The project includes construction of two new combined-cycle gas turbines of up to 280MW each.
As per the plans, three existing steam turbine units will be decommissioned, while two others will serve as backup.
ADB Central and West Asia department energy division director Rune Stroem said: "Karakalpakstan and Khorezm regions are expecting electricity demand to grow at double the rate of the forecasted national average.
"Reliable power supply is essential to meet the residential demand and for future industrial development and growth.
"This loan will help finance modern generating units to increase the reliability of power supply, save energy, and cut greenhouse gas emissions."
ADB said another component of the project will be staff training and other support for the state-owned power utility, Uzbekenergo.
The company, with earlier support from ADB, has made improvements in financial transparency and unveiled advanced electricity metering infrastructure.
Apart from ADB’s assistance, the Uzbekistan Fund for Reconstruction and Development will provide a $270m loan, while Uzbekenergo and the Government of Uzbekistan are extending a combined $130m, for a total investment cost of $700m.
The project, which will run for six years, is expected to be completed by the end of October 2020.
