Central Asia could generate up to $120mn in net annual economic benefits by better coordinating existing electricity networks and power plants, without major new construction, the Eurasian Development Bank (EDB) said in a new report published on October 29.

The region had 36.4 gigawatts of installed power generation capacity at the peak demand hour on December 10, 2024, but only 28.8 GW was available, leaving 6.6 GW out of service when it was most needed, according to an EDB report on regional electricity connectivity.

The bank estimates that improved coordination, digital monitoring and more efficient use of existing transmission networks could enable an additional 6bn kilowatt-hours of cross-border electricity trade annually. The gross economic benefit could reach $640mn a year, falling to up to $120mn after integration costs.

The report, Energy Without Borders: Architecture of Electricity Connectivity in Central Asia, argues that the region's main obstacle is not a shortage of generation capacity or physical connections, but the lack of commercial and institutional arrangements to make effective use of them.

“Wires without rules remain lines on a map,” the report said, arguing that the value of regional electricity links increasingly depends on how they are managed rather than how many transmission lines are built.

The urgency is growing as electricity demand rises by as much as 6% annually and is projected to reach around 370bn kWh by 2030. More than 35 GW of variable renewable generation is planned across the region by 2035, increasing the need for flexible power supplies and coordinated dispatch.

Uzbekistan could be forced to curtail 2.1bn to 3.5bn kWh of renewable electricity annually as early as 2026-2028, according to the report's projections, if regional systems cannot accommodate fluctuating solar and wind output.

Central Asia already has an interconnected electricity system and complementary energy resources. Kazakhstan, Uzbekistan and Turkmenistan rely heavily on thermal generation, while Kyrgyzstan and Tajikistan have substantial hydropower resources that can help balance seasonal demand and fluctuations in renewable output.

However, electricity trading between countries remains limited. Mutual trade within the Central Asian Unified Power System amounted to 12.1bn kWh in 2024, well below levels seen in more developed regional electricity markets, the EDB said.

The bank recommends starting with improved digital monitoring, reliable commercial metering and calculations of the actual transmission capacity available across existing networks. Physical upgrades should then target specific bottlenecks where they can deliver measurable system-wide benefits.

It proposes a gradual transition from more predictable bilateral electricity contracts to a regional day-ahead market, followed by balancing and system-services markets.

Hydropower arrangements will be central to the process. Reservoirs at Toktogul and Nurek, the Naryn hydropower cascade and the proposed Rogun plant in Tajikistan could provide flexibility to the wider region, but water releases must also accommodate irrigation, food security and existing interstate obligations.

The EDB argues that the ability of upstream countries to regulate electricity supplies should be treated as a paid service rather than an obligation imposed on them because of their geographical position.

The report identifies the distribution of costs and benefits as a major political obstacle. Even if integration produces gains for the region as a whole, individual countries may lose out unless compensation arrangements are agreed in advance.

The bank also examines potential electricity links to markets north, east, south and across the Caspian Sea, including the CASA-1000 project, but says external connections should complement rather than replace cooperation within Central Asia.

The report's central recommendation is to establish clear rules for electricity trading, balancing and compensation before committing to expensive new infrastructure. Better coordination could improve supply reliability, accommodate renewable generation and reduce the need for additional power plants, but delivering those benefits will depend on governments agreeing how the gains are shared.