China continues to rapidly invest in renewable energy within the framework of its Belt and Road Initiative (BRI). Particularly, Central Asian countries, which face infrastructure deficiencies, benefit from the financing and technological support provided under this initiative. The modernization of hydroelectric plants in Uzbekistan, Kyrgyzstan, and Tajikistan and the construction of energy transmission lines are concrete examples of this cooperation. While China’s global leadership in renewable energy technologies enhances the energy security of Central Asia, it also brings strategic implications for the region.
The Ankara Center for Crisis and Policy Studies (ANKASAM) presents an interview conducted with Dastan Bekmuratov, a Researcher at the Norwegian Institute of International Affairs (NUPI), to assess China’s strategy regarding energy investments in Central Asia and developments in energy transition.
China’s Belt and Road Initiative: “Utilizing Excess Construction Capacity”
China’s Belt and Road Initiative (BRI) emerged as a result of the country’s excessive construction workforce and material capacity. Under this initiative, surplus construction capacity has been leveraged through loans granted to foreign countries, with these projects being carried out by Chinese companies. Central Asian countries, facing infrastructure shortages, have sought to take advantage of this opportunity, leading to projects such as the modernization of hydroelectric plants in Uzbekistan and Kyrgyzstan, the refurbishment of thermal plants in Kyrgyzstan and Tajikistan, and the construction of transmission lines, all financed by China.
China’s Leadership in Global Energy Transition
Bekmuratov states that China has risen to a leading position in renewable energy technologies during the global energy transition process. “As of 2022, China reached a installed wind energy capacity of 366 gigawatts (GW) and a solar energy capacity of 393 GW. This figure is equivalent to double Europe’s total installed solar energy capacity. Furthermore, in 2023, out of the 40 million electric vehicles worldwide, 21.8 million are in China. The country not only increases its renewable energy capacity but also holds 80% of the global solar panel market and 60% of the wind turbine market. Thus, it is not surprising that China focuses on its overseas renewable energy investments.”
Importance of Renewable Energy Investments in Central Asia
According to Bekmuratov, “Central Asian countries should leverage the opportunities provided by China to achieve the Nationally Determined Contributions (NDC) targets set under the Paris Agreement. Investments in renewable energy infrastructure are crucial for both structural changes in energy systems and the development of climate policies. Given the trade restrictions imposed by the United States (USA) and some European countries on Chinese solar panels and electric vehicles, Central Asian countries have the chance to procure these products at lower prices.”
Regional Incentive Policies and Regulatory Frameworks
Central Asian countries have adopted several regulatory frameworks to decarbonize their energy sectors. In 2018, Kazakhstan initiated an auction system for renewable energy projects. Kyrgyzstan implements fixed tariffs for electricity produced from renewable sources, while Uzbekistan has promoted public-private partnership opportunities. Additionally, incentives such as tax exemptions, subsidies, and administrative support have been provided for such projects. These steps are seen as sufficient to attract Chinese investments to the region.
Current Activities of China in Central Asia
Currently, Chinese companies are actively operating in the renewable energy sector, particularly in Kazakhstan and Uzbekistan. Between 2018 and 2022, three solar energy facilities and five wind energy facilities were developed with the participation of Chinese companies. The Uzbek government has made agreements worth a total of 4 billion USD for the construction of solar power plants with Chinese companies. Kyrgyzstan is also interested in attracting investments from China for the construction of hydroelectric plants.
Regional Opportunities for Renewable Energy Investments
Increasing the share of renewable energy in Central Asia presents a strategic opportunity to meet the energy demand arising from population growth and economic expansion in these countries. Countries like Kyrgyzstan, Tajikistan, and Uzbekistan, which are heavily reliant on fossil fuels and facing declining natural gas production, encounter energy shortages, particularly in winter. Additional energy obtained from renewable sources can help meet local demands while allowing these countries to export excess energy to South Asia and China during the summer months.
Concerns About Chinese Investments and Potential Opportunities
Although some concerns regarding Chinese financing in Central Asia have previously led to protests, projects that consider technology transfer, local labor employment, and environmental requirements present significant opportunities for the region. Participation of China in renewable energy projects, if carefully negotiated, is expected to enhance energy security and contribute to regional economic development.
