2024-08-07 11:27:41
Azerbaijan has a very favorable investment climate, and according to the World Bank, it is among the top 30 countries in the world for business opportunities. The country’s strategic focus on attracting investment in renewable energy is in line with its goals of economic diversification, using oil revenues to support renewable energy initiatives.
As a globally recognized oil and gas producer, Azerbaijan has begun the transition to green energy, with a particular focus on developing renewable energy sources. The country has successfully implemented many renewable energy projects and is partnering with industry leaders such as Masdar, ACWA Power, and BP. Despite these achievements, European investment in Azerbaijan’s green energy sector remains somewhat limited. However, Azerbaijan is committed to meeting Europe’s natural gas needs by transitioning to clean energy production. President Ilham Aliyev has reaffirmed his commitment to double gas supplies to Europe by 2027.
During the II Global Media Forum in Shusha, President Ilham Aliyev emphasized Europe’s significant dependence on Azerbaijani gas.
“I say that it is important to put an end to hypocrisy because, on the one hand, Europe asks us to increase production and transport gas to Europe, because it seriously needs it. On the other hand, they do not finance it. This was one of the topics of my discussions with European colleagues. The European Investment Bank (EIB) has completely stopped financing fossil fuel projects. The European Bank for Reconstruction and Development (EBRD) has almost completely stopped financing such projects,” President Ilham Aliyev said.
In July 2022, the European Commission and Azerbaijan signed an energy memorandum in Baku, agreeing to double the volumes of transported gas. This agreement coincided with the ongoing Russian-Ukrainian conflict, which began five months earlier. After the signing of the memorandum, the EU’s position on expanding the Southern Gas Corridor, through which Azerbaijan supplies gas to Europe, became known. There were expectations of concrete decisions in this direction.
The European Commission has recognized Azerbaijan as a reliable energy partner and an important gas supplier to Europe. However, after the winter of 2022-2023, the excess gas reserves in Europe distracted attention from the expansion plans of the Southern Gas Corridor. Some foreign media outlets even published unfounded statements questioning Azerbaijan’s ability to meet the planned gas supply target of 20 billion cubic meters.
After successfully reducing its dependence on Russian gas, the European Union reaffirmed its commitment to phase out fossil fuels, including oil and gas. As part of this strategy, European financial institutions are now reluctant to finance projects related to these energy sources.
In his commentary to Azernews on this matter, economist Vugar Bayramov stressed the need to increase investments in renewable energy, especially from EU member states.
“Azerbaijan is a leader in the region in attracting investment in renewable energy, having provided more than one billion dollars in recent years. By cooperating with institutions such as the European Bank for Reconstruction and Development and attracting investment from the Gulf countries, Azerbaijan should increase investment in renewable energy, especially from the European Union,” Bayramov said.
The expert emphasized the role of Azerbaijan in increasing Europe’s energy security in the context of the Russian-Ukrainian conflict, thanks to a significant increase in natural gas exports (“blue gas”) to the EU in recent years.
“If in 2021 Azerbaijan exported about 10 billion cubic meters of blue gas to the EU, then in 2022 the volumes increased to 10.4 billion cubic meters and, according to forecasts, will reach 12 billion cubic meters in 2023, and 13 billion cubic meters are expected by 2024. The increase significantly increases Europe’s energy security, emphasizing the need to increase investments in the renewable energy sectors of Azerbaijan and Europe,” Bayramov noted.
Touching upon the memorandum on cooperation in the field of renewable energy between Azerbaijan and the EU, Bayramov noted the plans of Azerbaijan and Georgia to export energy from alternative sources to Europe starting in 2027.
“Azerbaijan has implemented comprehensive measures to attract investment, constantly making efforts to improve the investment environment, expand infrastructure, provide concessions and attract special attention from EU companies. This includes directing investments not only to Azerbaijan, but also to our liberated territories, Karabakh and Eastern Zangezur. We expect significant progress in this area in the near future,” the economist emphasized.
In turn, British journalist and political scientist Neil Watson acknowledged the stereotypes of Western countries regarding the investment attractiveness of Azerbaijan.
“It is commendable that Azerbaijan is implementing such giant renewable energy projects, but it is unfortunate that few companies with no significant past experience in the country seem willing to invest. There are biased reasons for this, as Azerbaijan is wrongly viewed as an unsafe investment opportunity,” he added.
Neil Watson expects the upcoming COP29 event in November to provide a platform to showcase Azerbaijan’s renewable energy potential and attract further investment.
“I believe that Azerbaijan needs to be more proactive in reaching out to political and business leaders in an organized manner to clearly explain the nature of the projects and the expected revenues. Hopefully, COP29 will allow Azerbaijan to present its current and proposed renewable energy projects on the world stage and attract additional investment,” the expert emphasizes.
Azerbaijan continues to advance its clean energy agenda with significant projects, including the recent commissioning of a 230-megawatt solar power plant and the nearing completion of a 240-megawatt solar power plant. In June, the foundation stone for three solar and wind power plants with a combined capacity of one gigawatt was laid in Baku.
Recognizing Azerbaijan’s significant energy potential, global energy giants such as Masdar, ACWA Power and BP are investing in the country. Azerbaijan has strong technical and economic potential for renewable energy: the technical potential on land is estimated at 135 gigawatts (GW), and the potential offshore is 157 GW.
The economic potential includes 3,000 MW of wind energy, 23,000 MW of solar energy, 380 MW of bioenergy and 520 MW of mountain river energy.