Azerbaijan is committed to developing its renewable energy potential, which is an important part of the country’s plan to reduce greenhouse gas emissions by 40% by 2050.
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The nation aims to elevate its renewable energy capacity to 30% by the year 2030 while diversifying its current energy framework to establish itself as a frontrunner in green energy initiatives. Azerbaijan is dedicated to setting a precedent and will revise its national objectives in the forthcoming 1.5-aligned Nationally Determined Contribution. Azerbaijan possesses substantial wind energy potential, with both onshore and offshore resources offering considerable prospects for sustainable energy production. The country has an economic potential of 3 GW from onshore wind, alongside an impressive technical capacity of 157 GW from offshore wind. Significant progress has already been achieved in realizing this potential, with key projects in collaboration with firms such as ACWA Power and Masdar currently in progress.
An ocean of 570,000 solar panels stretches out as far as the eye can see across an arid landscape an hour’s drive from Azerbaijan’s capital Baku. In the sun-baked hills of Garadagh, a country built on oil and gas is taking its first steps towards what it bills as a “green” future.
Azerbaijan is ramping up its efforts to support the green energy transition..
Azerbaijan is intensifying its initiatives to facilitate the transition to green energy by attracting foreign investments aimed at harnessing its significant renewable energy resources. The Asian Development Bank (ADB) has supported a new green energy project in the nation, inaugurating a 100-kilowatt (kW) floating solar facility, the first of its kind in Azerbaijan, situated on Lake Boyukshor near Baku.
This photovoltaic installation, which commenced operations in July, is expected to produce over 160,000 kilowatt-hours of electricity each year, featuring 95 kW solar panels mounted on the water and 5 kW on land. Fagan Abdurahmanov, a representative from the Ministry of Energy, noted that a variety of technologies were employed in the plant’s construction, including advanced panels designed for solar energy conversion and modern inverters that efficiently transform direct current into alternating current.
Furthermore, to guarantee the plant’s optimal functionality and efficiency, as well as to compare the performance of the floating section with that of the land-based section, measurement and observation systems—such as pyranometers, temperature sensors, and other monitoring devices—were installed. The launch of the Boyukshor floating solar facility prior to the COP29 global climate summit, which Azerbaijan will host, holds strategic significance. The summit will take place at the Baku Olympic Stadium, located in proximity to Lake Boyukshor, thereby providing an excellent platform to highlight Azerbaijan’s accomplishments in the renewable energy sector and its firm commitment to reducing carbon emissions while advancing towards a sustainable green energy future.
International cooperation for green energy transition..
Since the year 2020, Azerbaijan has been actively engaging with international companies to harness its rich renewable energy resources. Prominent energy firms and operators, including Masdar, ACWA Power, bp, Fortescue Future Industries, China Gezhouba Group Overseas Investment, Total Energies, Nobel Energy, A-Z Czech Engineering, and Baltech, have secured agreements to invest in various green energy initiatives. On October 26, 2023, in collaboration with UAE’s Masdar, the Garadagh Solar Power Plant was inaugurated, marking the largest solar energy facility in the Caspian and CIS regions, boasting a capacity of 230 MW. Furthermore, Masdar is involved in the development of a 315 MW solar power plant in the Banka village of the Neftchala district, a 445 MW solar power plant in Bilasuvar, and a 240 MW wind power plant in the Absheron-Karadagh district. The energy generated from these renewable sources is being progressively brought online. Concurrently, the Absheron Wind Power Plant project, with a capacity of 240 MW, is being executed by ACWA Power from Saudi Arabia. The Azerbaijani government is implementing comprehensive measures to promote renewable energy. In this context, both legal entities and individual entrepreneurs have been granted the “Investment Promotion Document” by the Ministry of Economy, which provides several tax incentives, including a 50% reduction in profit tax and income tax for a duration of seven years, along with exemptions from property tax and land tax for the same period. Additionally, the importation of machinery, technological equipment, and devices is exempt from VAT and customs duties for seven years, provided that the necessary documentation is submitted.
Concurrently, substantial efforts have been made to enhance the legislative framework governing renewable energy, resulting in the adoption of various legislative acts. As per the “Rules for the Implementation of the Mechanism for Supporting Active Consumers,” which have been sanctioned by the Cabinet of Ministers, both individuals and legal entities in Azerbaijan are permitted to utilize wind, solar, and other renewable energy sources on their land or buildings, provided they adhere to urban planning and construction regulations. This provision allows for the generation of up to 150 kW of electricity through the installation of solar panels on private residences.
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