Baku, Azerbaijan, Sept. 22
By Ilaha Mammadli - Trend:
The German consulting company MVV decon will complete a feasibility study of renewable energy source development project in Azerbaijan until mid-2015. It is planned to be implemented through a loan from the German KfW development bank, KfW Baku office told Trend September 22.
"KfW is ready to allocate 130 million euros to Azerbaijan to create a combined renewable energy park," the bank said. "These funds will be sufficient for the construction of the wind and solar park with 100 megawatt renewable energy."
The project aims to increase the proportion of renewable energy in total electricity generation levels in the country and ensure the continued and effective use of resources. The consultant's tasks also include supporting the development of a legal framework in the sphere of the renewable energy sources.
According to the preliminary information, KfW's loan will be directed to create the Pirekeshkul air fleet. According to the State Company for Alternative and Renewable Energy Sources, the project cost is estimated at 165 million euro.
The final cost of this project will be determined after the feasibility study is prepared.
One of the main issues being considered as part of the project is to set the tariffs for electricity generated from renewable energy sources.
A single retail electricity price at 0.06 AZN (0.076 dollars) per kilowatt per hour at a wholesale price no higher than 0.04 AZN has been in force in the country for seven years. Introduction of tariffs on electricity produced from renewable and alternative sources exceeding the existing wholesale electricity price in the country today is planned in the future.
The tariff for the sale of electricity generated from alternative sources to consumers will remain unchanged, while the prices for transmission of electricity to the operator are currently being negotiated.
The bill "On Renewable Energy Sources", submitted to the country's government for consideration, envisages an item on the transmission of electricity via an alternative method, to the general distribution network.
Currently, the total capacity of power generation in Azerbaijan is 7,105 megawatts. This enables to annually generate about 24 billion kilowatt / hours and export 2.1 billion kilowatt / hours of electricity. Azerenergy's power stations (generation and distribution of electricity in Azerbaijan) generated 15.1 billion kilowatt / hours of electricity in January-August.
It is expected that by 2015, generation of electricity from alternative and renewable energy sources in Azerbaijan will reach 2.6 billion kilowatt/hours per year, leading to fuel savings of one million metric tons. The greatest electricity losses are recorded at power stations. The work is currently conducted in the country on their reduction.
In particular, losses stand at 4.4% in electricity transmission, and 16% in distribution. In general, the amount of electricity loss in transmission and distribution reaches 20-21%.
At present, the share of alternative energy sources in Azerbaijan is less than 1% and accounts for small hydropower plants. A decision has been made in Europe and other developed countries to increase the annual share of alternative energy up to 10-15% of the total electricity generation.
According to the preliminary research, up to 100 facilities for alternative energy generation are planned to be constructed in Azerbaijan during five years.
Since the beginning of the cooperation, KfW has financed projects in the Azerbaijani energy sector, in particular, the creation of Imishli power lines, for which the bank allocated 30 million Euros. The funds have been allocated at the rate of 0.75% per annum for a period of 12 years with a 2 year grace period.
German bank's total portfolio on Azerbaijan is 594 million euros from the beginning of the cooperation in 1994.