In mid-January, Azerbaijani and Saudi officials gathered in Baku to mark the start of construction on a 240MW wind power project. A deal had been signed for the $300m scheme, some 45km northwest of the capital, two years earlier. Not far away, Abu Dhabi-based Masdar is building a solar power park which will provide another 230MW of power. A $200m deal for that project was agreed in April last year
These are the first large renewable energy plants in a country which, until now, has relied on its plentiful oil and gas resources to keep the lights on.
Other Gulf countries are also looking to get involved. On February 23, Azerbaijan’s energy minister Parviz Shahbazov was in Qatar for talks with his counterpart Saad Sherida Al-Kaabi and with Doha-based Nebras Power. On the agenda were proposals for both a 550MW gas-fired plant and 100MW of wind power.
Oil pioneer
Azerbaijan has a long history of exploiting its huge oil and gas resources. The first oil field was drilled there in 1846 and the world’s first offshore oil platform, the Neft Daslari, was built in the shallow waters of the Caspian Sea in 1951; it is still producing.
But like the big hydrocarbon producers in the nearby Gulf, the country is trying to wean itself off oil and gas, at least for its home market.
The Baku authorities have set a target of generating 30% of the country’s energy needs from renewable sources by 2030. Acwa Power’s wind plant will account for around 3.7% of total energy needs when it starts up next year, powering around 300,000 homes, but many more schemes will be needed if the government is to meet its aim.
Esmira Jafarova, a board member of the Baku-based Center of Analysis of International Relations, describes the 2030 target as “ambitious” and adds “The energy transition is a relatively new process in Azerbaijan. Until now, the country’s renewable energy potential was always confined to hydroelectric power.”
By developing more wind and solar plants to supply the domestic market, Baku hopes to free up more gas to sell abroad. A network of cross-border pipelines takes Azerbaijan’s gas from the Caspian Sea into Turkey and other European countries and demand is likely to be strong in the years to come. In the wake of President Vladimir Putin’s invasion of Ukraine, central and western European countries are desperate to find alternative sources of gas to replace Russian supplies.
“Everyone still accepts that gas will be essential for meeting energy needs in the future, especially in Europe,” says Jafarova, who previously worked as an advisor to the energy minister.
Wider plans
The projects now underway by Gulf companies in Azerbaijan are being mirrored in other former-Soviet countries. Masdar is also developing solar power plants in neighbouring Armenia and Georgia. Further east, in Uzbekistan, it is involved in developing solar and wind power. Earlier this month, Acwa Power broke ground on the $115m, 100MW Nukus wind project in north-west Uzbekistan.
Traditional energy companies are also thinking about getting involved. Oil major BP – whose interests encompass Azerbaijan’s Azeri-Chirag-Gunashli oil and gas complex and the Shah Deniz gas field – has been eyeing up the potential of renewable energy projects in the country. Reports in May last year indicated the British firm had signed up to evaluate a 240MW solar energy project in the Karabakh region.
In a brief war in late 2020, Azerbaijan had regained parts of Karabakh which had long been controlled by ethnic Armenians. Developing the reclaimed areas is now a priority for Baku, which talks of developing a “green energy zone” in the region. Notably, the two wind power plants that Shahbazov discussed with Nebras executives in Doha are in the Lachin and Kalbajar districts of Karabakh.
