Azerbaijan: In "green" future with Japanese technologies
Mountain villages to be supplied with renewable energy

ANALYTICS  27 June 2023 - 09:48

In recent years, Azerbaijan has been making every effort to participate in the global processes of the "big energy transition of 2030". In the coming years, the government plans to multiply generation in the alternative energy sector, including in the Karabakh region, to create offshore wind power and produce "green" hydrogen. In the development of renewable energy sources (RES), our country's partners are companies from Saudi Arabia, the United Arab Emirates, Great Britain, Türkiye, Israel, and a significant contribution is expected from Japan. For example, the Japanese company TEPSCO has developed a draft concept of a "Green Energy Zone" in the Karabakh region and recently signed a memorandum with the Japanese Komaihaltec on projects of hybrid renewable energy systems in Azerbaijan’s mountain villages.

The large-scale military conflict in Ukraine radically reformatted the energy landscape of the Eurasian space and forced European countries to abandon Russian hydrocarbons. To overcome the energy crisis in the past year and a half, the countries of the Old World, along with increasing alternative supplies of hydrocarbon raw materials, are accelerating the development of the "green" energy sector. The "green" trends launched by the EU have been picked up by the countries of the Middle East, Africa, South America, Indochina, Central and Southeast Asia, the construction of solar, wind and small-scale hydroelectric power plants has become a real mainstream of the energy sector in recent years. According to the International Energy Agency (IEA), in the next 10 years, at least $440 billion will be invested annually in the renewable energy sector worldwide.

With significant oil and gas reserves and the largest power generation capacity in the South Caucasus, Azerbaijan is considered a fully self-sufficient energy state and does not need urgent measures to reformat the national energy balance. Nevertheless, over the past few years, the government of the republic has been paying great attention to the development of the renewable energy segment, as well as the transfer of industry and the utility sector to less energy-consuming and environmentally friendly "green" technologies.

This sphere is among the national priorities of Azerbaijan’s socio-economic development and in the next decade it is planned to increase the share of "green" energy in the country from the current 17 per cent to 30 per cent of the total generating capacity of the country. Solving this task by 2030 will help Azerbaijan achieve its commitments under the Paris Climate Agreement (to reduce greenhouse gas emissions by 40 per cent by 2030) and thereby integrate into numerous international projects of great economic importance for the country.

In particular, it is planned in the next seven years to put into operation over 1,500 MW of generating capacity in the field of alternative energy, and the first steps in this direction have already been taken. At the beginning of last year, the construction of a 240 MW wind farm and a 230 MW Garadag solar power plant started. Both projects are being implemented at the expense of private investments by the Saudi company ACWA Power and the company Masdar from the UAE, which have attracted a total of $500 million to these undertakings. BP will soon invest in another renewable energy project – the construction of a 240 MW solar power plant in the Zangilan-Jabrayil zone.

Azerbaijan plans to implement significant plans for cooperation in the field of "green" energy with companies from Japan. It is appropriate to recall here that Azerbaijan already has a positive experience of cooperation with Japanese business in the traditional energy sector within the framework of two-stage construction - in 2004 and 2019 of a combined-cycle gas plant at the Shimal and Shimal-2 GRES in in the Khazar district’s Shuvalan settlement. The construction contract was executed by the Japanese company Toyo Engineering Corporation, and power equipment and combined-cycle generators with a total capacity of 800 MW were supplied and installed by the Mitsui/Mitsubishi alliance at the expense of a concessional loan from the Japan Bank for International Cooperation (JBIC) in the amount of over $275 million and with a maturity of 40 years. Japanese companies are known all over the world as suppliers of high-tech, resource-intensive and economical power equipment: at Shimal-2, the consumption of conventional fuel for the production of one kilowatt per hour is only 214.3 grams, which is noticeably lower than the average of the Azerbaijani energy system.

Guided by the successful experience of cooperation with Japanese manufacturers of energy equipment, the government of Azerbaijan consistently expands cooperation with them in the field of green energy development. In particular, since 2021, the Energy Ministry, with the support of the Japanese consulting company TEPSCO, has been developing the concept of a "Green Energy Zone" on Azerbaijani territories liberated from occupation. Meanwhile, an assessment of the "green" potential of the region has been made and a General Plan for the future "Green Energy Zone" has been developed, where a specific scenario for creating the necessary renewable energy generating capacities of one type or another, designed for the medium and long term, is painted on the basis of the concept. These documents define the energy resources of individual districts (for example, proposals for Aghdam have been prepared), assess the optimal options for using available resources (solar, wind, hydropower), and finally identify the necessary RES capacities depending on the economic and human potential of the districts. In general, over 10,000 MW of renewable energy can be generated in Karabakh and East Zangazur.

It is noteworthy that not so long ago, the specialists of the Japanese TEPSCO provided the  Energy Ministry with information on the development of Smart City systems on the example of Japanese cities such as Fujisawa, including information on optimising transmission and distribution networks for sustainable power supply in emergency situations.

The next step to expand Azerbaijani-Japanese cooperation in the field of "green" energy was the memorandum of understanding signed recently on renewable energy projects between the State Agency for Renewable Energy Sources (AREA) under the Energy  Ministry and the Japanese company Komaihaltec Inc. The document, in particular, calls for the creation of a feasibility study for a pilot project aimed at establishing an ideal system of electricity and heat delivery using hybrid electricity derived from renewable energy sources in Azerbaijan's mountainous villages.  It should be noted that Komaihaltec, among other things, specialises in the production of wind turbines and other specialised equipment of the average price category.

Apparently, this is only the beginning of the implementation of joint projects with Japan in the field of "green" energy, energy efficiency in the industrial and municipal sectors and other climate initiatives. Such optimism is based on the plans of the Japan Bank for International Cooperation (JBIC), which recently signed a memorandum of understanding with the State Oil Company of Azerbaijan (SOCAR), which involves expanding cooperation in the decarbonisation projects and attracting Japanese technologies for this. Financing for such projects from the Japanese side is also possible. "The parties agreed to strengthen cooperation by exchanging information on the introduction of low-carbon technologies, including, among other things, carbon dioxide capture and storage technologies (CCS) and fruitful use and storage of carbon dioxide (CCUS), as well as on projects related to hydrogen, ammonia, etc.," a recently-published JBIC statement says.

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