Azerbaijan plans Europe-bound exports of green hydrogen made in "recently liberated territories"
Article by Hydrogen Insight

ECONOMICS  17 April 2024 - 19:28

The UK-based Hydrogen Insight has published an article by Polly Martin highlighting the production and export of green hydrogen in Azerbaijan. Caliber.Az reprints the article.

Energy minister suggests that while offshore wind in the Caspian Sea will power electrolysis, production will take place further inland in Nagorno-Karabakh

Azerbaijan, the host of this year’s COP29 climate summit, is planning exports of vast amounts of green hydrogen to the EU, including from the Karabakh region, which until last year had been controlled by ethnically Armenian separatists for decades.

“We are cooperating very tightly, very intensively with the European countries with the great support from the European Union, in order to produce hydrogen, green hydrogen from the offshore wind we have in the Caspian sector, and to transport it into the European market,” Azerbaijan’s Minister of Energy Parviz Shahbazov told the Green Hydrogen Summit today (Tuesday) in Abu Dhabi.

He estimated that the Caspian Sea could site 157GW of offshore wind, which he said would exceed demand for renewable electricity not only in Azerbaijan, but Central Asia more widely.

Azerbaijan has already signed a joint development agreement with Masdar, an Emirati state-owned renewables developer and host of the Green Hydrogen Summit, and a framework agreement with Australian mining and energy firm Fortescue.

Shahbazov added that the government is also in talks with Saudi developer ACWA Power and oil major BP for green hydrogen projects.

However, electrolysers may not necessarily be sited along the coast of the Caspian, but further inland in a recent warzone.

“There is also the special green zone declared in the recently liberated territories of Azerbaijan, after the almost 30 years occupation by Armenia, and those territories we are going to apply... the production of hydrogen,” Shahbazov said.

Hydrogen strategy

Azerbaijan is in the midst of pulling together a national hydrogen strategy, which could provide further details on how and where projects will be deployed.

“The initial studies show that Azerbaijan possesses considerable potential in this field,” deputy energy minister Elnur Soltanov told local reporters.

He cited a 2023 study funded by the European Bank for Reconstruction and Development (EBRD) which found that green hydrogen produced in Azerbaijan would be cheaper than molecules generated in the EU.

This study calculated that a kilogram of green hydrogen could be produced using a blend of wind and solar power in Azerbaijan for €2.92 by 2030 compared to €3.67 in the EU — although the European cost could be a lowball estimate.

While Azerbaijan has vast reserves of natural gas, the report also argues that “high international gas prices... could make the use of domestic natural gas for blue hydrogen economically unfavourable as it would displace natural gas available for export”.

It also notes that the cost of transporting and storing CO2 is uncertain, while extra investment would be needed to meet regulations and manage upstream methane emissions.

The EBRD-backed study also points out that while green H2 could be blended into Azerbaijan’s existing gas infrastructure such as the Southern Gas Corridor (SGC) pipeline system for delivery to Europe, “high transmission fees for transport of hydrogen through the SGC could make the delivered cost in Europe uncompetitive”.

However, the study also anticipates that the majority of the 200,000 tonnes a year of annual low-carbon hydrogen that could be produced in Azerbaijan by 2030 will be exported — although it does note that 290,000 tonnes a year of green H2 would be needed to decarbonise Azerbaijan’s existing ammonia production.

Caliber.Az