The EBRD’s and CIF’s winning partnership in hydro and wind power in Central Asia

By Franka Klingel

The EBRD’s and CIF’s winning partnership in hydro and wind power in Central Asia

Qairokkum hydropower rehabilitation project in Tajikistan

A few years ago, a 50 megawatt (MW) wind farm in Kazakhstan would have been unthinkable. Kazakhstan’s electricity sector was, and still is, dominated by coal-fired power plants. Renewable energy was limited to a few hydropower plants constructed during Soviet times.

Similarly, in Tajikistan, it would have seemed like a distant dream to develop a modern 142 MW hydropower plant that is resilient to the impacts of climate change and able to provide secure and reliable power to more than 500,000 people.

Today, things are changing and projects like these are actually happening thanks to the joint efforts of the Climate Investment Fund (CIF) and the multilateral development banks (MDBs).

Over the last few years, the CIF and the MDBs have started to implement ground-breaking projects that have been fundamental in supporting developing countries on their way to becoming low-carbon economies and in adapting to climate change. Their impacts are dramatic and attracting notice.  

In May, the Qairokkum hydropower rehabilitation project in Tajikistan received the EBRD’s own Sustainability Award. A month later, the Yereymentau wind project in Kazakhstan received the American Chamber of Commerce’s AmCham award.

The EBRD is channeling more than US$ 75 million to repair and rehabilitate one of the country's crucially important hydroelectric power plants - at the Qairokkum dam.

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Hydropower rehabilitation in Tajikistan wins Sustainability Award

The Qairokkum hydropower plant rehabilitation project, financed jointly by the CIF and the EBRD, was awarded the EBRD Sustainability Award for “best climate adaptation project”  for its innovative approach of incorporating climate change considerations into the investment design.

The CIF laid the groundwork for ensuring that the plant’s rehabilitation was more climate-resilient. It provided additional funding for the project team to model both the water inflow into the reservoir and the plant’s electricity generation capacity under different climate change scenarios.

The CIF will also support the hydropower operator in adjusting the plant’s operational management to account for climate change.

Qairokkum’s resistance to future climate change will improve significantly and this will have tangible benefits for the local population. The plant will be safer and better able to deal with extreme weather events, such as earlier spring snowmelt and more severe summer droughts. It will be more reliable and better adjusted to supply electricity to local households and businesses.

Wind farm in Kazakhstan wins AmCham Award

In June of this year, the Yereymentau wind project received the AmCham Award for “environment and safety,” an honour that the American Chamber of Commerce in Kazakhstan awards to outstanding projects every year. The Yereymentau project is the first wind farm in the country and the result of joint efforts between the CIF, the EBRD and the Kazakh government.

Even before the project got underway,  Kazakh authorities worked with the EBRD on creating a legal and regulatory framework for renewable energy that includes feed-in tariffs for renewables, an essential foundation for attracting investments. Based on this partnership, the Kazakh government adopted a Renewable Energy Law in 2013.

The EBRD-funded Yereymentau project received €18 million in concessional co-financing from the CIF to mitigate the investment risk of entering into a nascent renewable energy market. The funds are being used to finance the construction, connection to the power transmission grid, commissioning and launch of the 50 MW wind power plant in central Kazakhstan. It is expected to offset 120,000 tons of CO2 per annum, the equivalent of 450 return flights from Astana to Almaty.

This first wind farm in the country will road-test the new regulations and will set the benchmark for developing, building and operating greenfield renewable projects in Kazakhstan.

Spurred in part by Yereymentou, the EBRD, together with the CIF, is now backing the 50 MW Burnoye Solar project, the country’s second renewable energy project (and first commercial-scale solar power park) with more such ventures expected to be signed in the future.

Qairokkum and Yereymentau demonstrate what can be achieved through the joint efforts of CIF and the MDBs and are proof positive that financing for development works best when done in collaboration. Such a partnership can deliver highly innovative climate finance solutions that can be replicated and scaled up. Indeed, the Qairokkum-style approach, whcih improves hydropower resilience, will soon be adopted in other climate-vulnerable countries.

Read this blogpost also on Fin4Dev.