Kambarata-1 HPP: Sustainable and Transformational Energy Project

pipeline

Prospective

Operation Abstract: Summary Description of Proposed OperationThe Kambarata-1 HPP, currently under development, is a transformative greenfield hydropower project, emerged among the least-cost projects for expanding clean energy resources in the Kyrgyz Republic and the Central Asia region. The project is located upstream of the Naryn river in the Kyrgyz Republic. Although initially conceived during the Soviet Union era in the 1980s, construction never commenced due to a lack of financing, which is estimated at around US$4 billion. In 2014, SNC Lavalin prepared a feasibility study for the project. Upon commissioning, the project will have an installed capacity of 1,860 MW (~50% of current installed capacity in the country), a 256-meter-high dam, 5.4 billion cubic meter reservoir, and 5,600 GWh annual generation. The project will serve as the main foundation of the country’s energy system, facilitating the decarbonization pathway and significantly improving water resource management in Central Asian region.The Kambarata-1 HPP project could generate the following significant economic, social, and environmental benefits for the Kyrgyz Republic if it is developed in a sustainable manner. It will: (i) support the government’s vision towards a green and affordable energy future; (ii) achieve energy security by resolving the country’s winter energy deficits; (iii) enable the energy security and political autonomy by avoiding reliance on imported energy, including from Russia; (iv) significantly gear power generation toward meeting winter peak demand, thus fundamentally solving the country’s seasonal energy deficits; (v) generate sustainable export revenues, thereby improving the sector financing performance; (vi) enable the diversification of the country’s electricity mix through integration of solar and wind energy at scale; (vii) strengthen the regional coordination efforts in energy and water resource management; and (viii) improve resilience to water related risks such as floods, droughts, and managed irrigation in the region. International Energy Agency’s net-zero assessment also confirms the hydropower as the backbone of global electricity security and the most cost-effective, dispatchable, and flexible low-carbon technology option to integrate solar and wind.Kamabarata-1 is a regional project in nature. With demand expected to grow by 40 percent by 2030, and triple by 2050 if carbon neutrality targets are to be met, substantial scale-up of generation capacity is needed for the region to cater to its growing needs while supporting a clean energy transition. The project, if fully funded, would be transformative as it would contribute to meeting the growing energy demand and lower costs of energy transition in the Central Asia region, enhance energy security through the further development of the Central Asia regional power market and help decarbonize the electricity grids in the Central Asia region, which are currently highly dependent on coal and gas (above 70 percent) for power generation. The Bank’s regional planning analyses confirm that Kambarata-1 would displace gas and coal fired generation in the region and thus support the region low carbon development. In addition, the Kambarata-1 project will enable large-scale deployment of variable renewable energy in the Kyrgyz Republic, Kazakhstan, and Uzbekistan through its flexible and storage capacity, facilitating the decarbonization pathway in Central Asia. Furthermore, the Kamabarata-1 project would allow for better management of water resources in Central Asia across seasonal variations, making it possible to better meet the irrigation and other water needs of the downstream countries (Uzbekistan, Kazakhstan).An adequate financing and development strategy will be required from the very beginning to ensure satisfactory technical, environmental, and social outcomes and address any potential macro-fiscal issues. In this regard, upon the request from the Government, the World Bank is providing a comprehensive support to the development of the Kamabarata-1 HPP project in a manner that is fiscally, financially, technically, socially, and environmentally sustainable. The Bank’s ongoing $18.6mln Technical Assistance for the Kambarata-1 HPP will finance: (i) updating previous studies to verify the technical feasibility and economic viability; (ii) strengthening the environmental and social framework; (iii) developing a fiscally sustainable financing plan and commercial framework; and (iv) project implementation support and capacity building. The Bank is in discussion with the Governments for financing of the project in phases, and have been requested to play a lead arranger role to attract other financiers for structuring a sustainable financing package for the project. The proposed Bank support under this MPA builds upon the long-standing partnership with the Government of Kyrgyz Republic, Government of Uzbekistan, and Government of Kazakhstan as the Bank has been selected as the lead partner in designing and implementing broader energy sector and tariff reforms. The MPA will also contribute to the Bank’s ongoing initiative on strengthening the energy connectivity and trade in Central Asia, including through the establishment of a regional electricity market under a pipeline project.Phase 1 of the K1-STEP Program will consist of the following components. Component 1: Early works. This component will finance the early works such as diversion tunnels, dam, powerhouse and substation pre-excavation, site installation. Component 2. Project design, management and supervision. This component will finance the PMC, project implementation support, and the operationalization of the Kambarata-1 Regional JV. (a) Subcomponent 1. Operationalization of the Kambarata-1 Regional project company. (b) Subcomponent 2. Project Management Consultancy (PMC). (c) Subcomponent 3. Project implementation support. (d) Subcomponent 4. Owner’s cost. Component 3. Implementation of social and environmental management plans. This component will finance the implementation and monitoring of E&S instruments including ESMP, Resettlement Policy Framework (RPF) and Livelihood Restoration Plan (LRP) requirements. This component will also support the implementation of a comprehensive benefit sharing plan in support of possible affected communities and national social programs.Component 4. Water management institutional capacity and regional coordination support. This component will finance a set of hydro meteorological instrumentation and consultancy services required for the Kambarata-1 HPP project, including key monitoring investments in the upper Naryn river basin to support the operation of Kambarata-1 HPP and mitigate future climate risks, and improve the water management institutional foundations within the Kambarata-1 HPP project and broader regional framework.

World Bank Group

Project

Solar, Water Supply and Storage, Power Generation (CCGT), Waste Processing and Treatment, Wind, Commercial, Hydro, Government