Azerbaijan, Baku, March 10 / Trend I.Khalilova /
German development bank KfW sent a letter to the State Agency for Alternative and Renewable Energy Sources acting under the Industry and Energy Ministry, which stated its readiness to provide technical assistance, KfW Baku office head Natig Abdullayev said.
"Technical assistance can be provided for the short and long term," he said. "Initial assistance can be calculated for 3-4 months and include an assessment of documents, advice in planning the activities of the agency."
The bank intends to bring legislation into conformity with European standards under the proposed assistance.
The technical assistance envisages improving the framework conditions for the further allocation of loan worth 40 million euro to Azerbaijan on developing renewable and alternative energy sources.
The German government decided to allocate loan to Azerbaijan, which can be used for the financing any project in this regard, including the construction of wind power station and power plants using solar energy or any other opportunities, in connection with which, a concept is envisaged to be developed.
KfW is ready to finance projects through local banks, which also is an innovation in participating in the implementation of energy projects, but the bank expects to receive state guarantees for this. KfW is ready to provide technical assistance to the Azerbaijani banks and the Agency if an agreement is reached.
KfW is still awaiting an answer from the Azerbaijani government to the possibility of providing state guarantees to finance projects in this regard.
The bank allocates preferential credits for the renewable energy sources.
This will be KfW's first project in the renewable energy field, although formerly the bank expressed its desire to finance alternative energy production, from which it later refused due to the lack of appropriate legislation on joining the network of Azerenerji.
Today, there is no legislation obliging Azerenerji to receive electricity from private power plants. In this regard, the bank intends to discuss these issues with the government before the implementation of similar projects.
According to the preliminary studies, up to 100 alternative electricity sources are planned to be constructed in Azerbaijan over the next five years.
Presently, share of alternative electricity sources is less than one percent, which fell on small hydropower plants.
Today, European and other developed countries agreed on an annual increase of share of the alternative energy up to 10-15 percent of the total electricity production.
Today, this field already has enough support at the state level, Azerbaijan has a great potential for development of this type of energy
According to the experts, the Caspian Sea's coast is favorable for the construction of wind power stations. The most favorable period from 365 days for their work is 225-229 days with an average speed from 8 to 10 meters per second. This is the ideal speed for the stations. The relevant agencies are carrying out extensive work and implementing pilot projects under the government support.
The Japanese Tomen Company conducted researches in Azerbaijan, and prepared report based on its three months work in 1998-1999. Construction of wind power station with a capacity of 60 megawatts in Gobustan was estimated at $100 million. This place is most ideal for the construction of wind power station, as in Gobustan the wind at the heights of 10 kilometers is blowing with a speed of 8 meters per second. However, the project was suspended due to its high cost at the time.
A single retail electricity tariff worth 0.06 manat ($0,075) per kilowatt / hour with the wholesale price not higher than 0.04 manat has been functioning in the country already for three years.
At present, the total electric power generation in Azerbaijan is roughly 6,000 megawatts, and total capacity of power plants under the construction will comprise about 1,500 megawatts
In 2010, financing the projects in the renewable and alternative energy sources field is planed through the public budget. Currently, projects for funding through the Azerbaijan Investment Company are being selected.
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