Azerbaijan is ramping up its efforts to support the green energy transition by attracting foreign investments to tap into its substantial renewable energy potential.
The Asian Development Bank (ADB) has funded a new green energy initiative in the country, launching a 100-kilowatt (kW) floating solar plant, the first in Azerbaijan, on Lake Boyukshor near Baku.
This photovoltaic station, which opened in July, is projected to generate over 160,000 kilowatt-hours of electricity annually, with 95 kW solar panels installed on water and 5 kW on land.
According to Fagan Abdurahmanov, an official from the Ministry of Energy, various technologies were used during the construction of the plant, including next-generation panels to convert solar energy into electricity, and modern inverters to efficiently convert direct current into alternating current.
Additionally, to ensure the optimal performance and efficiency of the plant and to compare its floating part with the land-based part, measurement and observation systems — including pyranometers, temperature sensors, and other monitoring equipment — were installed.
The inauguration of the Boyukshor floating solar plant before COP29 global climate summit, which will be hosted by Azerbaijan, is of strategic importance. The summit’s venue — Baku Olympic Stadium — is located near Lake Boyukshor, providing an excellent opportunity to showcase both Azerbaijan's achievements in renewable energy sector and the country's strong commitment to reducing carbon emissions and transitioning to a sustainable green energy future.
“COP29 will serve as a key platform for demonstrating Azerbaijan's investment attractiveness in the green energy sector. This event will provide unique opportunities to present ongoing projects in the renewable energy sector, as well as to identify and promote new initiatives. COP29 will also create favorable conditions for establishing relations and expanding cooperation with other countries and international organizations, which will help attract new investments and develop innovative solutions in the field of green energy,” Abdurahmanov told local media.
In 2021, at the 26th session of the UN Framework Convention on Climate Change, Azerbaijan made a voluntary commitment to reduce greenhouse gas emissions by 40% by 2050. To achieve this goal, the Energy Ministry has set a primary target of increasing the share of renewable energy sources in the country's total energy balance to 30% by 2030. Green energy capacity of 2 GW is planned in the first phase by 2027, and more than 8 GW in the next phase by 2030.
Azerbaijan will host COP29 from November 11-22, 2024. Confirmation of Azerbaijan’s host status came at the plenary session of COP28 on December 11, 2023, after Baku received collective backing from other Eastern European countries.
International cooperation for green energy transition
Since 2020, Azerbaijan has been actively cooperating with foreign companies to leverage its abundant renewable energy resources. Leading energy companies and operators, such as Masdar, ACWA Power, bp, Fortescue Future Industries, China Gezhouba Group Overseas Investment, Total Energies, Nobel Energy, A-Z Czech Engineering, and Baltech secured agreements to invest in green energy projects.
On October 26, 2023, in cooperation with UAE’s Masdar, the Garadagh Solar Power Plant, the largest solar energy complex in the Caspian and CIS regions, with a capacity of 230 MW, was commissioned.
Additionally, Masdar is engaged in the construction of a 315 MW solar power plant in the village of Banka in the Neftchala district, a 445 MW solar power plant in Bilasuvar, and a 240 MW wind power plant in the Absheron-Karadagh district. These facilities’ combined energy output from renewable sources is being put into operation.
Simultaneously, the Absheron Wind Power Plant project, with a capacity of 240 MW, carried out by ACWA Power from Saudi Arabia.
The government of Azerbaijan is taking extensive measures to support renewable energy. In this vein, legal entities and individual entrepreneurs have received the "Investment Promotion Document" issued by the Ministry of Economy, benefitting several tax incentives, including a 50% discount on profit tax and income tax for 7 years and exemption from property tax and land tax for the same period. In addition, the import of machinery, technological equipment, and devices is exempt from VAT and customs duties for 7 years if the necessary confirmation documents are provided.
At the same time, significant measures have been taken to improve the legislative framework in the field of renewable energy, and several legislative acts have been adopted. According to the "Rules for the Implementation of the Mechanism for Supporting Active Consumers" approved by the Cabinet of Ministers, individuals and legal entities in Azerbaijan can use wind, solar, and other renewable energy sources on their land plots or buildings on these plots in compliance with urban planning and construction rules. This includes the ability to generate up to 150 kW of electricity when installing solar panels on individual houses.
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