The Kyrgyz Republic possesses tremendous hydropower potential, up to 142 billion kWh, of which only 10% has been tapped in installed capacity. Hydropower accounts for the overwhelming majority of electricity produced in the Kyrgyz Republic (nearly 90%). However, heavily subsidized energy tariffs below cost recovery, corruption, and other obstacles have long hindered private investment in the sector. Lacking major new sources of investment, new generating capacity has stagnated in the Kyrgyz Republic and failed to keep pace with growing energy demand. Once a net exporter of electricity, in recent years the Kyrgyz Republic has at times imported power to meet domestic demand. With rare exceptions, the majority of the Kyrgyz Republic’s hydropower plants (HPPs), including Toktogul HPP, the country’s principal source of electricity, were constructed in the Soviet era. Equipment is outdated and in need of replacement and upgrading, posing a risk for system-wide catastrophic breakdowns.
U.S. firms have recently demonstrated an increasing interest in the Kyrgyz hydropower market, which presents a range of opportunities to prospective companies. The Kyrgyz government seeks to attract industry leaders with deep experience and technical know-how to improve the country’s hydropower infrastructure.
Major capacity generation projects financed in large part by IFIs offer an opportunity for private foreign companies to enter and compete in the Kyrgyz hydropower market. In 2017, the Kyrgyz government announced tenders to upgrade and expand generating capacity at 14 small HPPs across the country. The Kyrgyz government awarded a turn-key contract in 2018 for the Asian Development Bank-supported modernization of the Toktogul HPP to a joint venture of GE Hydro (France) and GE Renewables (Switzerland), with delivery in November 2023. Targeted opportunities also exist for firms that provide niche engineering services and other support to the hydropower sector. Foremost among potential risks to entrants are the complexities of the local market, which continues to suffer from widespread corruption.