Small rivers — big business: Ministry of Energy proposes that entrepreneurs make money on hydropower
The Ministry of Energy of Uzbekistan has urged entrepreneurs to invest more actively in small and micro-hydropower, proposing to use the potential of small rivers, streams (sais), and irrigation canals to develop private generation. According to the press service of the department, a system of guaranteed purchase of electricity generated by private small and micro-hydroelectric power plants has been introduced in the country. Economic incentive mechanisms are also provided for investors. The Ministry of Energy names the guaranteed market as a key advantage of the model […]
Small rivers — big business: Ministry of Energy invites entrepreneurs to earn from hydropower
The Ministry of Energy of Uzbekistan has urged entrepreneurs to invest more actively in small and micro-hydropower, proposing to use the potential of small rivers, canals, and irrigation channels for the development of private generation.
According to the ministry's press service, a system of guaranteed purchase of electricity produced by private small and micro-hydroelectric power plants is already in place in the country. Economic incentive mechanisms are also provided for investors.
The Ministry of Energy identifies the guaranteed sales market as the main advantage of this model. All electricity generated by private hydroelectric power plants is purchased by the state on the basis of long-term guarantee contracts. At the same time, purchase tariffs are automatically indexed taking into account tariffs for consumers.
Thus, the entrepreneur receives not only the opportunity to invest in a generation facility, but also a pre-determined mechanism for selling the generated electricity.
The Ministry of Energy also emphasizes the investment attractiveness of small hydropower. Unlike solar generation, electricity production at hydroelectric power plants depends to a greater extent on a constant water flow and, in the presence of appropriate hydrological conditions, can provide more stable generation.
According to the ministry's estimates, hydroelectric power plants built taking into account optimal technical and economic parameters are capable of recouping investments from approximately 3.7 years of operation. The declared potential net profit can reach up to 27% per year. At the same time, the actual profitability will depend on the cost of construction, plant capacity, water resource, operating mode, and other parameters of a specific project.
In essence, this is an attempt to turn part of the water resources and infrastructure into a new investment asset. For entrepreneurs, this opens up an opportunity to enter the energy sector not through the construction of large power plants, but through relatively small projects with a guaranteed electricity sales mechanism.