Green Energy Baku
Maria Haq
The 9th Ministerial meeting of the Southern Gas Corridor Advisory Council and the first Green Energy Advisory Council meeting held on 3 February in Baku reaffirmed the strategic energy partnership between the Republic of Azerbaijan and the European Union. The partnership serves common goals such as long-term energy security, sustainability, diversification of supply, and expanding cooperation on the energy transition agenda.
The co-chairs of the meeting welcomed the full-scale operation of the Southern Gas Corridor and its contribution to securing a reliable, competitive, and affordable energy supply from the Republic of Azerbaijan to Europe.
The successful commissioning of the Greece-Bulgaria Interconnector is another important development which will further support diversification of supplies in Europe. The co-chairs expressed their support for the expansion of the Southern Gas Corridor, indicating that it would offer a potential supply source for new energy markets.The co-chairs also acknowledge the importance of taking necessary steps to reduce methane emissions across supply chains.
The Green Energy Advisory Council Ministerial meeting, held for the first time, creates an excellent opportunity for partner countries, financial institutions, and companies to have productive discussions on expanding cooperation on the green agenda. This platform will contribute to creating international green energy linkages and turning Azerbaijan into a green energy supplier for European markets.
The "Memorandum of Understanding on a Strategic Partnership in the Field of Energy between the European Union represented by the European Commission and the Republic of Azerbaijan" signed in Baku on July 18, 2022, along with the expansion of existing cooperation in the fields of energy transition, renewable energy, energy efficiency and renewable hydrogen will pave the way for new opportunities for enhanced development of our partnership. We note also the importance of the "Agreement on strategic partnership in the field of green energy development and transmission between the governments of the Republic Azerbaijan, Georgia, Romania and Hungary" signed in Bucharest on December 17 2022.
The strategic agreements cover the progression of the first phase of a 10GW pipeline of renewable energy projects in Azerbaijan signed in June 2022. This follows the successful development of Garadagh, Azerbaijan's first foreign investment-based independent solar power project, and the largest solar plant in the region.
The 1GW clean energy agreements were signed by Masdar Chief Executive Officer, Mohamed Jameel Al Ramahi, Azerbaijan Minister of Energy, HE Parviz Shahbazov and Azerbaijan Minister of the Economy, HE Mikayil Jabbarov.
HE Dr Sultan Al Jaber, COP28 President-Designate and Chairman of Masdar, said: "Garadagh is a testament to our shared commitment to diversifying the global energy mix. Azerbaijan's ambition to develop low and zero-carbon solutions through renewable energy, is exactly what the world needs at this time.
"The UAE is proud to support Azerbaijan's clean energy goals, to generate more than 30 percent of its overall energy capacity from renewables by 2030. We need all nations of the world to set out clear energy transition plans with clear targets for renewable energy capacity. As the UAE prepares to host COP28 in November, our North Star for climate action must be to keep the ambition of limiting global temperatures to 1.5C within reach."
Speaking at the inauguration event, Dr Sultan Al Jaber also commended His Excellency President Ilham Aliyev and the nation of Azerbaijan for its commitment to a defined, strategic plan of action to develop new industries, new jobs and green economic growth.
HE Parviz Shahbazov, Azerbaijan Minister of Energy, commented: "Today is marked by the achievements of the state policy of the President of Azerbaijan, which prioritizes the development of renewable energy. The commissioning of the largest solar power plant based on the first foreign investment in our energy history, as well as the signing of investment agreements for the implementation of solar and wind energy projects with a capacity of 1000 MW, show that our country's green energy and green investment plans are successfully becoming a reality. Azerbaijan is pleased to realize its strategic goals as a green energy producing and exporting country with Masdar and these projects will play an important role in increasing the share of renewable energy sources in electricity generation capacity to 30 percent by 2030."
Mohamed Jameel Al Ramahi, Chief Executive Officer of Masdar, said: "The inauguration of Garadagh, the largest operational plant in the region, is a milestone achievement. Azerbaijan is a key strategic partner for Masdar and the signing of these additional agreements today pave the way to accelerate the scale of Azerbaijan's clean energy vision. Garadagh is the first in a number of potential projects to develop onshore wind, offshore wind, solar and green hydrogen with a total combined capacity of 10GW. This will lead to greater investment and international collaboration as we work together to help Azerbaijan achieve its ambitious climate goals."
As the UAE's clean energy powerhouse and one of the leading clean energy companies in the world, Masdar is accelerating the development and deployment of renewable energy and green hydrogen technologies to address global sustainability challenges.
Established in 2006, Masdar is active in more than 40 countries with a total electricity generation capacity of more than 20GW. It has invested, or committed to invest, in worldwide projects with a combined value of more than US$30 billion with ambitious growth plans to reach 100GW and 1 million tonnes of green hydrogen by 2030.
Abu Dhabi Future Energy Company (Masdar) is the UAE's clean energy champion and one of the largest companies of its kind in the world, advancing the development and deployment of renewable energy and green hydrogen technologies to address global sustainability challenges. Established in 2006, Masdar is today active in over 40 countries, helping them to achieve their clean energy objectives and advance sustainable development. Masdar is jointly owned by Abu Dhabi National Oil Company (ADNOC), Mubadala Investment Company (Mubadala), and Abu Dhabi National Energy Company (TAQA), and under this ownership the company is targeting a renewable energy portfolio capacity of at least 100 gigawatts (GW) by 2030 and an annual green hydrogen production capacity of up to 1 million tonnes by the same year.
While this latest energy cooperation is welcomed, even with an extra four bcm from Azerbaijan, it will not be enough to substitute Russian gas supplies to the EU, which totals around 150 bcm annually. It is also unlikely that deliveries will be further increased as the total capacity of the SGC totals 16 bcm, indicating that Azerbaijan will play a minor role in reducing Russian gas dependency. As fears continue to rise over a complete suspension of gas flows, the EU must secure additional sources and urgently re-think its energy strategy. It must forge new alliances to counter Russian threats, which could include making a short-term return to fossil fuels as recently suggested by the vice president of the European Commission.
Furthermore, the country adopted a Law on Using Renewable Energy Sources in Electricity Production in May 2021, providing a legal basis to develop renewable energy projects. The law envisages the introduction of auctions and tenders as support mechanisms, and it includes other draft legislative documents such as a PPA and a connection agreement.
Over the last 20 years, Azerbaijan has invested heavily in modernising its energy infrastructure, including for electricity generation. A 2002 presidential decree was adopted for the energy sector, setting the goal of eventually switching all thermal power plants to natural gas, and in the following years old generation plants were all modernised and switched. More than 90% of electricity is now generated from natural gas, but the system is designed to switch back to heavy oil in emergencies.
Azerbaijan has a total installed capacity of over 7.5 gigawatts (GW): 6.5 GW of oil- and gas-fired generation and 1.1 GW of hydro. In addition, the country has a small amount of wind, solar and other renewable energy generation.
Azerishiq OJSC is the one hundred percent state-owned enterprise responsible for electricity distribution, supply and other customer services (connection, metering and billing), except in the Nakhchivan Autonomous Republic, which is directly administered by its own state energy agency. Azerishiq oversees the seven regional distribution networks of Aran, Baku, Canub, Garb, Markazi Aran, Shimal and Shimal Garb.
The Law on the Power Industry (1998) sets out some provisions for third-party access so that Azerenergy can purchase electricity from other producers, and other entities can buy electricity from Azerenergy (or other state companies) and sell it to end consumers. Alternatively, independent generators or industries can supply electricity to consumers on their own grids or through the state transmission system; these arrangements account for around 1% of electricity generation.
Taking international experience into consideration, the government has prepared a draft Law on Electricity that envisages gradual market reform by 2025. It plans to allow independent generators to enter the sector and acquire existing power plants or build new ones. Privatisation of strategic assets is not expected to adversely affect energy sustainability and security.
According to the EU, at the height of the energy crisis last year, the Southern Gas Corridor proved to be a crucial source of piped gas supply, with deliveries increasing by more than 40% year on year in 2022 to 11.4 billion cubic meters.
The gas pipeline would enable a new energy corridor for Southeastern Europe within the Southern Gas Corridor, with the aim of establishing a new direction of natural gas supply from the Middle East and the Caspian region, Ibrahimović added.
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