Extra energy capacity
Azerbaijan boosting export potential

ANALYTICS  15 February 2023 - 14:37

As a country with a positive energy balance, Azerbaijan has been modernising its generating and transit infrastructure in recent years in order to increase electricity exports to Georgia, Türkiye, and a number of EU countries. The next step in increasing the country's energy potential will be the construction of the largest thermal power plant in the country's history, with a capacity of 1,280 MW, in the city of Mingachevir. A solemn ceremony dedicated to laying the foundation of a new energy facility was held on the eve of the capital's Gulustan Palace, with the participation of Azerbaijani President Ilham Aliyev and the heads of Italian and Chinese contracting companies.

Today, Azerbaijan's electric power system is the most powerful in the South Caucasus: it is based on 22 large thermal and 30 hydroelectric power plants of various capacities, most of which are on the balance sheet of Azerenergy OJSC. And taking into account small hydroelectric power plants, solar, wind and other generating facilities owned by private investors, the total installed capacity of the power system is almost 7,954 MW.

Moreover, over the past 20 years alone, three and a half dozen power plants of various types with a total capacity of approximately 3,400 megawatts have been built in Azerbaijan. Due to the presence of such a powerful generation potential, the republic has been a net exporter of electricity for about 15 years, fully and reliably providing domestic energy needs. In particular, according to the Energy Ministry, the total volume of electricity generation in the country last year exceeded 28.988 billion kWh, an increase of 4 per cent.

These factors favourably distinguish our country, especially in comparison with its neighbours in the region and even with the EU states facing the most acute energy crisis in 2021-2022. On the contrary, our republic not only did not experience any problems in the field of electricity supply but also consistently increased supplies abroad without any risk to energy security. Thus, in 2021, a significant increase in electricity exports was recorded - over 1.673 billion kWh, which is 45.4 per cent more than a year earlier. These successes were multiplied in 2022, providing an absolute record for export growth rates – over 3 billion kWh, which is almost 80 per cent higher than the previous year.

The export of electricity to the capacious Turkish and European markets is designated as a basic priority of the national economic strategy and a number of projects are being implemented in Azerbaijan for this purpose. With the participation of foreign investors, the country's potential in the field of renewable energy sources (RES) is being developed, and solar, wind and other generating facilities are being built on the Absheron Peninsula.

Similar work in the renewable energy segment is being carried out in the Karabakh region, where new small hydroelectric power plants are also being modernised and built, high-voltage power lines are being laid, and powerful substations designed to develop the export vector are being built. In the future, with the participation of friendly European countries and other investors, the powerful potential of wind generation in the Caspian Sea will be developed, followed by the export of generated electricity to Europe through a transit power cable, which is planned to be laid along the bottom of the Black Sea.

At the same time, Azerbaijan continues to develop the potential of traditional thermal generation, and the next step in this direction will be the construction of the most powerful combined-cycle thermal power plant in the South Caucasus in Mingachevir.

"Today we gathered for the ceremony of laying the foundation of a new power plant with a capacity of 1,280 MW, I am sure that in the near future – in 2025 - we will celebrate the opening of this station. And this project will further increase the importance of Mingachevir as the centre of Azerbaijan's electric power industry," President Ilham Aliyev said, speaking at a solemn ceremony dedicated to the construction of the future energy facility.

As part of the new thermal power plant [TPP] project, it is planned to install four gas turbines and four generators with a capacity of 320 MW each produced by the Italian company Ansaldo Energia, four scrap boilers and four transformer units manufactured by the Chinese company Dongfang Electric. In addition, it is planned to additionally carry out a new high-pressure gas line, build a gas distribution station, a water cooling network, a workshop for the preparation (softening) of clean water, form control and security systems, and carry out complex expansion works at 500- and 330-kilovolt substations.

Thus, a new high-performance power plant with a capacity of 1,280 MW will be created in the energy system of Azerbaijan with all the necessary economic facilities, so that its operation will be completely independent of the use of the infrastructure of another powerful energy facility in Mingachevir - the Azerbaijan Thermal Power Plant.

It should be recalled that at one time, on the initiative of great leader Heydar Aliyev, in 1976, the foundation of the largest TPP in the South Caucasus, Azerbaijan, was laid in Mingachevir: its first generator started working back in 1981, and subsequently, eight power units of 300 MW of installed capacity each were commissioned. Not so long ago, about 45 per cent of all electricity generated in the republic was produced at this thermal power plant.

The operational and technical resource of the Azerbaijani thermal power plant over the past 40 years since its launch has been largely exhausted, therefore, in 2018-2020, on behalf of the head of state, reconstruction of all eight power plant units was carried out, and its service life was extended for at least 20 years. Thus, reliability, stability, efficiency and safety were ensured, as well as more than 620 MW of TPP capacity lost due to deterioration was restored and its total capacity was brought to the initial design level of 2,400 MW. Nevertheless, the efficiency of the old-generation power units did not exceed 38.5 per cent, thereby the amount of conventional fuel spent on generating each kilowatt-hour of energy exceeded the reference level of 330 grams.

To overcome these shortcomings, Azerenergy specialists have prepared a project for the integration of the production system of the Azerbaijan thermal power plant with a new combined-cycle gas station with a capacity of 1,280 MW, the construction of which is being started in Mingachevir. In order to increase overall efficiency, the steam turbines of the current 7th and 8th power units of the Azerbaijan Thermal Power Plant will be upgraded and connected to the new station. As a result, the heat spent from gas combustion will be sent to the system of the new thermal power plant and will turn water into steam by recycling, which will allow obtaining energy without additional gas consumption.

Thanks to this connection, the total capacity of the new thermal power plant and two power units of the old station will be 1,880 MW, which will save 0.8–1 billion cubic metres of gas annually. Thus, due to fuel savings, it will be possible to recoup the investments invested in the project in a maximum of six years. Simultaneously with the creation of a highly efficient integrated generation complex, the efficiency will be increased by an additional 18 per cent and brought to 56 per cent, and annual electricity production will amount to 12.5 billion kWh.

Well, the most important thing is that the creation of a new energy facility in Mingachevir will cost Azerbaijan an extremely low price. "The construction of a new thermal power plant in Mingachevir with a capacity of 1,280 MW will cost within $400 million: specialists who are closely familiar with the field of electric power industry are well aware of how much a station of such capacity can cost," President Ilham Aliyev said, stressing that the funds that will be spent on this station are three to four times lower than the amount of financing, which would be required for the construction of a station of the same capacity.

The head of state said that 60 per cent of investments in the construction of the station will be made up of Azerenergy's own funds, and the remaining 40 per cent will be secured by attracting loans. "The new power plant will meet modern environmental standards, which contributes to the reduction of hydrocarbon emissions by 2 million tons and will bring great benefits to the environment," the head of state noted. Due to significant gas savings, the president also stressed that the new thermal power plant in Mingachevir will significantly contribute to Europe's energy security since the saved gas can be used to meet the needs of the countries of the Old World.

The construction of a new thermal power plant is planned to be completed in about three years, a specialised local company will be engaged in the construction of the facility, and the main generating equipment will be supplied by the Italian company Ansaldo Energia, which has a 170-year history of producing energy equipment and is also developing the renewable energy sector today.

Azerenergy has established productive relations with this Italian company, including within the framework of joint projects to restore energy infrastructure in Karabakh and East Zangazur liberated from occupation. Another partner in the construction of thermal power plants is Dongfang Electric Corporation (DEC), which is one of the 52 leading state-owned enterprises in China - the world's leading manufacturer of power equipment and contractor of energy projects.

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