Business opportunity: Renewable energy in Azerbaijan
General Information
Azerbaijan’s share of renewables is much below the world average because of the dominance of oil and gas sectors. At the same time Azerbaijan has perfect renewable energy potential, it is sunny and windy country. Hydro, bioenergy and geothermal resources have high potential as well.
Historically Azerbaijan was focused on oil and gas, but recently the focus is changing to renewables.
Currently hydropower dominates the renewable sector, followed by bioenergy (for example Baku solid waste incineration plant). The wind energy and solar energy segments are smaller but expected to grow significantly in the near future.
Heat pumps are new on the market and just taking the first steps in the consumer market.
In 2015 Azerbaijan took a commitment to reduce its GNG emissions (greenhouse gas) by 35% till 2030, compared to 1990 level. In 2021 Azerbaijan took a new commitment to reduce emissions by 2050 by 40%. To achieve these targets Azerbaijan has announced to increase the share of the installed capacity of renewable energy to 30% (it will double renewable capacity compared to current level).
Since 2020 Azerbaijan has close cooperation with ACWA Power (Saudi Arabia) in wind power generation and with Masdar (United Arab Emirates) in solar power generation, but the country is open to cooperation with other countries as well.
The key players in Azerbaijan renewable energy market are: Azalternativenerji, AzerEnerji, ACWA Power International, Tamiz Shahar JSC, Azerenerji JSC, Abu Dhabi Future Energy Company PJSC (Masdar) and OCA Global Investments SL.
Breakdown of renewable energy
In 2023 the total power generation capacity of Azerbaijan is 7954 MW, the capacity of the power plants on renewable energy sources, including hydropower is 1312 MW (16.5 %)
Hydropower counts for 1159 MW (30 stations), wind power 66 MW (8 stations), solar 52 MW (12 stations), bioenergy around 38 MW (2 stations)
Bioenergy, waste to energy
Active economic development of Azerbaijan (growth in agricultural, food sectors and others) is leading to a new opportunity in electricity generation from biomass (waste from agricultural, food, and other biological waste). Azerbaijan has a technical potential of 380 MW of bioenergy (currently bioenergy capacity is around 38 MW). Since 2011 Gobustan Experimental Polygon and Training Center has been operating, including a 1 MW biogas power station. Since 2012 Balakhani Waste-to-Energy Plant (€346 million investments) operates (500.000 tons per year of municipal solid waste).
It is expected that growth in agricultural production will lead to growth in the number of biogas projects and general economic growth and problems with waste will lead to growth of waste-to-energy projects. Finnish expertise in these sectors will be in high demand in Azerbaijan.
The latest news from the market
In 2022, the construction of Khizi-Absheron Wind Power Plant (capacity 240 MW, investments $300 million) and Garadagh Solar Power Plant (capacity 230 MW, investments $200 million) was started.
Recently, in June 2023, Azerbaijan has signed a memorandum on renewable energy with China Gezhouba Group Overseas Investment to build 2 MW of renewable capacity (solar energy, wind power, energy storage and smart energy systems).
During 2020-2023 Azerbaijan has signed documents (agreements, memorandums, etc.) with foreign companies for 25 MW of renewable energy projects. It is expected that the renewable energy market will boom in the medium term.
Seize the opportunity
The government announced plans that renewable energy will provide 30% of electricity generating capacity in the country by 2030 (will double to current level). In 2020 the state has introduced the “Action Plan on Attracting Additional Investments in the Renewable Energy Sector”.
In 2020 Azerbaijan Renewable Energy Agency was established and since then a number of laws and normative legal acts have been adopted in order to develop the renewable energy sector in Azerbaijan. During 2020-2023 Azerbaijan has announced a new renewable project for 25 MW with foreign partners.
Other countries see the potential of green energy market of Azerbaijan and already taking steps for promotion of own services and solutions in green energy, for example:
– 21.06.2022 German-Azerbaijani “Renewable Energy in Azerbaijan Forum”
– 02.04.2023 US-Azerbaijan “Green Energy Forum”, etc.
Finland has strong expertise and know-how in renewable energy, including bioenergy, biogas, waste-to-energy, solar and wind solutions which might be in a high demand in Azerbaijan.
Solutions or products needed
– products and solutions for wind energy (wind turbines, rotors, gear boxes, generators, blades, etc.)
– products and solutions for solar energy (solar panels, inverters, solar batteries, etc.)
– products and solutions for biogas and waste-to-energy sectors (sewage treatment, mixers and pumps, stirring facilities, gas analysis equipment, gas pipes, measuring equipment, etc.)
– products and solutions for other renewable energy sectors
– engineering, technical and consulting support
Exhibitions and events
Caspian Power and Green Energy 2024
4-6 June 2024, Baku, Azerbaijan
https://caspianpower.az
(part of Baku Energy Week www.bew.az/)
The main sectors of the exhibition are: Renewable energy sources, Bioenergy, Wind energy, Hydrogen energy, Geothermal energy, Hydropower, Solar energy, Energy efficiency, etc.
TF activities available for Finnish companies
Team Finland network can support Finnish companies in the activities in Azerbaijan:
– EastCham Finland, www.eastcham.fi
– Roving ambassador for the South Caucasus, Kirsti Narinen
https://finlandabroad.fi/web/aze/mission
If you are interested in this opportunity, please contact Altyn Shakirkhanova, Senior Business Advisor / Head of EastCham Branch in Kazakhstan [email protected].