BAKU, Azerbaijan, April 4. The partnership between Azerbaijan and Saudi Arabia has entered a new phase, with the green energy sector acting as a key driver of this cooperation.
During the Fourth Industrial Revolution, two countries, both rich in hydrocarbons, are collaborating to transition to clean energy. This serves as a prime example of effective collaboration to achieve global goals.
Azerbaijan, a dependable oil and gas supplier to global markets, and Saudi Arabia, a leader in the Muslim-Arab world, an OPEC member, and a G20 participant, are joining forces on large-scale clean energy projects. They’re not stopping there; they plan to further expand their cooperation in this field.
For instance, on January 13, 2022, the Ministry of Energy of Azerbaijan and Saudi Arabia’s ACWA Power signed a memorandum of understanding for cooperation in wind energy on the Caspian Sea.
ACWA Power, a globally recognized company, has a renewable energy production capacity of 8,000 MW and an overall investment capacity of 30,200 MW in the electricity sector, with an investment portfolio totaling $45 billion.
ACWA Power will oversee the construction of the 240 MW Khizi-Absheron wind power plant, with a project budget of $300 million, marking the largest investment by the Saudi company outside its home country.
Thanks to the electricity generated by the plant, 220 million cubic meters of natural gas will be saved, and 400,000 tons of carbon dioxide emissions will be avoided. The groundbreaking ceremony for the wind farm took place on January 13, 2022. The project will see the installation of 40 turbines, each with a capacity of 6 MW. Seventeen turbines will be set up in the Pirakashkul village of the Absheron district, and 23 turbines will be installed in the Sitalchay village of the Khizi district. The project is being carried out under a build-own-operate model. ACWA Power and the Azerbaijani government have agreed to expedite the project. Transmission lines in the designated area have already been constructed, and the first turbines could arrive as early as April 2024. More staff will be involved than initially planned, which will accelerate the implementation of several technical aspects of the project. This acceleration could lead to the wind farm being operational by 2025.
The project is receiving strong support from international financial institutions. In October 2023, the European Bank for Reconstruction and Development (EBRD) arranged a syndicated loan of $197.1 million (186.9 million euros) for ACWA Power Azerbaijan Renewable Energy, a subsidiary of ACWA Power. The project is also being co-financed by the OPEC Fund for International Development. In December 2023, the OPEC Fund approved a $50 million loan to ACWA Power Wind for the construction of the Khizi-Absheron wind power plant.
In addition to the Khizi-Absheron wind farm, ACWA Power has signed a memorandum of understanding with the Ministry of Energy of Azerbaijan to explore the construction of a 1 GW onshore wind power plant, a 1.5 GW offshore wind power plant, and the implementation of hydrogen projects in the country.
ACWA Power is also one of two companies that responded positively to the Azerbaijani government's proposal to create a green energy zone in Karabakh and Eastern Zangazur. The company has expressed its intention to build wind and solar power plants in these territories in the next stage. These projects represent a significant contribution to Azerbaijan's goal of becoming a green growth country and a supplier of green energy. The collaboration between Azerbaijan and ACWA Power is crucial not only for providing new capacities for the planned green energy corridor from the Caspian to Europe but also for reducing carbon emissions and accelerating the energy transition.
Beyond energy, the cooperation between the two countries extends to other sectors as well. Trade between Azerbaijan and Saudi Arabia amounted to $30.8 million in 2023, showing a 36.3 percent growth compared to 2022. However, these figures do not fully reflect the enormous potential for further development of bilateral economic relations.
This cooperation underscores the potential for future relations between Azerbaijan and Saudi Arabia, with green energy serving as a key driver that will likely impact various other sectors as well.
Saudi Arabia is dedicated to collaborating with Azerbaijan in the process of the new energy transition, and Baku deeply values this commitment.