Azerbaijan focuses on alternative energy development to increase fossil fuel exports

Azerbaijan in coming years will focus on the development of renewable energy, as it will let the country to boost oil and gas exports, according to the deputy head of the Agency for Alternative and Renewable Energy (AFARE) of Azerbaijan Jamil Melikov.

"This requires high-tech solutions, and Azerbaijan is going to gradually introduce them. Achieving this goal we will increase the country's export potential,” said Melikov. “In particular, Azerbaijan will be able to send more hydrocarbons for export, reducing domestic consumption. It is also very important from the environmental point of view.”

Azerbaijan is one of the largest producers and exporters of oil and gas in the Caucasus and Post-Soviet Union region. Last year the country produced 41.9 million tonnes of oil and almost 30 billion cubic meters of natural gas. State agencies expect the large reserves at the shelf of the Caspian Sea will allow Azerbaijan to increase production in the coming years.

Melikov added that Azerbaijan hopes for the support of the European Union (EU) as it plans its transition to renewable energy. "We would like to use the rich experience of the EU countries, and attract funding for projects in the area of renewable energy,” said Melikov. “We have signed memorandum of understanding with the EU on the implementation of reforms in field of alternative energy, and [we hope to establish a] joint consortium on alternative energy.”

Renewable Plan

Azerbaijan currently hopes to triple its renewable energy capacity from 830 MW this year to 2,500 MW by 2020. The program specifically calls to increase wind energy capacity from 240 MW to 800 MW and solar photovoltaics will increase from 290 MW to 600 MW all by 2020. Given the added potential of solar thermal systems, solar energy is the most promising form of alternative energy, as experts expect it will provide country with 950 MW of capacity by 2020.

In other segments, biogas will grow from 25 MW to 125 MW, geothermal from 15 MW to 150 MW, and small hydropower from 80 MW to 150 MW, al following the same timeline. The total investments for these projects will be between US$2.5–3.5 billion.

At the same time, it seems that Azerbaijan will continue to develop renewable energy even after its 2020 goal, according to recent reports released by AFARE. Development potential is huge and experts suggest that Azerbaijan may be able to eventually run on 100 percent renewable energy. According to the research presented by Melikov, the total potential capacity of renewable energy sources in Azerbaijan exceeds 12,000 MW. Solar accounts for most of this potential at 5,000 MW, while wind accounts for 4,500 MW, biomass for 1,500 MW, geothermal energy for 800 MW, and small hydro for 350 MW.

Wind Project Focus 

In the short term, developers in Azerbaijan are focusing on one of the largest renewable energy projects in the country: the first offshore wind power project in the Post-Soviet Union era. According to AFARE Chairman Akim Badalov, the 200-MW project will supply energy for several oil producing enterprises in the Caspian Sea. It will be built between the two oil-extracting platforms near the Pirallahi Island. AFARE plans to commence construction in 2017/2018 and commission the plant within two to three years after that. The construction of the station will cost AZN450-500 million (US$427-475 million).

"The project will be implemented at the expense of borrowed funds, in particular, loans of the foreign banks,” noted AFARE spokespersons. “[A] number of investors from UAE, Germany and China already expressed their interest in the participation on the project. Our main demand is that 80 percent of the works should be carried 

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