BAKU, Azerbaijan, December 29. As of the end of 2022, Azerbaijan’s renewable energy potential exceeds its installed capacity by four times.
Azerbaijan’s installed capacity for electricity production is 7.5 GW, while the country’s cost-effective renewable energy potential is around 27 GW. The major part of this volume, 23 GW accounts for solar energy, while onshore wind energy potential stands at about 3 GW. Azerbaijan also has immense potential of offshore wind energy both in the shallow part and deepwater, which is estimated at 157 GW, 20 times more than the installed capacity. It is planned to use this potential in the medium and long term after conducting economic, technical and other assessments.
At the same time, the potential of wind, solar and hydropower in the liberated lands (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.
Solar power projects in Azerbaijan
230 MW Garadagh solar power plant
The groundbreaking ceremony for the project was held in March this year. The project is carried out by Masdar Azerbaijan Energy LLC, fully owned by Abu Dhabi Future Energy Company. The investment cost of the Garadagh solar power plant is $225 million.
In August this year, the European Bank for Reconstruction and Development (EBRD), together with Asian Development Bank (ADB), Japan International Cooperation Agency (JICA), and Abu Dhabi Fund for Development (ADFD) allocated a loan in the amount of $114.2 million for the implementation of this project.
Once commissioned, the plant will be able to generate up to 500 million kWh of electricity, reducing up to 265,000 tons of carbon emissions annually, and saving 110 million cubic meters of gas. The project is planned to be put into operation by the end of the first half of 2023.
240 MW “Shafag” (Sunrise) solar power plant in Jabrayil / Zangilan zone
The project is carried out together with BP. In June 2022, Azerbaijan’s Ministry of Energy and BP signed an Addendum to the Implementation Agreement that they had previously signed in June 2021, committing them to work together to take the next steps. In September, it was announced that commercial evaluation for the projects is underway.
As part of this project, it is planned to introduce a business model involving virtual transmission of electricity. This model is a mechanism for the production and consumption of electricity, which will be beneficial to all parties, and at the same time will contribute to decarbonization. In other words, the “green energy” produced in Karabakh will be transported to Absheron, which will save natural gas used to generate electricity in Sangachal terminal.
According to Azerbaijan's Ministry of Energy, it is expected that engineering, design and financial issues will be resolved before the end of this year, and the construction of the plant will begin in 2023, with the commissioning expected in 2024.
100 kW (95 kW offshore, 5 kW onshore) floating solar power plant
The project, which is implemented as part of the "Knowledge exchange and technical support for the development of floating solar panels" pilot project with support of the Asian Development Bank (ADB), is nearing completion on Boyukshor lake.
The possibility of installing a floating photovoltaic plant with a capacity of 50 MW on Boyukshor and implementing large-scale projects on water reservoirs in the future is also being considered.
Wind power projects in Azerbaijan
240 MW Khizi-Absheron wind power plant
The groundbreaking ceremony for the projects was held in January this year. The project is implemented by Saudi Arabia’s ACWA Power. The project requires $300 million of foreign investments. After commissioning, this power plant is expected to produce 1 billion kWh of electricity per year. This means that about 300,000 homes will be provided with electricity.
The work of the power plant is estimated to save some 220 mcm of natural gas a year. This means preventing the emission of 400,000 tons of carbon dioxide into the atmosphere. The construction of the plant is estimated to take about 18 months.
400 MW wind power plant in Lachin and Kalbajar districts
The construction is envisaged in the 'Action Plan On Creating a Green Energy Zone in Azerbaijan's Liberated Territories for 2022-2026', approved by the Cabinet of Ministers on June 22, 2022.
According to the action plan, the country's Ministry of Energy together with Azerenergy OJSC should ensure the construction. The ministry is expected to implement the project within 2022 through 2026.
Azerbaijan Offshore Wind Roadmap
In June this year, the Ministry of Energy of Azerbaijan, the World Bank Group and the International Finance Corporation (IFC) launched the first-ever offshore wind roadmap. The map was created to provide strategic vision and recommendations for the country to tap into its 157GW of offshore wind potential – over 20 times the country’s current installed energy capacity.
The high growth scenario outlines a more ambitious expansion with 7.2GW of offshore wind by 2040, making up 37 percent of its electricity supply. Total investment that Azerbaijan will need in the low growth and high growth scenario for offshore wind energy development stands at $40-$100 million and over $500 million, respectively.
Hydropower projects in Azerbaijan
According to the Energy Ministry, it is planned to restore 11 small HPPs in the liberated lands of Azerbaijan over the course of almost two years, which will add about 54 MW of production capacity to the overall energy system. Currently, research is being carried out to restore and build 50 small HPPs with the total capacity of 320 MW and seven small HPPs with a total capacity of 33.4 MW.
A 100 MW Khudafarin hydroelectric power station and a 40 MW Gyz Galasi hydroelectric power station will be completed by 2025.
The construction of a 36 MW Ordubad hydropower station has been completed by 60 percent.
State initiatives on launching green electricity exports
As the Energy Ministry has announced, Azerbaijan is considering several options for exporting green electricity abroad:
- Azerbaijan-Türkiye-Europe Energy Corridor through Nakhchivan
- through Georgia and Türkiye
The corresponding agreements have been reached to export 75 MW of electricity from Nakhchivan to Türkiye and ENTSO-E has issued permissions to implement this project.
According to the Energy Ministry, a new line from Zangazur to Nakhchivan and to Iran will be constructed. In this context, the Jabrayil energy hub will help increase the country's export potential.
The construction of the 330-kV Jabrayil substation is of strategic importance. As part of this project, at the first stage, the 330-kV Agjabedi and Imishli substations will be completely reconstructed. At present, a 330-kilovolt transmission line is being laid from these power plants to Jabrayil and the Jabrayil nodal substation is being built.
At the second stage, a 255-kilometer 330 kV double-circuit power transmission line will be laid through the Zangezur corridor from the Jabrayil junction substation to Nakhchivan in order to connect Nakhchivan to the country's main energy system, and a 330-kV substation will be built. At the third stage, to create Azerbaijan-(Nakhchivan)-Türkiye-Europe energy hub, an additional substation will be built in Nakhchivan in accordance with European energy standards to convert 330 kilovolts to 400 kilovolts, and a double-circuit 400-kilovolts power transmission line will be built from Nakhchivan to Türkiye.
- through the Black Sea submarine cable through Georgia, Romania and Hungary.
This option provides for laying of a power transmission line with a length of 1,195 km and a digital communication cable between Georgia and Romania with an energy transmission capacity of 1,000 MW, for which it is planned to prepare a feasibility study with financial support from the World Bank by the end of 2023.
In this regard, within the framework of President Ilham Aliyev’s visit to Romania, the "Agreement between the governments of the Republic of Azerbaijan, Georgia, Romania and Hungary on strategic partnership in the field of development and transfer of green energy" was signed on December 17.
More on cooperation with international partners
A meeting between representatives of Azerbaijan’s Energy Ministry and Austrian companies was held in May this year, where the parties discussed strategic targets set to expand the use of “green energy” in Azerbaijan, as well as the renewable energy potential of the country, including offshore wind energy resources, institutional environment in the field.
Austria has also submitted draft document for energy cooperation with Azerbaijan with concrete proposals for hydropower plant-related projects.
Meanwhile, Australian Fortescue Future Industries (FFI) has already prepared a project plan for the production and export of green hydrogen in Azerbaijan, which was presented at the second meeting of the commission on renewable energy sources under the chairmanship of Parviz Shahbazov held in November of 2022.
The European Bank for Reconstruction and Development (EBRD) is currently preparing a market study report on Low Carbon Hydrogen Economy, and expects it to be finalized in the upcoming months. Moreover, the EBRD has also launched the preparation of the Green City Action Plan for Azerbaijan's Ganja city, which is expected to be ready next year.
The World Bank (WB) has prepared "Azerbaijan: Towards Green Growth" report, where the assessment for clean hydrogen production in the country is presented. Azerbaijan, as a fossil fuel economy, has potential for the production of clean, which is blue, green and turquoise, hydrogen, and the WB is eager to support this initiative.
At the same time, the Bank is currently preparing Country Climate and Development Report for Azerbaijan, where more detailed and in-depth assessment of hydrogen potential production in the country, with specific recommendations for the government, as well as the potential of WB’s support in the field.