Azerbaijan’s renewable energy projects with Gulf partners gain momentum Baku's green energy vision

Large-scale investments in the development of power generating capacities allowed Azerbaijan to become the largest producer and exporter of electricity in the South Caucasus. And in recent years, the vector of expansion of the energy system has shifted to the development of renewable energy sources (RES). In this regard, Masdar from the UAE and ACWA Power from Saudi Arabia have become key investors in the green energy sector in Azerbaijan.

This cooperation, which is notable for its scale and level of capital intensity, has recently attracted genuine attention of the world media and expert community. The official EU TV channel Euronews  published an article on the new RES projects of Azerbaijan and the UAE launched recently.

In recent years, Azerbaijan has been making maximum efforts to participate in the global processes of the “big energy transition of 2030”, and in this regard the country has made great strides in the development of the green energy sector. Thus, according to Azerbaijan’s Ministry of Energy, by the end of last year, the capacity of RES facilities in the energy system of the country was estimated at about 1,700 MW, and their share in the total generation reached 20 per cent.

By the end of 2027, the share of RES will increase to 33 per cent of all generation due to new projects of 2 GW of ‘green’ capacity to be created in Azerbaijan through investments of over $2 billion. Thanks to these projects, it is expected to produce 5.3 billion kWh of electricity, reduce atmospheric emissions to 2.5 million tons, and save 1.2 billion cubic meters of gas,” Azerbaijan’s Energy Minister Parviz Shahbazov said as he addressed the Baku Energy Week forum.

According to the minister, Azerbaijan will be able to diversify Europe's energy supply through both green energy supplies and large volumes of saved natural gas due to the growth of renewable energy generation. However, given the current pace of implementation of “green” initiatives in the domestic energy sector, it can be assumed that the development of the industry may be much more dynamic than expert forecasts.

It is appropriate to recall that the main investors in the RES sector are Masdar from the UAE and ACWA Power from Saudi Arabia, and companies from the European Union, Great Britain, Türkiye, China and other countries are also working on various projects in Azerbaijan. Last year Masdar specialists completed the construction of a large solar power plant with the capacity of 230 MW. And under the signed contracts and memorandums of understanding for the construction of new generating facilities by 2030 it is scheduled to ensure the creation of about 5000 MW of solar and wind energy.

The year 2024, declared the “Year of Solidarity for a Green World”, was very successful in terms of the implementation of the contracts agreed last year. Thus, on the margins of the Baku Energy Week that started on June 4, a ceremony of laying the foundations of solar and wind power plants was held with the participation of Azerbaijani President Ilham Aliyev and UAE Minister of Industry and Advanced Technology Sultan Ahmed Al Jaber.

Baku and Abu Dhabi, which enjoy active cooperation in the field of RES, are launching three large-scale solar and wind projects with a total capacity of 1 GW, according to an article published by Euronews TV channel. The publication further noted that the projects include a 445 MW solar power plant in Bilasuvar, a 315 MW solar power plant in Neftchala and a 240 MW wind farm in Garadagh in Absheron. The power plants are expected to produce an average of over 2.3 billion kWh of electricity per year, which in turn will save 496 million cubic meters of natural gas annually and prevent over 943,000 tons of atmospheric emissions.

"These projects actually demonstrate our green agenda and also demonstrate that our position is attractive not only for those who invest in fossil fuels, but also for those who invest in renewables. Masdar is our strategic partner in the area of renewable energy,” the article cited President Ilham Aliyev as saying.

The president also told Euronews that “Azerbaijan, a country which generated wealth from fossil fuels now is channelling this wealth into the renewable energy and as a host country of Cop 29, this is also our obligation to be among the frontrunners on the green transition.”

The article by Euronews also focuses on statements made by Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology, Chairman of Masdar and President of COP28: “"We are proud to partner with Azerbaijan on this significant expansion of its renewable energy capacity and to support Azerbaijan’s journey toward energy diversification, stimulating new industries, new jobs and sustainable economic growth.”

Euronews, quoting the UAE Minister of Industry, emphasizes the partners' ambitious goals of tripling renewable energy capacity by 2030. The article also notes the importance of the Caspian Oil & Gas 2024 exhibition, held as part of Baku Energy Week 29, which brought together more than 300 companies from 37 countries, for one of the most important events on the global energy sector calendar.

According to Euronews estimates, the forum called for switching to cleaner energy solutions, advancements in AI as well as ensuring economic growth in developing countries to help accelerate climate positive sustainable development.

Participants of Caspian Oil & Gas events voiced a number of promising endeavors in the field of alternative energy in Azerbaijan: including such endeavors being implemented jointly with another key partner of the country, a company from Saudi Arabia, ACWA Power.

“In 2025, the 240 MW Khizi-Absheron wind farm will be put into operation, where it is planned to produce 1 billion kWh of electricity per year,” Raad Al-Saady, Vice Chairman & MD of ACWA Power said at the exhibition. According to him, negotiations with Azerbaijan on the establishment of offshore and onshore wind farms are also at the final stage.

According to Abid Malik, Executive Vice President, Regional Director at ACWA Power, Azerbaijan has an impressive potential for the development of offshore wind energy: “Azerbaijan is a key country in the region for ACWA Power in the development of the RES sector, in this regard we are working very closely with the Azerbaijani government”.

The regional director also emphasized that the company is currently working with the government on the implementation of an offshore wind farm project with a capacity of more than 100 MW. Also in the country portfolio of ACWA Power is the development of the sphere of “green” hydrogen, plans for decarbonization of petrochemical production of SOCAR, as well as a contract with the Ministry of Energy on the project of battery energy storage system (BESS) with a capacity of 200 MW.

The development of the RES segment in the Nakhchivan Autonomous Republic, with its 5 GW renewable energy potential, is very promising, says Kamran Huseynov, Deputy Director of Azerbaijan Renewable Energy Agency (AREA) under the Ministry of Energy.

“We plan to export green electricity generated at new solar power plants (SPPs) in Nakhchivan, to Türkiye and further, possibly, to Europe.” Among others, TotalEnergies and Nobel Energy have announced projects of solar power plants in Nakhchivan with a total capacity of 650 MW, Masdar will build a 150 MW solar power plant, Germany's Notus will build a 70 MW solar power plant in the northwest of Nakhchivan, and other projects are being explored,” AREA deputy director said during the forum.

According to him, the “green” energy zones are also the liberated territories of Azerbaijan, where RES capacities with a total capacity of 2 GW will be created. In particular, such negotiations are underway with Chinese companies, a project with BP is scheduled to be implemented in the East Zangazur region, and agreements have recently been reached with Nobel Energy on the construction of a power plant in Jabrayil.