BAKU, Azerbaijan, October 26. Azerbaijan grows into a promising country for development in the renewable energy sector, Trend reports via the "Azerbaijan. Country Economic Memorandum" publication from the World Bank (WB).
The report mentioned that Azerbaijan has technical solar potential of around 23,000 MW, 3,000 MW of wind potential, and more than 500 MW of hydropower potential. Meanwhile, Azerbaijan’s current electricity capacity is about 7,500 MW, the majority of which is powered by natural gas.
"Reducing domestic consumption of natural gas would enable Azerbaijan to increase natural gas exports. Additionally, the ongoing reduction in the cost of wind and solar technologies makes investment in renewables attractive, especially compared to those in the oil and gas industry," the report said.
The WB pointed out that an increase in electricity production from renewable energy sources will open up the potential for increased exports of zero-carbon electricity, which could lead to higher prices if carbon pricing becomes more widespread. In addition, renewable energy sources can be used to produce green hydrogen, which is another potential opportunity for Azerbaijan.
At the same time, as the WB noted, Azerbaijan has a relatively low carbon intensity compared to its regional and structural partners.
"After declining sharply in the 2000s, its CO2 intensity (the amount of CO2 emitted per unit of GDP) has remained relatively constant over the past 10 years. However, this low level of intensity partly reflects the economic makeup of the Azerbaijan economy and its very low levels of domestic energy consumption per capita compared to its peers. In 2019, per capita energy consumption in Azerbaijan was 65 gigajoules, compared to 167 gigajoules in Kazakhstan and 204 gigajoules in Russia. At the same time, most of Azerbaijan’s carbon emissions occur in its hydrocarbon industry, which is more export-oriented than in regional and structural peers," the report said.
As Azerbaijan has extensive natural gas reserves of 2.4 trillion cubic meters (around 1.4 percent of global reserves), while its reserves-to-production ratio is among the highest in the world, this industry is a more reliable source of economic activity and income for Azerbaijan than oil, although revenues from gas are much lower than from oil. Moreover, it could also contribute to the development of the hydrogen industry in Azerbaijan.
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