2023 was a very successful year for Azerbaijan as the country restored its territorial integrity and reached significant achievements in different sectors of the economy including the energy sector. — writes Shahmar Hajiyev, Senior Advisor at the Center of Analysis of International Relations

It is worth noting that the energy sector plays a key role in Azerbaijan’s economy and, driven by its natural resources, the country’s energy production is strongly tied to fossil fuels. The finalization of the Southern Gas Corridor (SGC) enables the country to export its natural gas to the European energy markets. In 2016, the country signed the Paris Agreement on climate change, which set up a goal to reduce greenhouse gas emissions (GHG) by up to 35 per cent by 2030. Overall, Azerbaijan aims to export not only fossil fuels but also green energy to Europe. To this end, the country has already started to develop its renewable energy capacity, and one of the country’s primary goals is to support a sustainable energy future.

According to calculations, the technical potential of renewable energy in the country is around 135 GW onshore and 157 GW offshore, which is an important source for the generation of electricity to support energy transition and sustainable development. Renewable energy sources are expected to make up 30 per cent of Azerbaijan’s electricity generation by 2030. Such potential of the country would help the country save natural gas for exports as well as reduce the country’s GHG emissions to meet its 2030 Paris Agreement commitment and improve electricity security by diversifying generation.

Touching upon Azerbaijan’s clean energy strategy, it should be noted that the country supports the creation of “Green energy” zones and the attraction of international investments in the green energy sector. Towards this end, Azerbaijan has already started cooperation with Saudi-listed ACWA Power, the UAE’s clean energy powerhouse, and one of the world’s fastest-growing renewable companies, Masdar and BP to implement various green energy projects in the country. In 2023 the country accelerated the process of development of green energy, therefore Masdar has signed agreements for solar and onshore wind projects with a total capacity of 1GW in Azerbaijan, following the inauguration of the 230 MW Garadagh Solar Park, the region’s largest operational solar plant. The strategic agreements cover the progression of the first phase of a 10 GW 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.

Also, in 2023 ACWA Power agreed to develop 500 MW renewable energy projects in Azerbaijan’s Nakhchivan Autonomous Republic with Masdar and the State Oil Company of Azerbaijan Republic (SOCAR). ACWA Power signed implementation agreements with the Azerbaijani Ministry of Energy for a 1GW onshore wind farm and a 1.5 GW offshore wind farm with storage. It has an agreement with SOCAR for collaboration and exploration of renewable energy and green hydrogen. In addition, Masdar has signed agreements to develop integrated offshore wind and green hydrogen projects and onshore wind and solar projects with a total combined capacity of 4 GW.

It is noteworthy to mention that President Ilham Aliyev supports a sustainable energy future in the country, thus transforming Azerbaijan into a “green energy hub” is a key component of the country’s energy policy. Speaking at the inauguration of Garadagh Solar Park, President Ilham Aliyev emphasized that “Karabakh, East Zangezur, and Nakhchivan have already been declared a green energy zone. There is a significant potential to use our natural resources, one of which is apparently the wind. Of course, among our plans is to work actively with our partners to create an energy corridor — Caspian-EU Energy Corridor”.

Overall, the abundant renewable energy resources in the region can support the green energy ambitions of Europe. These resources can also contribute to achieving the target rate- 42.5% (by 2030) of renewable energy in the continent. To this end, Georgia Azerbaijan, Romania, and Hungary signed an agreement on the development of the high-voltage submarine electricity cable under the Black Sea, which will support the “Green Energy Corridor” across the region. This energy project will be the longest power cable underwater in the world, aiming to connect the South Caucasus region with South-Eastern Europe, involving the electricity systems of these countries and continental Europe.

The culmination of Azerbaijan’s success in the green energy sector and sustainable development for the 2023 year was the country’s success in hosting the 29th Conference of Parties (COP29) to the UN Framework Convention on Climate Change in 2024. The significant achievements in the energy sector and future vision for sustainable development made Azerbaijan an ideal candidate country to win the backing from other Eastern European countries to host such an important international event. As noted on President Ilham Aliyev’s Facebook page, “Azerbaijan consistently supports global climate action and implements various energy efficiency measures. Clean environment and green growth are among our national priorities. Renewable energy is gaining momentum in Azerbaijan.”

To sum up, Azerbaijan’s path to a sustainable energy future supports global efforts to cope with climate changes and inter-regional energy cooperation. Meanwhile, the end of the Garabagh conflict in the South Caucasus opens up new opportunities for regional economic integration, and Armenia’s support of Azerbaijan’s bid to host COP-29 could be characterized as a significant mechanism for future durable peace in the region.

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