SECOND ANNUAL RENEWABLE ENERGY CONFERENCE: SHOWING THE WAY,

UNCLAS SECTION 01 OF 04 DUSHANBE 001330

SIPDIS

STATE FOR SCA/CEN, OES/PCI

E.O. 12958: N/A
TAGS: ENRG SENV ECON ZK TI
SUBJECT: SECOND ANNUAL RENEWABLE ENERGY CONFERENCE: SHOWING THE WAY,
STILL LOOKING FOR THE WILL

DUSHANBE 00001330 001.2 OF 004



1. SUMMARY. Dushanbe hosted the Second Annual Renewable Energy
Conference on November 9, sponsored by the Carnegie Endowment
for International Peace, the Regional Environmental Center for
Central Asia (CAREC),and the Renewable Energy Association of
Tajikistan (REAT). Attendees came from all the Central Asian
countries, Europe, Russia, and the United States. Tajikistan's
First Deputy Minister of Energy and the U.S. Ambassador to
Tajikistan gave keynote speeches to open the conference. Among
the many points raised, the presenters noted the rich potential
of renewable energy, citing a number of projects in solar, wind,
and small hydropower. They also pointed out the lack of
financing, the fact that renewable energy is not yet
commercially feasible, and that investors face an unclear legal
environment fraught with risk. Yet, with persistence and
favorable policies, renewable energy could become cheaper than
oil, gas, or coal over time. Renewable energy could also
stimulate economic development in rural communities, provide
jobs, raise incomes, and alleviate poverty. END SUMMARY.

TAJIKISTAN RICH IN POTENTIAL BUT LACKS FINANCING


2. Tajikistan's First Deputy Minister of Energy and Industry,
the U.S. Ambassador to Tajikistan, and noted Central Asian
scholar Dr. Martha Olcott gave keynote speeches opening the
Second Annual Renewable Energy Conference on November 9. (NOTE:
On the eve of the conference, Dushanbe's electricity went out
across the city for two hours. It was not only a timely
premonition of the importance of renewable energy to
Tajikistan's future, but it was also a testament to the energy
crisis that Tajikistan now faces at the onset of winter. END
NOTE.) First Deputy Minister of Energy and Industry Asadullo
Gulyamov said Tajikistan was blessed with considerable renewable
energy potential, including small hydro power and wind energy in
remote villages off the grid. Tajikistan had an adequate legal
and normative base to develop renewable energy, and
international organizations and banks had already financed
renewable energy projects. Unfortunately, Tajikistan's ability
to fund such projects was inadequate. Because Tajikistan was in
a constant state of need, and because the existing energy
capacity was insufficient to meet the country's needs,
Tajikistan was keenly interested in developing its renewable
energy potential. This conference would give all participants
the opportunity to see the various paths forward.

AMBASSADOR: DIVERSIFICATION IMPORTANT BUT NEED CLEAR RULES


3. Ambassador Gross said renewable energy was very important in
Central Asia, and President Obama had made renewable energy
development a high priority. He applauded Tajikistan for its
work to develop renewable energy, but he noted that Tajikistan
faced rationing part of the year because of the cyclical nature
of its energy sources. Diversifying its energy sources and
capacity was very important for Tajikistan's future, and wind,
solar, and small hydro power stations were all readily
available. A lack of clear rules for small energy producers was
one roadblock to using more renewable energy, but he added that
there was a draft law to promote renewable energy. However, the
general population still had very little understanding about
Tajikistan's considerable renewable energy potential.

IS RENEWABLE ENERGY FEASIBLE?


4. Asian Development Bank (ADB) Country Director Makoto Ojiro
said Tajikistan was one of the countries most severely affected
by climate change, largely due to glacier melting. In the long
term, Tajikistan needs to adapt to reduced water flows and
consequently less hydro power. He cited a number of ADB
projects, including the Nurek Dam and the transmission line
project to enable the export of electricity to Afghanistan. He
noted that ADB's "Strategy 2020" aimed to provide reliable
energy consistent with sustainable development, and this
strategy gives high importance to all renewable energy sources
in the context of climate change. The ADB was planning to spend
$50-80 million in ten countries, including Tajikistan, to
address the impact of climate change.


5. REAT President Umarkhon Madvaliev said Tajikistan was using
only 5% of its solar and wind renewable energy potential of 527
billion kilowatt hours (kWh) per year. Unfortunately, there was
a lack of financial resources to develop renewable energy, there

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was no regulatory legislation concerning its use, and there were
not enough trained technicians in the field of renewable energy.


6. Kyrgyzstan NGO "Akmena" Alexey Postnov said domestic
consumption in Kyrgyzstan accounted for 48% of energy use,
industry 28%, and agriculture 11%. One could not talk about
renewable energy in Kyrgyzstan without also discussing the
problems of inadequate energy supply, constantly pending energy
crisis, inefficient use of resources, and lack of profitability.
In addition, there was enormous loss of energy along
transmission lines. Kyrgyzstan's energy crisis had a political
aspect: the lack of a specific mechanism to manage water
resources that was acceptable to all parties. The political
barriers included inadequate information among users on the
possibility of renewable energy, a lack of financing for such
projects, and the need to improve the legislation regarding the
use and production of renewable energy. On the positive side,
the private market is gradually developing, and both China and
South Korea are currently negotiating possible investment.


7. Kazakhstan's UNDP Wind Energy Development Consultant Gennady
Doroshin said UNDP's wind energy project in Kazakhstan was
currently generating 121 kilowatt-hours (kWh) per year and
experiencing growth of up to 30% per year; by 2010 Kazakhstan is
expected to generate more than 400 Gigawatt-hours of wind energy
per year. Over time, the cost of wind energy could begin to
approach the cost of coal, and it would be much cheaper than
nuclear power. The Kazakhstani government fully backed this
program and there was good investment potential. Doroshin
helped the UNDP develop Kazakhstan's first wind atlas, which
maps where winds were strongest, helping potential investors
identify good locations for wind stations. By 2024, Kazakhstan
planned to generate 5% of its total energy from wind (it
currently stands at 0.028%). In spite of a recent law
supporting development of renewable energy, he cited a number of
remaining barriers, such as the lack of adequate juridical
structures to support and stimulate the development of renewable
energy and attract investment, and the high costs of renewable
energy projects.


8. Kyrgyzstan State Technical University Professor Ruslan
Botpaev presented some projects his university had developed,
including solar panels for water heating and space heating in
apartments. Solar panel heating was too expensive for the
marketplace at the present time and could not be used when cloud
cover blocked the sun, often the case in winter. The potential
market was huge, however, and with adequate investment and use
over time, the cost of solar energy could become cheaper than
natural gas.


9. Germany's Gesellschaft fuer Technische Zusammenarbeit (GTZ)
Energy Specialist Felix Zeiske said GTZ was using local
materials (straw, fiber, lime, clay, etc.) to make thermal
insulation for villages, and is double-glazing windows and
sealing doors and windows. GTZ hoped this would help reduce the
excessive use of wood during winter, thereby reducing forest
degradation in the countryside. GTZ was providing micro
financing up to $500 to buy and install insulation, and it
expects a savings of 40-60% fuel use per house during winter as
a result. GTZ's goal is to insulate 500 homes in the Pamir
Mountains by 2010.


10. UNDP Consultant Zoran Morvich said the regulatory and
financial framework for small hydro plants was underdeveloped in
Tajikistan. At least one million people in rural areas had
little or no electricity year round, and this is especially
difficult during winter. Seventy-three percent of the
population consumed only 8.5% of the country's total
electricity. Some small hydro plants existed but they were off
the grid and only supplied households. Some communities
operated 100 kilowatt to 30 Megawatt stations, but they were
also off-grid and operated only in the winter. The UNDP sought
to support the development of renewable energy resources
(primarily small hydro and solar) to reduce poverty and promote
economic development, with a focus on rural communities. Its
strategy was to help establish the proper political framework to
promote the development of community-based small hydro and
energy efficient projects; secure financing for renewable energy
and energy efficient development, using local manufacturers and
operators; and strengthen the capacity to monitor how renewable

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energy projects help reduce poverty. The eventual goal was a
50% reduction in poverty.

LEGAL FRAMEWORK FOR RENEWABLE ENERGY


11. Tajikistan's Committee of Communication and Investment
Deputy Director Shodi Shabdolov acknowledged that there was a
lack of legislation on renewable energy in Tajikistan.
Parliament, however, was working actively on a draft law to
stimulate the development of renewable energy. Tajikistan faced
two pressing problems: its forests were rapidly shrinking
because villagers used wood in the winter and had no readily
available alternative source of fuel; and the Pamir glaciers are
shrinking, inevitably affecting life in all of Central Asia.
This would force people eventually to leave Central Asia, which
would increasingly become a vast empty desert. This consequence
was not only the result of the desiccation of the Aral Sea, but
also of climate change. Shabdolov said Uzbekistan announced
that it would cut off all electricity to Tajikistan beginning in
December, not even letting electricity from Turkmenistan transit
Uzbekistan. Existing energy resources were very limited, and
the people would not wait for the government to pass laws to
help develop renewable energy. He did not elaborate on the
consequences, but just left the pending threat hang in the air
for conference members to ponder.


12. Kazakhstan UNDP Consultant Gennady Doroshin said renewable
energy currently was uncompetitive in the marketplace because of
high investment costs and high risks. Without adequate legal
support, there was no incentive to invest. He cited a number of
conditions necessary to promote renewable energy, including a
state investment subsidy, tax preferences, a favorable tariff
rate that allows producers to sell to the grid, certification
for those permitted to sell renewable energy, a requirement that
the state grid purchase renewable energy, and stipulations that
a certain percentage of power companies' generation must be
renewable. He noted that, because of ongoing concern about
corruption, the government of Kazakhstan was still working out
this concept. Currently, Kazakhstan lost a tremendous amount of
electricity in transmission. Existing problems for renewable
energy development included a lack of transparency in the
regulations and consequent high risk for investors during the
period of project development, bureaucratic barriers, conflict
between users and monopolistic regulators, and the demand for
renewable energy projects to conform to existing legislation
without changes.

DISCUSSION PERIOD: NEED FOR ADEQUATE LEGISLATION


13. In the ensuing discussion period, one observer noted that if
there was adequate legislation but no implementing act to
empower the law, a law would remain just an empty declaration.
Another added that the lack of viable renewable energy
alternatives in rural areas was why villagers were cutting wood
for winter, resulting in a massive stripping of forests, huge
ecological degradation, and a major loss for the nation. Yet
another said renewable energy was too expensive to develop
without support, so if there were no laws that provided
favorable policies to investors, there would be no renewable
energy and -- noting the recent blackout -- there would continue
to be a huge electricity deficit in Tajikistan.

AFGHANISTAN STRESSED NEED FOR RENEWABLE ENERGY PROJECTS


14. Senior Advisor to the President of Afghanistan for Mines and
Energy Rahman Ashraf gave the most interesting presentation of
the conference, stating that for several years Afghanistan was
ravaged by war and only since 2001 were the people united enough
to build the country and provide for its energy needs. Since
2002, the government had worked with local communities to build
small hydro power, solar energy, and wind generating stations.
Only 10-15% of the population had access to electricity, one of
the lowest rates in the world, and only 3% of the population was
connected to the electric grid, mostly in large cities. Most of
the existing power stations were more than 40 years old.
Eighty-five percent of the power generated is from "biomass"
(e.g., wood),and the demand was expected to grow exponentially.
Ashraf said an electricity transmission line from Tajikistan
should be completed in 2010, but because it was hydro-generated
power would only be available seven months out of the year.

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There would be no electricity transmitted during the winter
months.


15. Ashraf noted that many small diesel-powered generators were
initially sent to rural villages, but they could only provide
limited service, they needed repair or replacement, and the
local population could not afford to buy the fuel to run them.
As a result, most of these generators were now not in operation.
Renewable energy, such as small hydro power, is a much more
feasible solution, and since 2003, provincial reconstruction
teams (with USAID funding) had installed 135 micro hydro power
stations at a cost of $3500 per village. These stations could
be a major energy source for Afghanistan. In addition, solar
heating could also be an important source of energy, and the
National Solidarity Program had plans to install solar powered
lighting in 100 villages. Wind and geothermal power also
presented great opportunities for development.


16. Ashraf argued that renewable energy could help stimulate
regional economic development in rural areas, but villages
needed access to financing. He claimed that one kilowatt of
electricity in villages could generate up to $1.5 in GDP. Such
projects helped create jobs and increase incomes in the medium-
to long-term. He insisted that giving jobs to former Taleban
and their families was the best way to bring peace to
Afghanistan.
QUAST