Uzbekistan Reforms Small Hydropower Auction Rules to Boost Generation

Uzbekistan is overhauling its auctioning and project evaluation regulations for the small hydropower sector. More than 2,500 sites for the construction of small and micro-hydropower plants have already been made available for auction from approximately 3,000 identified prospective locations. This initiative to increase electricity generation through compact stations follows a national strategy directed by President Shavkat Mirziyoyev.

The Ministry of Energy intends to transition from selling individual licenses to offering them in clusters – grouping four to five future stations on a single waterway into a single lot. This package-based approach is designed to reduce investor costs during the design phase and streamline the process of securing bank loans. Private sector representatives have expressed readiness to construct cascades consisting of five or six facilities on specific irrigation canals.

Simultaneously, auction rules are being tightened to prevent land speculation. Previous instances have been recorded where entrepreneurs acquired sites at near-zero costs with no intention of constructing generating capacities, seeking only to secure land ownership. To eliminate such practices, the state is introducing a minimum starting price and establishing rigorous obligations for investors regarding the targeted use of the land – specifically, that it must be used exclusively for electricity production.

Before construction begins, every site will undergo a technical and economic audit involving scientific institutes. Specialists will measure water flow and calculate profitability to ensure that each station can deliver its declared capacity for at least six months of the year. Projects will be categorized into three groups based on their complexity. Priority will be given to locations with existing water head that do not require significant capital works. The second tier includes stations on operational canals where existing hydraulic structures must be modified to create height differences. The third group involves projects requiring comprehensive channel modifications and flow regulation.

The small hydropower construction program aims to fully utilize domestic industrial capacity. The Uzbekhydroenergo plant, which manufactures turbines and generators for stations with capacities up to 40 MW, has reached its maximum production volume. The government requires the use of primarily Uzbek equipment and local labor for new projects. Having established a micro-hydropower industry from the ground up, Uzbekistan is now preparing to export this technical expertise to neighboring countries in the region.