BAKU, Azerbaijan, August 3. The opening of the 220/110/10-kilovolt Yeni Sangachal substation took place with the participation of President of the Republic of Azerbaijan Ilham Aliyev today. This project marks the next stage in the transformation of Azerbaijan's energy sector, where the development of renewable energy sources is increasingly integrated with traditional oil and gas infrastructure.
Just a few years ago, the implementation of renewable energy projects was seen mainly as part of a decarbonization policy, whilst today they are becoming an element of a broader strategy aimed at simultaneously increasing the efficiency of the national energy system, strengthening the country's export potential, and ensuring the long-term sustainability of the energy sector.
The project, connecting the Shafag solar power plant under construction in the Jabrayil district and the Sangachal terminal via Azerbaijan's unified power grid, is one of the most illustrative examples of this approach. This project will not only reduce carbon emissions and transition one of the key oil and gas industry facilities to renewable energy sources, but will also annually release significant volumes of natural gas that can be exported. Given the continued demand for Azerbaijani gas in Europe, such projects are acquiring not only environmental but also strategic economic significance.
This large-scale project envisages the integration of the 240 MW Shafag solar power plant, currently under construction in the Jabrayil district, into Azerbaijan's power grid and the provision of electricity to the Sangachal terminal via the country's unified power grid. The project is being implemented under a cooperation agreement between Azerenergy OJSC and bp.
The first stage of the project was the opening of the 330-kilovolt Shafag substation in Soltanli village of the Jabrayil district on May 9 of this year. The next step was the construction of the Yeni Sangachal substation, which will ensure the transmission of electricity to the Sangachal terminal.
Once the project is commissioned, the terminal's existing gas-fired power plant will be shut down, and electricity generated by the Shafag solar power plant will be supplied to the facility via the national grid. As a result, the Sangachal Terminal's annual electricity demand of approximately 500 million kWh will be entirely met by renewable energy sources. This will save 120-150 million cubic meters of natural gas annually and reduce carbon dioxide emissions by 260,000-330,000 tons.
Furthermore, the new substation will supply power to bp's 80 MW Sangachal Terminal and 85 MW Shah Deniz Compressor Station. Thus, the combined demand of these two strategic facilities, exceeding 1 billion kWh per year, will be covered by Azerbaijan's unified power grid.
Liberated territories become energy hubs
The project also reflects the new role of the liberated territories in the country's energy policy. The Jabrayil district is gradually becoming not only a site for renewable energy facilities but also a source of electricity for Azerbaijan's strategic oil and gas infrastructure.
Construction of the 240 MW Shafag solar power plant is actively underway. In April 2026, the first solar module was installed at the site, the delivery of the main equipment was completed, and approximately 30% of the towers and tracking systems have already been installed. Upon completion in 2027, the plant will be able to generate approximately 500 million kWh of electricity annually. The project is being implemented by a consortium consisting of bp (40.01%), SOCAR Green (39.99%), the Azerbaijan Business Development Fund (10%), and the Hungarian MVM company (10%).
One of the project's key features is the implementation of a "virtual energy transfer" mechanism, which will allow solar power generated in Jabrayil to be supplied to the Sangachal terminal via the national grid.
After fully electrification of the terminal, the seven gas turbines currently used for power generation will be gradually decommissioned. This means not only a reduction in operational emissions by approximately 50%, but also the opportunity to export the freed natural gas. Namely this component makes the project important not only from a climate policy perspective but also from an energy security and export strategy perspective for Azerbaijan.
Renewable energy becomes new growth hub
In recent years, Azerbaijan has significantly accelerated the development of renewable energy.
As President Ilham Aliyev noted, the country will have 2 GW of solar and wind generation by the end of 2027, and this figure should reach 8 GW by 2032.
"Our responsibility dictates that we invest in renewables. And we are doing that, together with our partners, creating very good conditions for investors, more or less the same as those that existed in the beginning of the 1990s for oil companies. Now, the same level of cooperation and investment-friendly approach is being applied to companies in the renewable energy sector. We already have several projects in operation. By the end of next year, we will have 2 gigawatts of solar and wind capacity. By the end of 2032, we will have 8 gigawatts of solar and wind capacity. And if we add hydropower, which we are actively developing, especially in the liberated areas of Garabagh and East Zangezur, where more than 300 megawatts have already been commissioned, this represents additional potential," said President Ilham Aliyev, speaking at the opening of the Baku Energy Week on June 1.
Today, the installed capacity of renewable energy facilities in the country is approximately 1.83 GW, and their share of the total installed capacity of the power grid has reached almost 19%. This positive trend is already reflected in the current indicators of the country's electricity sector. According to data from the Azerbaijani Ministry of Energy, from January through June 2026, electricity production at thermal power plants amounted to 10.59 billion kWh, at hydropower plants – 1.89 billion kWh, and at other generation facilities – 902 million kWh.
Of this volume, wind power plants accounted for 475.7 million kWh, solar power plants – 282.7 million kWh, and another 143.6 million kWh was generated at the Municipal Solid Waste Incinerator Plant.
Compared to the same period last year, hydropower generation increased by 31.2 million kWh, while wind power generation increased by 454.7 million kWh. Overall, renewable energy generation, including hydropower, rose by 463.1 million kWh to 2.79 billion kWh, demonstrating the continued expansion of renewable energy sources in the country's energy balance.
Leading international investors play a key role in the implementation of renewable energy projects. One of Azerbaijan's largest partners is Masdar (UAE), which has already commissioned the country's first commercial-scale solar power plant, Garadagh, with a capacity of 230 MW. Currently, the company is implementing three more major projects in partnership with SOCAR Green: solar power plants in Bilasuvar with a capacity of 445 MW and Neftchala with a capacity of 315 MW, as well as the Absheron-Garadagh wind farm with a capacity of 240 MW.
Saudi Arabia's ACWA Power is also steadily expanding its presence in Azerbaijan. In January 2026, the country's largest wind farm, the Khizi-Absheron wind farm with a capacity of 240 MW, was officially opened. The company views Azerbaijan as a priority market for further investment in the renewable energy sector.
Chinese companies are also showing growing interest in the Azerbaijani market, participating in negotiations and the implementation of new solar and wind energy projects. Thus, the development of renewable energy is becoming not only an important element of the national energy strategy but also one of the most attractive areas for foreign investment.
Concurrently, Azerbaijan is promoting the creation of international green energy corridors, including the Caspian-Black Sea-Europe route, which has already entered the development stage following the completion of feasibility studies.
The Yeni Sangachal project demonstrates that renewable energy development in Azerbaijan extends far beyond the construction of individual solar and wind power plants. The country is gradually shaping a new energy model in which renewable energy sources are becoming part of the oil and gas infrastructure, increasing its efficiency and environmental friendliness.
Integrating solar generation with the country's largest export terminal simultaneously reduces the country's carbon footprint, modernizes the energy system, and frees up additional natural gas volumes for export. With Azerbaijani gas exports expanding and large-scale renewable energy projects underway, such solutions are becoming an important element of the country's long-term strategy to strengthen its role as a reliable supplier of both traditional and green energy in regional and European markets.
