Gulf Investors Envision a ‘Green Road’ in Central Asia

For decades, Central Asia’s power systems have been bound to Soviet-era legacies: outdated, inefficient, and heavily interconnected with Russian infrastructure. Today, governments are working to dismantle these dependencies and build new energy systems centred on sustainable technologies, financed and strategised largely with Gulf support.

This emerging partnership reflects a wider transformation. Central Asia is seeking fresh partners to modernise its energy sector amid rising geopolitical uncertainties. Countries such as Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan are attempting to shed the Soviet legacy by diversifying both their energy mix and their international partnerships.

The region faces mounting challenges: surging electricity demand, unreliable supply, and intensifying climate risks. In response, governments are pursuing scalable, low-cost, low-carbon energy solutions to reduce reliance on natural gas, coal, and hydropower—all while constrained by dependence on coal and limited fiscal space. Gulf-backed investments offer an attractive alternative. Through state-owned giants such as ACWA Power and Masdar, Gulf states are exporting megawatts of clean energy, deploying solar, wind, storage, and green hydrogen by leveraging oil revenues.

What is taking shape is a “Green Road” between the Gulf Cooperation Council (GCC) and Central Asia—echoing the Silk Road’s legacy, but powered by wind turbines and solar panels rather than wells. It is redefining trade linkages through climate-resilient infrastructure, technology transfer, and inter-regional cooperation. Clean energy here is not only a tool for decarbonisation but also for economic growth, geopolitical influence, and development. This partnership is forging a new regional energy model, bolstering Gulf soft power while opening economic opportunities across Central Asia.

The GCC’s growing clean energy footprint in Central Asia signals a forward-looking strategy: a pivot from fossil fuel exporters to global enablers of the energy transition. By transforming hydrocarbon wealth into a diversified portfolio of clean energy assets, Gulf states are securing a place in the low-carbon future.

At the centre of this shift are state-backed developers. ACWA Power, half-owned by Saudi Arabia’s Public Investment Fund, and Masdar—jointly owned by Mubadala, TAQA, and ADNOC—are rapidly expanding their international presence. ACWA Power holds 52 GW of renewable capacity across 15 countries, while Masdar’s portfolio exceeds 51 GW in 40 countries spanning Asia, Africa, and Eastern Europe.

These firms bridge business and diplomacy, advancing national strategies through high-impact investments in renewables, storage, and green hydrogen. They export expertise, technology, and a replicable model for utility-scale clean energy deployment. In doing so, they are laying the foundations of a new energy corridor built on sustainability.

Central Asia is a natural frontier. Vast, underutilised land, rising electricity demand, and its strategic position at the crossroads of China, Russia, and South Asia make it a low-risk, high-reward opportunity. Gulf states are extending their geopolitical influence in a region once dominated by great power rivalries—now increasingly oriented toward the energy transition. In Uzbekistan, for instance, ACWA Power is developing a 1.5 GW wind farm worth $2.4 billion, while Masdar has completed the 500 MW Zarafshan wind farm, the largest in Central Asia to date.

Despite their hydrocarbon reserves, Central Asian countries face severe electricity challenges. Demand is rising due to population growth, urbanisation, and industrialisation—particularly in Uzbekistan and Kazakhstan, where demand increased by 4 percent year-on-year in 2024. This surge collides with limited generation capacity and ageing infrastructure.

The regional energy mix remains dominated by natural gas (43 percent), coal (30 percent), and hydropower (24 percent). Yet gas faces mounting pressure: domestic consumption is rising, leading Uzbekistan to restrict exports. Turkmenistan depends almost entirely on gas, while coal is entrenched in Kazakhstan, where it supplies nearly 70 percent of power generation.

Hydropower, meanwhile, is increasingly unreliable. Kyrgyzstan and Tajikistan depend on it for 80 to 90 percent of electricity, but droughts, climate volatility, and cross-border tensions undermine output. New hydropower projects are fraught with political obstacles and regional disputes. Much of the sector still relies on Soviet-era plants—inefficient, outdated, and beyond their intended lifespans.

Electricity systems also suffer from inefficiencies and subsidies. Grid losses reach 22 percent in Kazakhstan and Tajikistan, while tariffs cover only 65 percent of generation costs across the region. This contributes to fiscal deficits ranging from 4 percent of GDP in Tajikistan to 6 percent in Uzbekistan. Imports help fill gaps, but regional trade is limited, fragmented, and politically sensitive.

By contrast, Central Asia’s solar and wind potential remains largely untapped. Vast land and abundant resources stand against weak project pipelines, policy uncertainty, and limited institutional capacity.

In this context, Gulf-backed clean energy investments act as a catalyst. With low-cost capital, proven delivery capacity, and competitive generation costs (2.5-3.5 cents per kWh), developers like ACWA Power and Masdar bring not only finance but also execution, engineering expertise, and capacity-building.

For Central Asia, this translates into more reliable power, a diversified mix, and greater climate resilience. For the Gulf, it supports economic diversification while elevating its energy champions as credible global actors. Clean energy exports both shield Gulf economies from fossil fuel volatility and expand their geopolitical influence.

These partnerships bridge financing gaps, stimulate regional development, and strengthen political stability through modernised infrastructure.

The Gulf-Central Asia alliance marks a new phase in both regions’ energy trajectories—anchored in mutual interests and a shared vision of a low-carbon future. For the Gulf, it brings economic and diplomatic dividends beyond oil. For Central Asia, it offers a pathway to modernise power systems and reduce long-standing vulnerabilities.

The “Green Road” under construction is more than a metaphor. It is an emerging infrastructure and investment corridor that symbolises a new model of South-South cooperation, grounded in clean energy.

Its success will depend on sustained political commitment, cross-border coordination, and scalable innovation. If these align, the GCC-Central Asia energy corridor could become a landmark in the global energy transition—turning risk into opportunity.

Photo: ACWA Power