Uzbekistan turns power policy into an AI investment pitch

Uzbekistan is pairing new generation capacity, battery storage, and special incentives to attract data centers and AI infrastructure, with Karakalpakstan emerging as a test case. The country’s challenge now is turning announced megawatts, tariffs, and policy support into long-term power contracts investors will actually sign.

Why it matters: - AI infrastructure depends on reliable electricity as much as chips, models, and talent. - Uzbekistan is trying to compete for digital investment by offering not just incentives, but guaranteed power, storage, and predictable pricing. - The approach could help Central Asia move beyond raw materials and transit into digital infrastructure.

What happened: - On Aug. 24, at the Silk Road Finance & Technology Forum in Tashkent, Bobur Khodjaev said companies looking at data centers in Uzbekistan flag power reliability as a first concern. - On Aug. 25, Uzbekistan commissioned three power plants and three battery energy storage systems with a combined capacity of 2,423 MW, worth about $1.7 billion. - The projects included a 1,573 MW combined-cycle gas plant in Syrdarya, a 300 MW solar plant with 150 MW of storage in Navoi, a 200 MW wind farm with 100 MW of storage in Karakalpakstan, and a 100 MW BESS facility in Namangan. - Karakalpakstan is being promoted for data centers because of its solar and wind potential.

The details: - Uzbekistan’s installed power capacity has reached 25.8 GW. - Solar, wind, and hydropower account for 8 GW, or 31%, of that total. - The country plans to generate 90 billion kWh in 2026, about 40% more than in 2020. - President Shavkat Mirziyoyev has directed the government to expand computing capacity and applied AI projects. - Authorities had previously reported more than 200 AI applications. - National AI use needs relatively limited electricity, but large model-training clusters require guaranteed megawatts. - Karakalpakstan has a special regime for AI and data center projects. - Companies investing more than $100 million can get IT Park incentives, customs exemptions on imported equipment, and a special electricity tariff of 5 cents per kWh. - The previously quoted standard tariff for legal entities was about 8.3 cents per kWh. - The government also covers part of road, electricity, and water infrastructure costs. - A $130.9 million framework investment agreement has been signed in Karakalpakstan for an AI data center involving Taiwan’s Keycore Technology. - The agreement is a commitment, not a completed facility. - Saudi Arabia’s DataVolt is building the 12 MW TAS-1 data center in Tashkent, with the first phase expected by the end of 2026. - Financing discussions on digital and energy infrastructure are under way with Korean institutions, including Korea Eximbank. - Investors evaluate grid access, electricity price, reliability, cooling water, telecommunications, reserve capacity, and approval speed. - Battery storage does not replace generation, but it helps smooth peaks and adds flexibility to the system.

Between the lines: - Uzbekistan is shifting the AI investment conversation from tax breaks to utility-grade infrastructure. - The country is signaling that megawatts are now part of industrial policy, not just energy policy. - Karakalpakstan shows the upside and the risk: it offers land, wind, and solar, but also water constraints and questions about who absorbs the cost of discounted power. - Cheap electricity alone is not enough for data centers if grid delivery, service levels, and long-term contracting remain unclear.

What’s next: - Investors will look for 10- to 15-year power contracts with transparent reliability and outage metrics. - More concrete site-level commitments will be the real test of Uzbekistan’s pitch. - The key question is whether announced capacity can be converted into contracts for projects that can actually be built and operated.

The bottom line: - Uzbekistan is not just selling incentives for AI investment. It is trying to sell guaranteed megawatts, and that is becoming the real competition.