Azerbaijan is one of the countries with high potential for renewable energy sources. Thus, the potential of renewable energy sources, which are economically viable and technically feasible, is estimated at 27 000 MW, including 3 000 MW of wind energy, 23 000 MW of solar energy, 380 MW of bioenergy potential, 520 MW of mountain rivers.
Although it is rich in energy resources and recognized as an energy exporter in the world, the use of renewable energy sources are paid special attention in the Republic of Azerbaijan. One of the main goals of the energy security policy implemented under the leadership of the President of the Republic of Azerbaijan Mr. Ilham Aliyev is to strengthen the use of renewable energy sources in the country.
One of the main steps taken for the efficient use of renewable energy potential in our country was the adoption of the "State Program on Use of Alternative and Renewable Energy Sources in the Republic of Azerbaijan" in 2004. The adoption of the program has created opportunities for the implementation of radical changes in the use of renewable energy sources and the assessment of our potential in this area.
Azerbaijan Renewable Energy Agency under the Ministry of Energy of the Republic of Azerbaijan was established by the Decree No. 1159 of the President of the Republic of Azerbaijan dated 22 September 2020 and the Charter of the Agency was approved.
Relevant laws and normative legal acts have been adopted in order to develop the renewable energy sector in our country, to improve the legislative and institutional environment in this area. In recent years, the work carried out in the field has been continued and the law of the Republic of Azerbaijan “On the use of renewable energy sources in the production of electricity”, No 339-VIQ, dated 31 May 2021 which makes a special contribution to the development of renewable energy has been approved. The implementation of relevant measures in the direction of development of sub-legislative documents is continued in order to ensure the application and implementation of the law.
The paragraph 5 (CLEAN ENVIRONMENT AND GREEN GROWTH COUNTRY) of the document “Azerbaijan 2030: National Priorities for Socio-economic Development" approved by the Order of the President of Azerbaijan Republic dated 2 February 2021 covers the issues of climate change and the fight against it, as well as the application of renewable energy in all sectors of the economy based on the principles of green energy in our country. Thus, in line with the priorities for the country's socio-economic development, more attention is being paid to the use of renewable energy sources and the expansion of the application of “green” technologies in the current and future periods. Within the work carried out in this area, cameral investigations were continued throughout the country in the direction of identification and prioritization of areas with potential for renewable energy sources. The above-mentioned national priorities are of particular importance in the direction of implementation of the obligations arising from the UN “World Transformation: Agenda for sustainable development until 2030”.
The total power generation capacity of Azerbaijan is 7542.2 MW, the capacity of the power plants on renewable energy sources, including large HPPs is 1304.5 MW, which is 17.3 % of the total capacity.
Hydropower capacity is 1154.8 MW (30 stations, 20 of which is SHPP), wind power capacity 66.1 MW (7 stations, 2 of which is hybrid), bioenergy capacity 37.7 MW (2 stations, 1 of which is hybrid), solar energy capacity 45.9 MW (12 stations, 2 of which is hybrid). One hybrid power plant (Gobustan) is equipped based on wind-2.7 MW, solar-3 MW and bioenergy-0.7 MW. In Nakhvhivan AR 4 SPPs with a total capacity of 33 MW are commissioned. Installed capacity on renewable energy sources excluding large hydropower plants, was 194 MW in 2021 and it made up 2.5 % of total electricity generation capacity.
In 2021, electricity production in the Republic amounted to 27,8 billion kWh. During the reporting period, electricity generation at TPPs amounted to 26.2 bln kWh, at HPPs to 1277.3 mln kWh, and at other sources (WPP, SPP and Solid household waste plant) to 339.9 mln kWh in comparison. 91.5 mln kWh of electricity was generated at WPPs, 55.2 mln kWh at SPPs, and 193.2 mln kWh at the solid household waste incineration plant. Electricity generated from renewable energy sources made up 5.8 % of total production.
In addition, a number of steps are being taken to assess the potential for the electricity generation at the expense of the renewable energy generation, and a number of the steps and measures are being taken to use this potential. 8 territories were selected in the direction of identification and prioritization of areas with potential for renewable energy sources. Relevant measures are already being taken to implement pilot projects in the selected 3 areas. In addition, it is planned to implement projects in the regions in the coming years in order to use solar energy potential available throughout the country in comparison with wind energy, unsuitable agricultural lands, to distribute electricity generation capacities on renewable energy sources. The work on investment in selected and prioritized renewable energy sources in areas with high potential has been continued through auctions. Currently, the project “Support to Renewable Energy Auctions in Azerbaijan” is being implemented with European Bank for Reconstruction and Development (EBRD). Within the project, the auction rules, a set of conditions for the auctions, as well as the preparation of documents on procurement of electricity, a request for qualifications (RFQ) for participation in the auction and a request for proposal (RFP) will be provided.
On 12 December 2015, in accordance with the Paris Agreement adopted at the 21st Conference of the Parties, the Republic of Azerbaijan submitted its contributions to the Convention Secretariat determined at the intended national level. As a contribution to global climate change mitigation initiatives, Azerbaijan has set a target to maintain a 35% reduction in greenhouse gas emissions by 2030 compared to the base year (1990). In November 2021, at the COP26 conference in Glasgow, Azerbaijan adopted a new commitment to reduce emissions by 2050 by 40% as a voluntary commitment and to create a “Netto Zero Emission” Zone in the liberated territories. To achieve these goals, by 2030, the Ministry of Energy has set the main target to increase the share of the installed capacity of renewable energy to 30% in the country's overall energy balance. For this purpose, it is planned to create a total of 1500 MW new generation capacities including 440 MW in 2023, 460 MW in 2023-2025 and 600 MW in 2026-2030 at the expense of renewables.
On 9 January 2020, implementation agreements were signed on the implementation of pilot projects on renewable energy between the Ministry of Energy and ACWA Power (Saudi Arabia) and Masdar (United Arab Emirates) at the Cabinet of Ministers of the Republic of Azerbaijan. According to the agreements, pilot projects will be implemented for the construction of wind power plants with a capacity of 240 MW with “ACWA Power”, and for the construction of solar power plants with a capacity of 230 MW with Masdar.
On 30 December 2020, Investment agreement, Power Purchase agreement and Transmission Connection agreement were signed on 240 MW wind power plant between the Ministry of Energy, Azerenergy OJSC and ACWA Power. On 6 April 2021, Investment agreement, Power Purchase agreement and Transmission Connection agreement were signed on 230 MW solar power plant between the Ministry of Energy, Azerenergy OJSC and Masdar of the United Arab Emirates.
On 13 January 2022, the foundations of the "Khizi-Absheron" Wind Power Plant with a capacity of 240 MW and on 15 March 2022, of 230 MW Garadagh Solar Power Plant were laid. The President of the Republic of Azerbaijan Ilham Aliyev attended both events.
In order to ensure the implementation of the instructions given by the Presidential Decree of the Republic of Azerbaijan No. 1209, dated 29 May 2019 “On accelerating reforms in the energy sector of the Republic of Azerbaijan”, the cooperation is being carried out with the International Financial Corporation, which is part of the World Bank Group, on the development of the road map on offshore wind energy. On 14 April 2021, the Memorandum of Understanding on cooperation in the field of offshore wind energy was signed between the Ministry of Energy of the Republic of Azerbaijan and the International Finance Corporation (IFC) and work on the development of the road map is underway. The roadmap will cover geospatial analysis, cost modeling and economic analysis, supply chain and infrastructure valuation, and social and environmental impact assessment.
Within the framework of cooperation with the German Energy Agency (DENA), the project “Cooperation between the Ministry of Energy of the Republic of Azerbaijan and DENA within the promoting decentralized energy supply with the application of renewable energy technologies in the selected territories of Azerbaijan” is being implemented. The main target of the project is to support the Ministry of Energy in fulfilling the renewable energy framework conditions for the development of the renewable energy market in Azerbaijan, to develop recommendations for supporting the development of decentralized renewable energy in Azerbaijan and to jointly identify areas of application. Different pilot project proposals on application of solar energy systems for sub-artesian wells, small-power portable solar and battery power systems, combined solar and heat pump power systems for greenhouses, energy systems for thermal use of biomass energy in buildings were put forward within the project. Feasibility study, implementation strategy and general recommendations to support the development of decentralized renewable energy by identifying stakeholders were developed.
Within the pilot project “Knowledge Exchange and Technical Assistance on the Development of Floating Solar Panels System” implemented with the support of Asian Development Bank, the installation of a photovoltaic system with a capacity of up to 100 kW on Boyukshor Lake, as well as the development of business models to encourage the participation of the private sector in the installation of solar panels, strengthening national capacity through trainings are envisaged. The implementation of the project is planned to be completed by March 2023.
On February 22, 2021, the Ministry of Energy of the Republic of Azerbaijan and BP signed a memorandum of understanding on cooperation in assessing the potential and conditions required for large-scale de-carbonized and integrated energy and transport systems, including renewable energy projects in the regions and cities of Azerbaijan. The memorandum was signed in the context of Azerbaijan's economic diversification, the creation of a competitive energy market, a clean environment and a country of “green growth” and bp's announcement of “net zero emissions” targets in 2020. According to the memorandum, it is planned to create a Steering Committee and a Working Group for the implementation of the activity, as well as to prepare a Master Plan on decarbonization for the relevant regions and cities of Azerbaijan. The Master Plan will cover clean energy projects, low-carbon transport, green buildings, waste management, clean industry, natural climate solutions, integrated partnerships, as well as the development of integrated and de-carbonized energy and transport systems. In addition, on 3 June 2021, the Ministry of Energy of the Republic of Azerbaijan and bp signed an implementation agreement on cooperation in the field of evaluation and implementation of the project for the construction of a 240 MW solar power plant in the Jabrayil region. Cooperation within the framework of the implementation agreement includes the evaluation of the solar energy project in the technical and commercial aspect, the station designing, the provision of financing and the adoption of a final investment decision.
On 3 May 2021, the President of the Republic of Azerbaijan Ilham Aliyev signed an order on measures to establish a “green energy” zone in the liberated territories of the Republic of Azerbaijan. An agreement was signed between the Ministry of Energy and Japanese Company “TEPCO” in the direction of attracting a specialized international consulting company for the implementation of the instructions arising from the order, as well as preparation of the concept and master plan for the establishment of the “Green Energy Zone” in the liberated territories. During the relevant period, the measures envisaged in the framework of the contract were carried out and as a result, a concept document on the establishment of the “Green Energy Zone”was prepared. In the concept, the development models of territories were developed by applying various scenarios, energy demand according to the growth rate of gross domestic product and population settlement scenarios were predicted and various energy supply options were evaluated. At the same time, work is underway to prepare a Master plan. Within the framework of the implementation of the instruction on the establishment of the”Green Energy Zone", investigations are being carried out to study the solar, wind, biomass, thermal, geothermal and other renewable energy potential of the liberated regions, to determine the coordinates of the territories, as well as to provide energy supply by building wind and solar power stations, as well as hydropower plants on reservoirs, lake and small rivers.
About 25% of Azerbaijan's internal water resources falls to the share of the liberated territories, which is approximately 2.56 bcm annually. In particular, it should be noted that there is a favorable potential for the implementation of solar energy projects in the liberated territories. Thus, Zangilan, Jabrayil, Gubadli and Fuzuli regions are the second most favorable regions in the country followed by Nakhchivan AR according to the solar radiation observed. As a result of the initial observations, the relevant areas with favorable solar radiation were identified. The potential of solar energy in the liberated territories is estimated at more than 7200 MW. The territory of Jabrayil and Zangilan districts was considered expedient on the basis of preliminary studies, topography for solar power projects, climatic conditions, proximity to the network, energy production potential, transport infrastructure and comparative analysis of other technical factors. The presence of favorable wind potential in the liberated territories, especially in the mountainous parts of Lachin and Kalbajar, was determined according to preliminary researches. The analysis shows that the wind power potential in these areas is around 2000 MW. In previous years, relevant scientific research has been carried out on the existence of geothermal energy sources in the liberated territories. Geothermal energy is mainly used for electricity generation (with favorable temperature and debit), thermal power supply and tourism-balneological purposes. Preliminary analysis shows that there are geothermal sources in the mountainous part of the Lesser Caucasus (4000-5000 cubic meter per day (30-74°C)). Based on preliminary observations, it is more expedient to use this potential for heat supply and balneological purpose, respectively.