US, ADB to endorse Azerbaijan's "green" initiatives Review by Caliber.Az

Azerbaijan is making every effort to diversify its energy strategy and participate in the global processes of the "big energy transition 2030". Over the past two years, the country has modernized the legal framework and launched projects in the field of "green energy", including the development of the potential of the Karabakh region, the development of offshore wind energy, as well as solar power generation. Consultants and investors from the Persian Gulf countries, the European Union, the UK, Israel, and Türkiye are already taking part in these initiatives. Support for Baku's "green" initiatives is also possible from the US, as well as the Asian Development Bank (ADB): the prospects for such cooperation were discussed the day before at the Azerbaijani-American Energy Forum.

The war in Ukraine, and disruptions in the Eurasian energy logistics, which repeatedly intensified the global energy crisis, played a catalytic role, prompting countries in Europe, Asia, as well as the US to accelerate the development of renewable energy sources (RES). According to the International Energy Agency (IEA), the world will invest at least $440 billion annually in the creation of renewable energy sources over the next 10 years. Moreover, not only highly developed countries lacking natural resources are following this path, but oil-rich Saudi Arabia, the UAE, other Persian Gulf countries, and several oil and gas-producing states in Central and South Asia are among the leaders in the construction of solar power plants, which have also boosted construction of green power generation facilities.

The development of renewable energy is a national priority in Azerbaijan as well, and in the next decade, the country plans to increase the share of green energy from the current 17% to 30% of the total generating capacity of the country. Solving this task by 2030 will help Azerbaijan to meet the objectives within the framework of the UN International Programme on Green Transformation adopted in 2015, fulfill its obligations under the Paris Climate Agreement (reduction of greenhouse gas emissions by 40% by 2030) and thereby integrate into numerous international projects of great economic importance for our country.

In particular, the country plans to commission more than 1,500 MW of generating capacity in the alternative energy sector over the next eight years, and the first steps in this direction have already been taken: last year saw the start of construction of a 240 MW wind farm and a 230 MW Garadagh solar power plant. Both projects are being implemented with private investments from Saudi Arabia's ACWA Power and Masdar of the UAE, which have attracted a total of $500 million to these undertakings. And Britain's BP will soon invest in the implementation of another RES project - the construction of a 240 MW solar power plant in the Jabrayil region. In general, the whole Karabakh region is considered a "Green Energy Zone": according to preliminary calculations, more than 10 thousand MW of renewable energy can be generated here. The groundwork for the alternative energy segment is also quite high in Nakhchivan - a solar power plant with a capacity of 500 MW is planned for construction here. Even more ambitious projects are planned for wind power development in the Azerbaijani sector of the Caspian Sea, as well as joint plans with Georgia, Romania and Hungary for laying a high-voltage submarine cable across the Black Sea to export electricity to Europe.

It is noteworthy that companies from the United States have recently shown interest in Azerbaijan's renewable energy potential.

"The United States strongly supports Azerbaijan's initiative on creation of a green energy corridor and is ready to help attract investment in the field of renewable energy in your country," US Charge d'Affaires Hugo Guevara said at an Azerbaijani-American energy forum organized by the Ministry of Energy and the Azerbaijan Export and Investment Promotion Foundation (AZPROMO) the previous day.

Another forum participant, US Assistant Secretary of Commerce for Global Markets and Director General of the Foreign Trade Service Arun Venkataraman expressed the same opinion: "The US promotes the attraction of investments into the field of 'green' energy of Azerbaijan as well as will support efforts on decarbonization of its economy". He said that the forum held in Baku provided an excellent opportunity for US companies to familiarize themselves with the potential of renewable energy in the country, and the US core business with great interest considering its participation in such initiatives. In particular, during the forum business meetings were held between Azerbaijani and US companies, where information was provided on the investment environment in the country, current and prospective projects were presented, including in the field of production of "green hydrogen", plans were outlined to integrate "clean energy" technologies into the energy balance, etc.

The interest in cooperation in the sphere of alternative energy is mutual, believes Deputy Energy Minister Elnur Soltanov, who attended the meetings, and Baku offers its US colleagues to expand cooperation in the renewable energy sector in three specific areas. "The biggest potential for cooperation is seen in the liberated territories of our country, as well as in the Caspian Sea region and the Nakhchivan Autonomous Republic," the deputy minister said.

Today, there are good reasons to count on China's assistance in the development of our RES: the Heavenly Empire's interests are among others promoted by the most authoritative financial institution of the Asian region - the Asian Development Bank (ADB). "The Azerbaijani government jointly with the ADB has launched a project to install floating solar panels on Boyukshor Lake in Baku," Soltanov said during the forum. The project envisages the construction of a 100-kW floating solar power plant (95 kW on water, 5 kW on land) on the lake. Floating solar panels are more expensive than onshore panels, which affects the return on investment, especially since tariffs for renewable energy in the country are not as high as in other parts of the world, and therefore, according to the deputy minister, this initiative is a pilot project to test and evaluate the effectiveness of floating solar systems.

However, the experience of cooperation with ADB on green energy is extremely important in the context of the new country partnership strategy with Azerbaijan being developed for 2024-2028. As ADB Country Director in Azerbaijan Candice McDeigan recently noted, ADB will consider expanding support for renewable energy projects if the pilot project at Boyukshor Lake yields the expected results. Not so long ago, the ADB approved crediting of Masdar Azerbaijan Energy's $21.4 million project in the segment of solar energy.

This is just the beginning. Shortly, our country will significantly expand cooperation with the ADB in the field of renewable energy. For example, relevant agencies of Azerbaijan are currently working on the concept of an alliance within CAREC (Central Asia Regional Economic Cooperation) on green energy. Not so long ago ADB Vice President Shixin Chen noted that the Azerbaijani government and the CAREC energy community began to develop the concept of the Alliance for Green Energy, and this structure will soon create a platform to make RES projects available to investors.