Azer Ahmadbayli, expert of Trend Analytical Center
The Industry and Energy Ministry of Azerbaijan plans to submit bill entitled "On Alternative Energy Sources" for consideration of the Cabinet of Ministers before the end of the year.
Jamil Melikov, Deputy Chief of the State Alternative and Renewable Energy Sources Agency, said, "Once infrastructure, legal provisions and tariff base are prepared, alternative energy sources will become an interesting thing to invest in and will attract money of local entrepreneurs and foreign banks and financial agencies."
Given that electricity production with the use of renewable sources requires too much money and has the value higher than that for the use of fossil sources, there are necessary instruments, including financial ones to back alternative power engineering development in Azerbaijan and involve private businesses in this work. This is a huge field of activity because the share of alternative and renewable energy sources in Azerbaijan currently is equivalent to only one percent of total primary energy supply. They are largely small hydro power plants. In European countries, this indicator averages 10-11 percent and is scheduled to increase up to 20 percent in 2020.
Once, US government included production tax credit, PTC in the 1992 Energy Policy Law in the amount of 1.5 cent per 1 kWh to stimulate windy energy production. This is the discount used under wholesale sale of electricity produced by a wind power plant in first 10 years of operation. The sum varies every year depending on inflation. The tax credit amendment usually remains in effect for several years and may be prolonged after its validity period is over.
In February 2009, US President Barack Obama signed a bill envisioning prolongation of the PTC for the production of solar, windy, geothermal power and reserved cycle bio-energy (using specialized kinds of agricultural produces) up to the end of 2012 to 2.1 cent per 1 kWh of produced power. Thus, the US Government bears part of the financial burden to provide support to private businesses and simultaneously settles the strategic task of alternative power engineering development.
Some European countries also provide financial support to private businesses that have invested in renewable energy sources.
Energy structure diversification is in line with the general context of Azerbaijan's economic development; alternative power engineering development is its most important constituent part, with the country's natural-climatic potential in account. State-level support to private businesses, in a certain form, would have given this process a good start.