Azerbaijan pushes energy efficiency and renewables with new legislative package

Azerbaijan has already adopted four crucial laws within its energy sector, with three more in development, including a strategically significant law concerning heat supply, according to Elnur Soltanov, the country's Deputy Minister of Energy.

He shared these updates during a panel discussion titled “Azerbaijan: Emerging Gateway to Green Growth and Connectivity” at the European Bank for Reconstruction and Development’s (EBRD) Annual Meeting in London, Caliber.Az reports, citing local media.

Soltanov explained that the country’s primary focus is on enhancing energy efficiency, expanding the use of renewable energy sources (RES), and liberalising the energy sector to foster growth and development.

Soltanov paid special attention to the draft heat supply law, which aims to stimulate the development of centralised heating systems — an area that remains underdeveloped in Azerbaijan. The new law intends to introduce modern technologies such as heat pumps and aligns directly with the country’s energy efficiency goals.

With the support of the EBRD, the Azerbaijani government is also working on a regulatory law that will form the basis for an independent regulatory body to oversee the sector. “One of the critical tasks of this new entity will be to establish tariffs based on real production costs, which is vital for the sustainable development of the energy sector,” Soltanov noted.

Soltanov further emphasised that Azerbaijan is on track to achieve its target of 32% renewable energy in its installed capacity by 2028, two years ahead of the original timeline. He added, “In addition to attracting foreign direct investment (FDI), we are giving special focus to supporting prosumers—consumers who also produce electricity. Citizens now have the ability to install solar panels of up to 150 kW and sell any excess electricity back to the grid.”

The Deputy Minister also underscored the importance of the Energy Efficiency Law, which will be followed by the creation of at least a dozen additional regulations addressing areas like building certification, household appliances, and energy audits. Moreover, Azerbaijan has established an Energy Efficiency Fund, backed by a solid financial foundation, funded through taxation on fossil fuels.

Addressing the challenges that Azerbaijan faces, Soltanov pointed out the country’s outdated housing stock inherited from the Soviet era, where energy efficiency had previously been overlooked. “While this presents significant challenges, it also offers a broad space for reforms. Energy efficiency is becoming a new source of energy,” he highlighted.

Looking ahead, Soltanov announced that the Ministry of Energy plans to intensify its efforts in the coming months, with a series of new initiatives that will play a key role in shaping Azerbaijan's energy policy in the future.