World Bank outlines path to make Azerbaijan major green electricity exporter

Oil&Gas Materials 8 August 2023 10:25 (UTC +04:00)
Laman Zeynalova
Laman Zeynalova
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BAKU, Azerbaijan, August 8. Single Buyer Model (SBM) can play a central role in turning Azerbaijan into a major green electricity exporter, says the World Bank (WB), Trend reports.

Under the single-buyer electric market model, the utility company creates a supply purchasing group whose job is to competitively procure supply on behalf of all the utility's end-use customers.

WB notes that the export of electricity has emerged as a crucial topic for Azerbaijan.

Despite its strategic location, the country currently has limited electricity trade with neighboring systems due to both physical and economic constraints, especially concerning renewable energy (RE) developments. Nevertheless, promising initiatives are underway, including a potential project linking Zangazur to Türkiye and European markets, as well as a proposed Black Sea cable connecting Georgia to Romania. A significant step was taken on July 18, 2022, when the EU and Azerbaijan signed a memorandum in the energy sector, outlining a roadmap for the future, with a specific focus on connectivity, leveraging Azerbaijan's geographical location, and its vast RE potential.

To fully harness its RE potential and establish itself as a major green electricity and energy exporter, the government of Azerbaijan is planning to construct dedicated transmission lines. This will enable the export of RE electricity without utilizing the country's existing transmission and distribution (T&D) system for the majority of the planned capacity.

In this context, the World Bank believes that SBM can play a central role by adopting an efficient approach to generation resources, facilitating flexible dispatch, and accommodating more variable renewable energy (VRE) into the system. By optimizing thermal capacities to meet domestic demand, more green electricity can be allocated for export, either as electrons or as green hydrogen or ammonia.

The proposed SBM model aims to reduce overall system costs and cross-subsidy requirements. It also seeks to implement a transparent and cost-reflective pricing regime, instilling confidence in independent investors for both VRE and conventional generation assets. The SBM will enable a greater variety of contracting options, fostering a conducive environment for further growth in the energy sector.

By adopting these measures and capitalizing on the potential of RE, Azerbaijan can position itself as a leading player in green electricity and energy export, contributing to a sustainable energy future, says the WB.

Azerbaijan, Georgia, Hungary, and Romania signed an agreement in Bucharest on December 17, 2022 to build an underwater electric cable under the Black Sea. The project could become a new power source for the European Union. The 1,100-kilometer cable from Azerbaijan to Romania will provide Azerbaijani energy for the rest of the continent. The project could be completed within three to four years.

The results of the preliminary study on the project will be known in September.


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