Azerbaijan Leads Regional Renewable Energy Investment Amid Global Energy Security Challenges

(MENAFN- AzerNews) Nazrin Abdul Read more

Azerbaijan's investment climate is highly favorable, ranking among the top 30 countries worldwide for business opportunities according to the World Bank. The country's strategic focus on attracting investments in renewable energy aligns with its economic diversification goals, utilizing oil revenues to bolster renewable energy initiatives.

As a globally recognized oil and gas producer, Azerbaijan has embarked on a transition to green energy, emphasizing renewable energy development. The nation has successfully executed numerous renewable energy projects and enjoys collaborations with industry leaders such as Masdar, ACWA Power, and BP. Despite these achievements, European investment in Azerbaijan's green energy sector remains somewhat limited. Nonetheless, Azerbaijan aims to meet Europe's natural gas demands by shifting towards green energy production. President Ilham Aliyev has reiterated his commitment to doubling gas supplies to Europe by 2027.

During the 2nd Global Media Forum in Shusha, President Ilham Aliyev underscored Europe's significant reliance on Azerbaijani gas.

"Why did I say let's stop hypocrisy?! On one hand, Europe urges us to increase production and transport it to Europe because of their urgent need. On the other hand, funding discussions with my European colleagues reveal a shortfall. The European Investment Bank has completely ceased financing fossil fuel projects, while the European Bank for Reconstruction and Development allocates minimal funds to this sector," stated President Ilham Aliyev.

In July 2022, the European Commission and Azerbaijan signed an energy memorandum in Baku, agreeing to double the volume of transported gas. This agreement coincided with the ongoing Russia-Ukraine conflict, which had started five months earlier. Following the memorandum's signing, the European Union's stance on expanding the Southern Gas Corridor, through which Azerbaijan supplies gas to Europe, gained prominence. There were expectations for concrete decisions in this direction.

The European Commission has recognized Azerbaijan as a dependable energy partner and a crucial gas supplier to Europe. However, after the winter of 2022-2023, the surplus of gas reserves within Europe shifted attention away from the expansion plans for the Southern Gas Corridor. Some foreign media outlets even published unsubstantiated claims questioning Azerbaijan's ability to meet the planned gas supply target of 20 billion cubic meters.

With the successful reduction of Russian gas dependency, the European Union has renewed its commitment to phasing out fossil fuels, including oil and gas. As part of this strategy, European financial institutions are now reluctant to finance projects associated with these energy sources.

In his comment to Azernews on the issue, economist Vugar Bayramov emphasized the need for increased investment in renewable energy, particularly from EU member states.

"Azerbaijan leads the region in attracting renewable energy investments, securing over one billion dollars in recent years. While collaborating with institutions like the European Bank for Reconstruction and Development and attracting investments from Gulf countries, Azerbaijan must increase renewable energy investments, especially from European Union member states."

The expert highlighted Azerbaijan's role in enhancing Europe's energy security amid the Russia-Ukraine conflict, with significant increases in natural gas exports ("blue gas") to the EU in recent years.

"If Azerbaijan exported about 10 billion cubic meters of blue gas to the EU in 2021, volumes increased to 10.4 billion cubic meters in 2022 and are projected to reach 12 billion cubic meters in 2023, with expectations of 13 billion cubic meters by 2024. These increases significantly enhance Europe's energy security, underscoring the need for increased investments in Azerbaijan's and Europe's renewable energy sectors."

Referring to the memorandum on renewable energy cooperation between Azerbaijan and the EU, Bayramov noted the plans for Azerbaijan and Georgia to export energy from alternative sources to Europe starting in 2027.

"Azerbaijan has implemented comprehensive measures to attract investments, with ongoing efforts to improve the investment environment, expand infrastructure, provide concessions, and garner special attention from EU companies. This includes directing investments not only to Azerbaijan but also to our liberated territories, Karabakh and Eastern Zangezur. We anticipate significant progress in this area soon," the economist stressed.

Another expert, Neil Watson, acknowledged Western countries' stereotypes toward Azerbaijan regarding investment attractiveness.

"It is praiseworthy that Azerbaijan is undertaking such mammoth renewable energy projects, but regrettable that few companies without significant past experience of the country seem willing to invest. There are preconceived reasons for this, with Azerbaijan falsely being considered as an unsafe investment opportunity," he added.

Neil anticipates that the upcoming COP29 event in November will offer a platform to showcase Azerbaijan's renewable energy potential and attract further investments.

"I believe that Azerbaijan needs to be more proactive in reaching out to political and business leaders in an organized way to explain clearly the nature of the projects and the estimated revenues. Hopefully, COP29 will enable Azerbaijan to put its current and proposed renewables projects on the world stage and attract additional investment."

Azerbaijan continues to advance its green energy agenda with significant projects, including the recent commissioning of a 230-megawatt solar power plant and nearing completion of a 240-megawatt solar power plant. In June, foundations were laid for three solar and wind power plants in Baku, boasting a combined capacity of one gigawatt.

Recognising Azerbaijan's substantial energy potential, global energy giants such as Masdar, ACWA Power, and BP are investing in the country. Azerbaijan possesses robust technical and economic potential for renewable energy, with land-based technical potential estimated at 135 gigawatts (GW) and sea-based potential at 157 GW.

Economic potential includes 3,000 MW of wind energy, 23,000 MW of solar energy, 380 MW of bioenergy, and 520 MW from mountain rivers.

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