BAKU, Azerbaijan, December 21. Currently, Azerbaijan’s renewable energy potential exceeds its installed capacity by four times.
As of the end of 2023, Azerbaijan has an installed electricity production capacity of 7.5 GW, but the country's cost-effective renewable energy potential is significantly higher, totaling around 27 GW. The majority of this capacity, specifically 23 GW, is attributed to solar energy, while onshore wind energy potential is approximately 3 GW. Azerbaijan also boasts substantial potential for offshore wind energy, both in shallow and deepwater areas, estimated at 157 GW—20 times more than the existing installed capacity. Plans are underway to tap into this potential in the medium and long term, following comprehensive assessments encompassing economic, technical, and other considerations.
Simultaneously, the potential for wind, solar, and hydropower in the recently liberated lands, including the Karabakh and Zangazur Economic Zones, exceeds 10 GW.
Azerbaijan is aimed at increasing the share of renewables in the installed capacity of electricity to 24 percent in 2026, and 30 percent in 2030. By 2027, the country aims to generate 3 GW of wind energy and 1 GW of solar energy, to export 80 percent of this production. Looking ahead to 2037, Azerbaijan anticipates expanding its capacity to a minimum of 6 GW.
Cooperation with international partners
Masdar
Masdar has been actively involved in Azerbaijan since 2020, accomplishing the successful launch of the 230MW Garadagh solar plant in October this year. Masdar has forged agreements to advance onshore wind and solar projects, as well as integrated offshore wind and green hydrogen projects, boasting a combined capacity of 4GW in the country. Notably, Masdar and Azerbaijan have mutually agreed to an option for expanding the total capacity of renewable projects to an impressive 10GW, spanning across various technologies.
On January 15, 2023, Azerbaijan's SOCAR and Masdar signed an agreement for the joint development of offshore wind energy and hydrogen projects with a total capacity of 2 GW. Additionally, they agreed to collaborate on the joint development of 1 GW solar PV energy and 1 GW onshore wind energy projects.
On October 26, 2023, Azerbaijan signed three crucial investment agreements with Masdar, paving the way for the development of green energy projects with a combined capacity of 1000 MW. These agreements entail the creation of a 445 MW solar power plant in the Bilasuvar region, a 315 MW solar power plant in the Banke settlement of the Neftchala region, and 240 MW wind power plant projects in the Absheron-Garadagh region.
On November 10, 2023, ACWA Power, Masdar and SOCAR signed a Memorandum of Understanding to develop 500MW of renewable energy projects in Nakhchivan.
In June, Al Ramahi Mohamed Jameel, CEO of Masdar, told Trend on the sidelines of the Astana International Forum (AIF 2023) that the company is eager to support Azerbaijan in the development of its hydrogen production potential.
ACWA Power
In 2019, ACWA Power entered the Azerbaijani market with a commitment to supporting the country in reaching its ambitious goals of integrating renewable energy, reducing greenhouse gas emissions, and advancing decarbonization.
Currently, ACWA Power is in the process of developing a 240MW wind power plant in Azerbaijan, with a total investment of $286 million. In this regard, on October 26, 2023, the EBRD arranged a syndicated loan worth $197.1 million (186.9 million euros) to ACWA Power Azerbaijan Renewable Energy, the project company owned by ACWA Power. Further, on December 15 this year, the OPEC Fund approved a $50 million loan to ACWA Power Wind Azerbaijan Renewable Energy to support the construction of the Khizi-Absheron wind power plant.
Earlier this year, the company inked four implementation agreements for significant projects, including a 1GW onshore wind farm, a 1.5GW offshore wind farm, and a battery energy storage project, in collaboration with the Ministry of Energy.
Additionally, a cooperation agreement with SOCAR has been established, fostering collaboration and exploration of renewable energy and green hydrogen.
On September 29, 2023, a roadmap for the Battery Energy Storage System (BESS) project and the 200 MW onshore wind power project was signed between the State Agency on Alternative and Renewable Energy Sources (SAARES) under the Ministry of Energy of Azerbaijan and ACWA Power.
bp
‘Shafag’ (Sunrise) solar power plant in Jabrayil
The Ministry of Energy of Azerbaijan and bp signed an executive agreement on cooperation in the field of evaluation and implementation of a 240 MW solar power plant construction project in the Zangilan-Jabrayil zone in June 2022.
On September 20, 2023, bp, SOCAR, and the Azerbaijan Investment Company (AIC) have inked an Accession Agreement, outlining their commitment to participate in the Sunrise project for the development of a solar power plant.
On October 19, 2023, Shafaq (Jabrayil) Solar Limited energy company for the implementation of this project has established its representative office in Azerbaijan.
In November, Bakhtiyar Aslanbayli, bp Vice President for the Caspian region, told Trend that the project is steadily progressing towards its final investment decision. He noted that bp is currently working with the government, SOCAR and other partners to finalize technical and commercial issues related to the project.
TotalEnergies
On June 3, 2023, the Ministry of Energy of Azerbaijan signed a memorandum of understanding with TotalEnergies. According to the agreement, the company will construct wind and solar power plants, each with a capacity of 250 MW, along with energy storage systems in Nakhchivan, Azerbaijan.
As of today, there has been no significant progress on these projects.
Nobel Energy
On June 3, 2023, an agreement was reached for Nobel Energy to construct a 400 MW solar power plant in Azerbaijan's Nakhchivan. In this regard, the Ministry of Energy of Azerbaijan and Management signed an appropriate memorandum of understanding. The energy produced at this power plant is planned to be exported to Türkiye.
Local measures to boost renewable energy capacity
'Jabrayil' energy hub
The 330-kV 'Jabrayil' energy hub was commissioned on May 4, 2023. This electricity junction will facilitate the export of renewable electricity generated by the Sunrise solar power plant, as well as the 'Khudafarin' and 'Giz Galasi' hydropower plants. Approximately 1,000 megawatts of electricity are intended to be exported from the 'Jabrayil' energy hub to European markets.
Study on hydrogen production potential
The EBRD has been working with Azerbaijani authorities since 2022 to assess the potential for a low-carbon hydrogen economy in the country. In August 2023, the study prepared by Advisian consulting company with the support of the EBRD reveals that Azerbaijan, with its established refining, ammonia, and methanol markets, along with extensive natural gas distribution systems that could be converted to hydrogen, is poised for significant progress in the realm of low carbon hydrogen demand. The study also shows that Azerbaijan is more than capable of producing renewable hydrogen, which can in turn support local decarbonization and provide cost-competitive renewable fuels to high-demand regions like the EU.
Black Sea Energy Submarine Cable project
The Black Sea Energy Submarine Cable project intends to provide Europe with secure energy sources. To assist the initiative, the European Commission, Azerbaijan, Romania, Hungary, and Georgia signed a Strategic Partnership Agreement in Bucharest. The main priority of the project is to deliver renewable energy to Romania through underwater electrical cables passing through Azerbaijan and Georgia. It is anticipated that the project, with an initial budget of $2.3 billion, will be operational by 2029.
As part of the project, on November 21, 2023, Azerbaijan, Romania, Georgia, and Hungary together with Bulgaria and the EU signed a Memorandum of Understanding (MoU) on the creation of the Green Energy platform.
Furthermore, the parties agreed to start a feasibility study right after the tender and hold a meeting of transmission system operators in December in Baku to establish a joint venture.
In a recent interview with Trend, Rolande Pryce, WB Regional Director for South Caucasus, said that a feasibility study for the Black Sea Energy Submarine Cable project is expected to be ready by April - May 2024. The initial step involves a feasibility study initiated by the government of Georgia under an existing WB-funded operation.
Other memorandums
The State Agency on Renewable Energy Sources, under the Ministry of Energy of Azerbaijan, and A-Z Czech Engineering, have signed a memorandum of understanding in the field of renewable energy sources. The primary focus of this agreement is to facilitate projects related to renewable energy sources within Azerbaijan. Specifically, it includes plans for constructing a 500 MW solar power plant in the Nakhchivan Autonomous Republic, along with efforts to boost electricity exports to Türkiye. The CEO of A-Z Czech Engineering Milan Pavlicek told Trend that the total investment for these initiatives, covering both the solar power plant and the necessary infrastructure for increased exports to Türkiye, amounts to $500 million.
Further on, a roadmap for the Battery Energy Storage System (BESS) project and the 200 MW onshore wind power project was signed between the State Agency on Alternative and Renewable Energy Sources (SAARES) under the Ministry of Energy of Azerbaijan and the ACWA Power energy company.