Since 2016, Uzbekistan has undertaken a remarkable transformation — from isolation to a path of reform-driven growth. As Central Asia’s most populous country, endowed with abundant natural resources and occupying a strategically pivotal location, Uzbekistan is now emerging as a hub for new investment opportunities.

Economic reforms across multiple sectors are opening up previously untapped markets, and among these, the renewable energy sector stands out. It not only offers strong financial returns for investors but also generates meaningful social and environmental benefits, making Uzbekistan a compelling case of how reform can drive inclusive and sustainable development.

Uzbekistan’s Economic Reform Journey

Uzbekistan’s reform agenda first began in 2017, under the leadership of President Shavkat Mirziyoev, marking a decisive shift from a centrally controlled, state-dominated economy toward an open, market-oriented system. The government’s strategy has focused on liberalizing key sectors, improving transparency, and creating a business-friendly environment not only for domestic investors, but foreign also.

One of the most significant reforms was the unification and liberalization of the Uzbek som. By allowing the currency to float freely, the government eliminated the black-market exchange rate, increased transparency and provided investors with a predictable and stable financial environment. This move has been instrumental in boosting the confidence of foreign investors.

Uzbekistan has also initiated a large-scale privatization program, opening up state-owned banks, utilities and manufacturing companies to private and foreign investment. This has unlocked new sectors for capital inflows, particularly in infrastructure and energy, while signalling a long-term commitment to a market economy.

Economic Growth and Investment Trends

Uzbekistan’s economic reforms have begun to yield tangible results. In 2023, the country experienced a 6% GDP growth and attracted over $7.2 billion in foreign direct investment (FDI), nearly doubling the amount from 2022. These investments are instrumental in modernizing infrastructure, expanding energy production, and diversifying the economy. The government’s commitment to liberalization reforms launched in 2017 continues to encourage private sector participation and foreign investment.

In 2024, FDI in Uzbekistan grew by more than 50%, with the investment volume in the fourth quarter reaching its highest level since 2021, totaling $3.87 billion. From January to December 2024, the total volume of FDI increased by 53.6%, reaching $11.9 billion, while the share of FDI in the country’s gross domestic product (GDP) rose by 2.4 percentage points, reaching 10.3%. The volume of cross-border money transfers also increased by 30%, reaching $14.8 billion. 

These inflows are helping to modernize infrastructure, expand energy production and stimulate economic diversification. The government’s commitment to liberalization reforms launched in 2017 continues to encourage private sector participation and foreign investment. The government aims to double the GDP to $200 billion by 2030, leveraging significant progress in green energy and energy sector reforms.

Emerging Investment Frontier: Renewable Energy

Uzbekistan’s electricity sector remains heavily dependent on natural gas. According to the International Energy Agency (IEA), in 2022, natural gas accounted for 82% of the country’s total electricity generation, significantly outweighing other sources like coal, oil, hydro or wind and solar.

This reliance on gas exposes Uzbekistan to risks–including price volatility, supply disruptions, and environmental impacts –   making diversification in this current climate essential. Recognizing this, the government has committed to a bold energy transition, aiming to have 25% of its electricity from renewable sources by as early as 2030.

This policy is backed by targeted legislation, including the Decree on Accelerated Measures to Improve Energy Efficiency and the Development of Renewable Energy Sources from 2019, which explicitly sets the target for renewable electricity by 2030. This marks a significant advancement in Uzbekistan’s shift toward sustainable electricity generation. These favourable conditions have created specific avenues for investment opportunities, from solar and wind projects to modernizing the electricity grid and leveraging public-private partnerships.

Renewable Sources

With more than 300 days of sunshine per year, Uzbekistan has one of the most favorable solar climates in Central Asia. This makes large-scale solar photovoltaic  (PV) projects highly viable. Several pilot and commercial-scale plants are already in operation, and the government is actively seeking foreign investment to expand capacity, particularly in the Navoi, Samarkand, and Khorezm regions.

Moreover, wind corridors in regions such as Karakalpakstan and Navoi offer significant potential for utility-scale wind farms. Major Gulf and European firms have begun investing in these projects, attracted by favorable government policies, guaranteed power purchase agreements, and financing support from multilateral institutions.

Uzbekistan’s electricity transmission and distribution infrastructure requires significant upgrades to integrate renewable energy efficiently. The World Bank has approved a $100 million credit and the Asian Development Bank (ADB) a $125 million loan to modernize the power grid, including upgrading transmission lines, substations, and distribution networks. These initiatives aim to improve energy efficiency, enhance reliability, and support the integration of renewable energy sources into the national grid

Public-Private Partnerships (PPPs)

The government has created legal and financial frameworks to encourage PPPs, offering security in Uzbekistan’s investment opportunities, long-term contracts, and partial risk mitigation. These mechanisms make Uzbekistan a more predictable and attractive destination for foreign investors seeking both profitability and involvement in the country’s energy transition.

By combining natural advantages, supportive policy, and growing demand, Uzbekistan’s renewable energy market could be emerging as one of the most promising investment frontiers in Central Asia, thus creating greater job opportunities and wider market growth for the country.

Uzbekistan’s Investment Opportunities: The Future

=”https://borgenproject.org/the-uzbekistan-2030-strategy/”>Uzbekistan’s reform-driven transformation has created a dynamic investment climate, with the renewable energy sector emerging as a prime example of how economic openness can deliver both financial returns and social impact. Abundant solar and wind resources, ambitious government targets, and support from multilateral institutions position the country as a regional hub for clean energy investment.

Combined with grid modernization and public-private partnerships, these reforms are fostering job creation, market growth, and long-term economic prosperity, making Uzbekistan a compelling model for sustainable development in Central Asia.

– Elizabeth Occleston

Elizabeth is based in Southport, UK and focuses on Business and New Markets for The Borgen Project.

Photo: Flickr