On Thursday, November 21, USAID Asia Deputy Assistant Administrator (DAA) Javier Piedra and Vice Minister of Energy, Republic of Kazakhstan, Sungat Yessimkhanov signed a landmark Memorandum of Understanding on behalf of the United States Agency for International Development and the Government of Kazakhstan to help establish a Central Asian regional electricity market.

Why it Matters

The five countries of Central Asia – Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan have their individual domestic energy resources. However, an integrated and improved regional power system would add billions of dollars to the Central Asian economies, enhance energy security, economic stability, and lead to a cleaner environment. It would also facilitate commercial trade transactions and attract private investments in the power sectors of all five Central Asian countries.

Each of these countries wants to ensure reliable and secure electricity to meet their citizens demand at the lowest cost. This while maintaining technical standards and encouraging investment in the energy sector. An integrated power market could ensure fair and consistent transactions for all countries. It could lead to the establishment of common standards for performance, fair and non-discriminatory pricing, and equitable access to the power grid.

The Significance of the MoU with Kazakhstan

Signing the Memorandum of Understanding signifies an important first step toward the realization of Kazakhstan joining in the creation of regional electricity market in Central Asia. The Central Asia Regional Energy Market is one of USAID Central Asia’s major projects that connects all of Central Asia and opens up the opportunity for expanding the market for Kazakhstan’s power exports to other Central Asian countries as well as to South Asia, namely Afghanistan and Pakistan. At the MoU signing, DAA Piedra explained, “We are pleased that your government [Government of Kazakhstan] has agreed with our recommendations on adopting new policy reforms to accelerate renewable energy development. USAID stands ready to provide continued support on improving legislation and other technical assistance to promote the region’s long-term energy security and economic growth.”

What’s Happened So Far

Similar Memoranda of Understanding have been signed with the countries of Uzbekistan and Tajikistan and an Action Plan has been signed and agreed on with the Kyrgyz Republic. With the latest MoU with Kazakhstan, the United States has brought four of the five countries of Central Asia together to develop a regional energy market that will benefit the citizens of their countries and beyond. The USG through USAID is providing technical assistance and helping the countries of Central Asia build domestic capacity to establish an economically viable and sustainable electricity market.

What’s Next

U.S. technical assistance and diplomatic engagement, closely coordinated with financing from international financial institutions and other donors, will help make a Central Asia regional energy market a reality in the coming years. In the next few years, the focus will be on increasing bilateral electricity trade agreements, establishing legal and regulatory agreements, and developing a regional operator and trading platform. As the market continues to grow, more generation, transmission and system operation and controls will be built. The reality of a regional power market will allow all the Central Asian countries to take advantage of their vast energy resources to enjoy low-cost clean energy while ensuring economic growth.