Shaping Asia’s Infrastructure: Unlocking Central Asia’s solar potential - Liberalising trends in solar development in Kazakhstan and Uzbekistan

With over one million square kilometres of steppe and desert landscape and up to three thousand hours of sunlight per year, Central Asia has significant potential for solar power production. Since declaring independence in 1991, Kazakhstan and Uzbekistan have prioritised fossil fuel development, but recent legal, tax, and regulatory reforms have spurred foreign investment into the solar sector.

This blog is the fourth in our series: “Shaping Asia’s Infrastructure”, which explores legal developments shaping infrastructure across Asia, and sits alongside our “Inside Infrastructure” series covering infrastructure trends globally. It explores the evolving legal frameworks, technical and regulatory reforms, and dispute resolution mechanisms that are shaping the solar energy landscapes in Kazakhstan and Uzbekistan respectively and examines the opportunities for foreign investors.

New investment incentives 

Uzbekistan

2019 was a big year for solar in Uzbekistan. The “Law on the Use of Renewable Energy Sources” was passed, creating comprehensive legislation for the sector, replacing the previously fragmented, project-specific framework. For parties involved in solar projects, it brought in a range of benefits, such as a ten-year exemption from all property and land taxes applicable to renewable energy equipment, guaranteed national grid access, and an exemption from all taxes for five years from the company’s registration for solar equipment producers. Since 2022, solar plant producers have also been entitled to a three-year, 50% reduction in corporate income and property taxes.

Also in 2019 the “Law on Investments and Investment Activity” changed the landscape for foreign investment. Since then, all foreign investors in Uzbekistan enjoy: (i) statutory protection against nationalisation, expropriation, and unlawful interference; (ii) the ability to insure against these risks; and (iii) a ten-year stabilisation clause against all adverse legal changes (stabilisation clause). Guarantees, funding, and special tax and payment regimes may also be negotiated with the government on an ad hoc basis.

These reforms have attracted major industry players and between 2019-2023 solar electricity generation in Uzbekistan rose from 0.01 to 0.45 terawatt hours.

Kazakhstan

The newest amendments to Kazakhstan’s legislation “On Support of the Use of Renewable Energy Sources” support small-scale and domestic solar facilities, including by guaranteeing individual owners’ ability to sell excess energy to the grid. Other legislation provides greater commercial sector benefits. Since 2020 solar projects have been “investment priority projects”[1] and may be eligible for benefits such as: (i) exemptions from customs duties and VAT on imports; (ii) government grants-in-kind; (iii) a 100% reduction in corporate income tax; (iv) exemption from property taxes for new industries or facilities; (v) application of a zero coefficient to land tax rates; and (vi) access to state in-kind grants, up to 30% of the total investment volume.

Foreign investors in Kazakhstan are also granted: (i) statutory protection against nationalisation, expropriation, and unlawful interference; and (ii) a ten-year stabilisation clause. For investments of US$60 million or more, additional benefits may be gained through investment contracts with the government.[2]

These changes have boosted the sector, with electricity generation from solar energy in Kazakhstan increasing more than 1000% from 2018 to 2023,[3] and major industry players now operating multiple farms there.

Complementary technical and regulatory reforms 

In 2023, Kazakhstan launched a plan to modernise its electric grid by 2029.[4] The technical regulator, KazStandard, consequently released eleven new national standards for renewable sources to improve technical cohesion across energy infrastructure, including: (i) standards for PV systems; (iii) guidelines for designing land-based PV plants; and (iii) requirements for solar installations. 

Uzbekistan is similarly upgrading its grid by 2030, and is introducing digital control systems, smart meters, and more efficient power lines to reduce losses and improve reliability.  

Both countries use auction systems for renewable project, through which foreign and domestic companies compete in a government-led bidding process, with the winning bidder usually awarded a long-term power purchase agreement for a particular project. Kazakhstan’s system provides for fixed tariffs (as opposed to feed-in tariffs), with the “Financial Settlement Centre for Renewable Energy Support” now acting as single purchaser. Over fifty auctions have been held in Kazakhstan since 2017, and thirteen projects will be allocated via the system in 2025, including four solar projects. Uzbekistan’s auction system is operated by the Ministry of Energy, and at least nine auctions for renewable projects have been held since the system was introduced in 2020.

Dispute resolution

Creating consistency and clarity in dispute resolution is a key priority in both countries. Both are signatories to the New York Convention and have established international arbitration centres which offer local commercial and technical expertise. Moreover both Kazakhstan and Uzbekistan have implemented arbitration laws based on the UNCITRAL model law. Extensive networks of bilateral investment treaties – forty-three for Kazakhstan and fifty for Uzbekistan – also offer broad protections for foreign investors in most major Western economies as well as Asia and parts of the Middle East. 

Opportunities

In addition to attracting billions of dollars in foreign investment, Kazakhstan and Uzbekistan have pledged billions to their own projects:

• In May 2025, Kazakhstan announced plans to commission ninety-three new renewable energy projects by 2030, with a total capacity of 2.3 gigawatts. In August 2025, the government also invested nearly US$11.5 billion to upgrade the power system as part of a national infrastructure plan, with US$4 billion allocated to major renewable projects involving existing international partners.
• In Uzbekistan, President Mirziyoyev announced plans in December 2024 to commission eighteen new solar and wind power plants before 2030, and in early 2025, one such solar plant was commissioned for US$80 million.

Even so, the region’s solar capacity remains massively under-utilised. By some estimates, Kazakhstan could produce more than six trillion kilowatt-hours of solar electricity annually, compared to the two billion produced in 2024. The International Energy Agency similarly reports that Uzbekistan has a technical solar potential almost four times larger than the country’s primary energy consumption.

Beyond domestic opportunities, both governments are also looking to leverage technical advancements to expand the market regionally. For instance, in July 2025, Kazakhstan and Uzbekistan (in conjunction with Azerbaijan) announced a joint venture to develop a high-voltage power line under the Caspian Sea. Multilateral projects of this calibre connecting solar-rich Central Asia with European markets will likely continue to develop, representing unique opportunities for foreign investors.

Takeaway

Solar power in Central Asia is a rapidly expanding market. With vast geographic potential and a maturing regulatory landscape, the region presents major opportunities for foreign investors – though success will depend on carefully structuring projects to navigate the shifting legal and investment frameworks.

The authors would like to thank Melissa Owens for her assistance.