Eurasian countries to invest in grid modernization

Near-term growth will be focused in Central Asian countries currently battling high electricity losses

Sep 8th, 2014
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Eurasian countries will invest $18.3 billion in electric grid modernization — or smart grid — over the next decade. The region has strong drivers for smart grid investment, a number of experienced vendors and funding available from multilateral lending organizations.

Near-term growth will be focused in Central Asian countries currently battling high electricity losses. Larger countries such as Russia are expected to develop in the medium term, according to a new study published by Northeast Group LLC.

"The case for smart grid investment in Eurasia is compelling," said Ben Gardner, president of Northeast Group. "Eurasian countries are among the least energy efficient in the world and have some of the highest electricity distribution loss rates. Smart grid will be instrumental in improving the efficiency of the electricity sector in these countries. Available multilateral financing will help kick start deployments in the near term."

Since 2011, the World Bank and Asian Development Bank have committed $380 million for smart grid investments in Uzbekistan. Several other Eurasian countries have similar electricity sector characteristics and could see financing become available if deployments are successful in Uzbekistan. For example, Kyrgyzstan has the second highest electricity losses in the world (at 29 percent) due to electricity theft and unmetered premises.

"The current political challenges in Russia and Ukraine limit the short-term market potential of some of the region's largest countries," said Gardner. "But recent events do not change the core drivers and potential benefits, which should lead to strong medium-term growth. International vendors will be looking to partner with established local vendors and to participate in near-term Central Asian projects to position themselves for significant medium-term opportunities in the larger markets of the region."

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