China’s growing influence in Central Asia’s renewable energy sector is reshaping the region’s energy landscape, according to Vice President for Studies of Carnegie Endowment for International Peace, Evan A. Feigenbaum.
In his newly published analysis, Feigenbaum argues that traditionally known for its investments in fossil fuel projects, particularly in Kazakhstan and Uzbekistan, China has embarked on a strategic shift towards renewable energy initiatives. This evolution reflects a nuanced approach characterized by adaptation to local dynamics and collaboration with regional stakeholders.
Historically, Kazakhstan and Uzbekistan have heavily relied on fossil fuels for their energy needs. However, mounting environmental concerns and energy security challenges have prompted both nations to explore renewable energy alternatives.
China’s increased involvement in this sector is driven by a convergence of factors, including diplomatic cooperation, evolving investment strategies, and regulatory frameworks.
China’s engagement in renewable energy projects in Central Asia has undergone two distinct phases. Initially focused on large hydropower projects, China has pivoted towards wind and solar initiatives since 2018. This strategic adaptation is mirrored in financing mechanisms, with a shift towards equity financing and collaboration with local banks.
In Kazakhstan, Chinese companies have predominantly acted as project developers, aligning with government-led initiatives to promote renewable energy. Conversely, in Uzbekistan, tender processes have been the main driver for Chinese involvement, with a focus on engineering, procurement, and construction (EPC) contracts, as well as supply agreements.
While China’s engagement offers opportunities for accelerating the region’s green transition and enhancing energy independence, it also presents risks of technological dependency and limited competition. China’s dominance in the market could extend its influence beyond economic realms, potentially impacting regulatory standards and project conditions.
As China navigates the renewable energy landscape in Central Asia, it must strike a delicate balance between collaboration and overreliance. Sustainable development and equitable participation in the region’s green transition are paramount considerations in this evolving energy partnership.
