Central Asia - Regional Electricity Market Interconnectivity and Trade Program Using the Multiphase Programmatic Approach (MPA), Including Proposed Phase 1 Grant and Credits to Tajikistan, Kyrgyz Republic, and Uzbekistan

Overview & Synopsis

Central Asia Regional Electricity Market Interconnectivity and Trade Project for the Kyrgyz Republic, Tajikistan, and Uzbekistan has the development objectives to enhance regional electricity trade through a pilot regional electricity market, strengthen regional transmission capacity, and enable the integration of renewable energy in Central Asia. Component 1: Pilot regional electricity market. This component establishes, operationalizes, and pilots a short-term, transparent, and rules-based regional trading platform that complements existing bilateral contracts, using a day-ahead market to trade national surpluses and deficits and adopting a serviced market framework hosted by CDC Energia as the Regional Market Operator and central counterparty. Sub-components include design and delivery of market rules, participant eligibility and onboarding for transmission system operators and balance-responsible parties including, where permitted, independent power producers, configuration of the trading platform, staff training, and implementation followed by one to two years of live operation with options for extension; and development of an Automated Commercial Metered Data Management System to underpin settlement and reporting. Component 2: Reinforcement and digitalization of regional interconnections. This component finances no-regret investments that modernize and digitalize priority 500 kV and 220 kV assets to increase capacity, reliability, and redundancy, reduce losses, and enable higher variable renewable energy integration and cross-border power flows, while incorporating climate resilience and fiber optic communications. Sub-components include, in Tajikistan, construction of a new 500 kV Dushanbe–Regar transmission line with optical ground wire and the upgrade and expansion of the Regar and Dushanbe 500/220/35 kV substations to secure evacuation from Rogun hydropower plant and double transfer capacity to Uzbekistan; in Uzbekistan, construction of a second 220 kV Uzbekistan–Paulgan–Fergana–Sokin circuit and the Uzbekistan section of the 220 kV Yulduz–Kristall cross-border line with associated substation extensions, fiber optic links, and Supervisory Control and Data Acquisition/Energy Management System (SCADA/EMS) integration to strengthen the Fergana energy hub; and in the Kyrgyz Republic, construction of the Kyrgyz section of the 220 kV Kristall–Yulduz line and modernization and rehabilitation of the 220 kV Kristall and Torobaeva substations to enhance transfer capacity and stability with Uzbekistan, alongside implementation support and preparation of subsequent phase investments. Component 3: Strengthening the institutional framework and enabling environment. This component supports a phased regional governance setup for market development and coordinated planning, leveraging a ministerial-level Electricity Coordination Council under a Central Asia Energy Council, and uses CDC Energia to operate the pilot while options for a long-term market and system operator, a regional planning coordination body, and a regional regulatory body are developed. Sub-components include capacity building for national and regional institutions on technical, fiduciary, and environmental and social practices, knowledge sharing and monitoring and evaluation to inform subsequent market phases, design of trade-enabling financing and risk mitigation mechanisms, and support for coordinated cybersecurity practices and stakeholder engagement.