Policy Recommendations To support Central Asia’s electricity grids effectively, donor community should pursue a staged and targeted approach, focusing on technical and institutional gaps. Given the legacy of state dominance, limited investor confidence, and uneven reform capacity, reforms must be tailored and politically feasible. The EU has a com ­parative advantage in combining technical cooperation with diverse financing instruments. Technical assistance and peer-to-peer exchanges can help ministries and regu­lators absorb new regulatory models, while grants can be deployed to de-risk early reforms and pilot projects. Con­cessional loans, particularly for distribution companies, can enable investments without overwhelming fiscal space. Importantly, sequencing reforms allows economic growth to accompany evolving market structures, mini­mizing the risk of price shocks for consumers with weaker purchasing power. The recommendations below reflect the“low cost, high ­leverage” logic. Often, grants and technical cooperation can unlock significant flows of IFI and private capital, while avoiding debt stress for recipient countries. In an era of de­clining development assistance volumes, this efficiency is particularly important: every euro spent should demonstrate long-term value. The recommendations align with local de­velopmental priorities and could well strengthen the credi­bility of EU and donor engagement; where relevant, they are also directed at national governments. 1. Prioritize investments in distribution infrastructure and local grid resilience . → Target audience: EU institutions, national governments → Political feasibility: High in the short to medium term, as smart metering aligns with ongoing national moderni­zation programs and EU donor priorities. Distribution-level bottlenecks remain the weakest link in Central Asia’s electricity systems, accounting for the bulk of technical and commercial losses. EU actors can lead by co-financing distribution upgrades through conces­sional loans, grants, and technical assistance. These in­vestments should go beyond hardware to include corpo­rate governance reforms, improved revenue collection, and customer service modernization. Such interventions would stabilize power delivery at the most vulnerable layer of the grid and complement national plans. 2. Support full deployment of smart metering and strengthen the digital security of energy infrastructure → Target audience: EU institutions, national governments → Political feasibility: High in the short to medium term. Widely supported by governments but may face cost and data-sharing resistance from some utilities. Automated metering infrastructure reduces losses and enables transparent trade, but deployment is uneven, especially in rural and border areas. The EU, drawing on its experience with digital energy markets, can co-finance metering rollouts while embedding stand­ardized protocols, consumer-side communication in­frastructure, and cybersecurity protections. Harmo­nized data architectures would enhance operational efficiency and reduce risks of disputes or cyber inci­dents. This is a prerequisite for any future interopera­ble market model in Central Asia. 3. Enhance maneuverable capacity and develop a ­coherent regulatory framework for energy storage → Target audience: national governments, with EU ­support via technical assistance and blended finance → Political feasibility: Medium. Governments have a political will to pursue storage, but regulatory gaps and cost-recovery barriers limit private sector participation. While hydropower offers some flexibility, the re­gion’s growing share of variable renewables is straining grid stability. Investments in battery stor­age, pumped hydro, and gas-fired peakers are now essential, but remain unattractive to private devel­opers due to high costs and policy uncertainty. The EU can add value by helping governments design coherent regulations for storage and flexible gen ­eration, offering technical assistance to integrate these assets into market operations, and providing blended finance to de-risk early-stage projects. Supporting pilot projects could demonstrate scala­ble models. Encouraging maneuverable generation also reduces curtailment risks and supports the long-term integration of renewables into national and regional grids. Policy Recommendations 17