Development of power engineering after gaining independence (the third stage after 1991)

The collapse of the Soviet Union affected power engineering as well. However, strategic policies directed at  establishing mutually advantageous relations with the leading countries of the world allowed for attracting opportunities that have led to the increase in efficiency of Azerbaijan`s power system, the reconstruction of the electric power engineering economy and construction of new power sources up until the present day.

A new stage of development in the energy system was started with the completion of the construction of Yenikend Water Reservoir and Hydroelectric Power Station, which was the continuation of the unfinished Shamkir Hydroelectric Power Station, begun in 1984.  The station were put into commission in December 2000 thanks to a loan amounting $53.2 million allocated by the European Bank for Reconstruction and Development and hard work of the republic's power engineers and builders.

Thanks to a loan from Deutsche Landesbank of Germany, two modern steam-gas turbines, each with a capacity of 53 MW, were installed and commissioned at Baku Thermal Power Plant No. 1.

Azerbaijan's national energy system has been closely linked with the energy systems of the Russian Federation, the Islamic Republic of Iran, Georgia and Turkey. This is also one of the major factors contributing to the further development of mutual relations between the countries and maintaining peace, stability and security in the region.

Substantial measures were taken for the formation of a legislative basis in the electric power engineering sector, and improvements to the legal basis concerning this field. Several laws were passed on electric power engineering, including laws on ‘Electric Power Engineering’, ‘The Use of Energy Resources’, and ‘Electric and Thermal Stations’.

Decrees of the President of the Republic of Azerbaijan, Ilham Aliyev, on the ‘State Programme for the Development of the Fuel and Energy Complex of the Republic of Azerbaijan (2005-2015)’ and ‘Additional Measures to Improve the Electricity Supply in the Republic of Azerbaijan’ played an important role in energy development.

For the first time in the CIS, commissioning modern gas turbines of type Shimal-1 with a capacity of 400 MW and the construction of power plants of eight modules with a total capacity of 872.5 MW (including Nakhchivan Autonomous Republic) in different regions of the country, the installation of systemically important power transmission lines and substations has eliminated the disproportion in power supply. The modern Sumgayit steam-gas type power plant was put into commissioned in 2009 and with a capacity of 525 MW, the Janub Power Plant in 2013, with a capacity of 780 MW. . With a capacity of 409 MW, the “North-2” Power Plant, which is located in Shuvalan settlement and play a significant role in improving the stability and quality of electricity supply in the Absheron peninsula, was commissioned on September 05, 2019 with the participation of the President of the Republic Mr. Ilham Aliyev.

Azerbaijan, which guarantees the safety of its electric power engineering, has been exporting electricity to neighbouring countries since 2007. Thus, the growing role of Azerbaijan in the world energy market is increasing its geopolitical influence. In November 2011, Azerbaijan signed the Memorandum of Understanding on energy cooperation between Azerbaijan and the European Union and began to adapt this field to international standards. The implementation of measures to align the legislative base with the directive and regulation of the European Parliament on the reforms to be carried out in the field of energy is one of the directions of the activity of the Ministry of Energy. In this regard, many legislative acts regulating the field have been drafted.

The reforms carried out since 1990 in the field of electric power engineering in European countries have ensured the de-monopolization of electricity and the creation of competitive conditions in the energy market, as a result of which there have been conditions for reducing electricity prices and losses and increasing the level of Service.

Sixteen power plants with a capacity of more than 3,000 MW have been commissioned in the last 13 years. The total generation capacity has reached 7,516 MW, the number of plants to 33 (15 of them are TPPs, 18 are HPPs) as the country has changed from an energy importer to an energy exporter.

At the same time, Azerbaijan is successfully implementing and developing its energy policy in the international arena. Azerbaijan is already one of the active members of a number of international organizations, including OSCE, Eastern Partnership, Black Sea Economic Cooperation (BSEC) and GUAM.

On 1 July 2013, President of the Republic of Azerbaijan Ilham Aliyev said at the inaguration ceremony of the Janub Power Plant that energy security issues are of great importance for each country. “Every country should strive to ensure energy security. Without this, independent development is impossible. Azerbaijan has not only ensured its energy security, but also played a role in ensuring the energy security of other countries. The recent decisions turn Azerbaijan into a very serious partner on a global scale. Azerbaijan has been exporting its energy resources to world markets for several years. Additional opportunities are emerging for the export of our natural resources to the world markets in the future. This means that Azerbaijan has ensured its economic future for many years. Opportunities are being created for long-term and sustainable development of Azerbaijan. Azerbaijan's role in the world is growing and strengthening. This will increase our country`s strength. Because we are successfully implementing our energy policy and this policy is yielding results. We are directing the revenues from this policy to all other areas."

The Republic of Azerbaijan has relations with Russia, Georgia, Iran and Turkey among the neighbouring countries in the field of electric power engineering, and imports and exports of electricity are carried out with those countries. The electricity transmission capacity to Russia is around 350 MW and around 550 MW to Iran.

The electricity transmission capacity of the 500 kV Samukh-Gardabani Overhead Transmission Line, commissioned within the Azerbaijan-Georgia-Turkey Energy Bridge project, is 650 MW.

The energy systems of Azerbaijan and Russia have been connected through two interstate overhead transmission lines. These are the 330 kV Derbent Overhead Transmission Line, which connects the 330/110 kV Khachmaz (Azerbaijan) and 330/110 kV Derbent (Russia) substations and the 110kV Yalama Overhead Transmission Line, which connects the 110/35 kV Yalama (Azerbaijan) and 110/35 kV Bilici (Russia) substations.

The energy system of Azerbaijan operates in a parallel mode with the Unified Energy System of Russia in a single synchronous zone. Mutual relations between the parties are carried out in accordance with the Intergovernmental Agreement on Cooperation in the Field of Electric Power Engineering between the Republic of Azerbaijan and the Russian Federation, dated October 7, 1995.

The relationship between the energy systems of the Republic of Azerbaijan and the Russian Federation are regulated on the basis of the agreement on parallel work concluded between the parties according to the decisions of the Joint Intergovernmental Commission on Economic Cooperation, agreements on the sale and purchase of electricity and on the transfer of electricity in case of accidents.

Since December 2001, the import and export of electricity between the parties has been of a purely commercial nature. The volume of electricity exported to the Russian Federation has been growing dynamically since 2007. The energy system of Azerbaijan operates with a positive balance.

Azerbaijan’s and Georgia’s energy systems are linked along the 500 kV Samukh-Gardabani Overhead Transmission Line, which also supplies Turkey via transit through Georgia, and the 330 kV Agstafa-Gardabani Overhead Transmission Line.

The energy relations of Azerbaijan and Georgia are based on the Intergovernmental Agreement ‘On Cooperation in the Field of Electric Power Engineering’, signed between the Republic of Azerbaijan and Georgia on December 27, 1997, and the Agreement ‘On the Parallel Operation of the Georgian and Azerbaijani Power Systems’, signed August 5, 1998.  This relationship is regulated on the basis of the agreement on parallel work concluded between the parties, based on the decisions of the Joint Intergovernmental Commission on Economic Cooperation, agreements on the sale and purchase of electricity and on the transfer of electricity in case of accidents.

The energy exchange between the energy systems of the Republic of Azerbaijan and the Islamic Republic of Iran is carried out along five existing electric power transmission lines - the 330 kV Mugan, 230 kV Imishli and 110 kV Astara-Astara transmission lines, owned by Azerenergy OJSC, and the 132 kV Araz-Araz and 132 kV Julfa-Julfa transmission lines, owned by the State Energy Agency of Nakhchivan. 

A contract ‘On the Exchange and Transit of Electricity’, signed between Azerenergy OJSC (Azerbaijan) and the company TAVANIR (Iran) agreed to the commissioning of the 230 kV Parsabad Transmission Line on February 24, 2001. Electricity from Iran to Nakhchivan Autonomous Region of Azerbaijan is carried out only as an energy exchange.

There are three overhead transmission lines between the Azerbaijani and Turkish energy systems - the 154 kV Igdir-Nakhchivan No. 1, the 154 kV Igdir-Nakhchivan No. 2 and the 34.5 kV Sadarak.

Within the Azerbaijan-Georgia-Turkey Energy Bridge project, Azerbaijan built the 500 kV Samukh-Gardabani Overhead Transmission Line. The 500/400/220 kV S/S Akhaltsikhe and 400 kV Overhead Transmission Line, connecting Georgia to Turkey, were commissioned at the end of 2013 and completed by Georgia. Transmission of electricity through the 500 kV Samukh-Gardabani Overhead Transmission Line had started by February 2016.

In 2018-2020 “Azerenerji” OJSC restored 1300 MW of power in the general energy system. 260 MW as a result of repair and restoration works at modular power plants aggregates, 810 MW lost power at TPPs, and 230 MW at WPPs were restored. A total of 12 power plants and up to 20 substations have been reconstructed, repaired and overhauled.

Measures are underway to construct new power plants. The foundation of “Gobu” power station was laid on August 21, 2020. At present, the construction of 385 MW “Gobu” PP and 330/220/110 kV “Gobu” substation is underway. Construction of 4 SHPPs (Astara and Oguz 1,2,3) has been completed and connected to the network. 

The construction of 140 MW (100+40) Khudaferin and Giz Galasi HPPs on the territory of Jabrayil region, located on the Araz River, are underway. After the construction is completed, integration into the energy system will be provided through the 330 kV network to be established. The construction of hydroelectric power plants is planned to be completed within 2.5 years.

New legislative acts regulating the field, as well as the laws of the Republic of Azerbaijan on Electric Power Engineering, on Efficient use of the energy resources and energy effectiveness, on Use of renewable energy sources in the generation of the electricity, on Regulator in the energy and utilities fields were drafted.

In accordance with the targets set by the President of the Republic of Azerbaijan, measures are underway to increase the share of renewable energy in the electricity generation to 30% by 2030. On December 29, 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 of the Kingdom of Saudi Arabia. On April 6, 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.