The International Renewable Energy Agency’s (IRENA) new 2024 annual report sheds light on the global dynamics of «green» energy costs, and its findings cast great doubt on the economic feasibility of one of Central Asia’s largest infrastructure projects – the Rogun hydroelectric power station in Tajikistan. The report data shows that the project, which is positioned as a guarantee of the country’s energy independence and export potential, risks turning out to be chronically unprofitable.

According to the IRENA analysis, the cost of electricity (LCOE) produced in hydroelectric plants remains high. For the first time in a long time, it has remained virtually unchanged and the global average for new hydroelectric power plants is 5.6 US cents per kilowatt-hour. Even in China, the world leader in hydroelectric power plant construction, this figure remains at 4.9 cents. Against this background, hydropower looks noticeably more expensive than other types of renewable energy sources: it is 30% more expensive than solar and as much as 67% – wind.

This is where the main paradox of the Rogun project arises. Recently, representatives of the World Bank reported that Tajikistan has fulfilled one of the key conditions for obtaining financing – entered into agreements on the direct purchase of electricity with Kazakhstan and Uzbekistan. However, according to the published drafts of these agreements, the starting selling price for Rogun electricity at the border will be only 3.4 cents per kWh. Even with annual indexation, it will barely reach 4 cents by 2040. This price is 44% below the cost of production at new hydroelectric power plants in China and 68% below the world average. Selling energy cheaper than it costs to produce – a direct path to financial ruin.

Supporters of the project may argue that Tajikistan still exports energy at low prices – for example, to Uzbekistan for 2 cents. However, this comparison is incorrect. The current supplies come from old, long-paying Soviet hydroelectric power plants. The cost of energy at the Rogun hydroelectric power station for decades to come will include a colossal investment component, which, according to recent estimates, will exceed 10 billion US dollars.

Perhaps the construction of the Rogun hydroelectric power station is much cheaper than its global counterparts? No, calculations show the opposite. Even without taking into account the costs of the Soviet period and the inevitable rise in cost, the unit cost of construction is about $2,645 per kilowatt of installed capacity. This is higher than the world average ($2,225/kW) and even the Chinese average ($2,433/kW). Consequently, there is no low construction cost here.

The final argument remains – the exceptional efficiency of the hydroelectric power station. But even here hopes are not justified. The installed capacity utilization factor (APU) of the Rogun hydroelectric power station, according to calculations based on design documentation, ranges from 44-51%. This is fully consistent with the world average (48%) and Chinese (50%) indicators. No super-efficiency is expected that can radically reduce the cost of a kilowatt-hour.

Thus, the facts add up to a disappointing picture. The cost of energy at the Rogun hydroelectric power station cannot be lower than that of similar stations in the world, which means that exporting to neighboring countries at prices fixed in contracts will obviously be unprofitable. This leaves open an unpleasant question that both the Tajik government and international creditors, including the World Bank, must ask themselves: who will ultimately cover the multibillion-dollar losses? If exports are subsidized, then the only way to recoup the project will be to sell the remaining energy to domestic consumers at many times inflated tariffs. Alas, in this case, the entire burden of the ambitious megaproject of the Rogun hydroelectric power station should fall on the shoulders of ordinary citizens of Tajikistan.

Daria Syrskikh,
especially for Rivers.Help!