Amid the global energy transition, Azerbaijan and the countries of the South Caucasus are undergoing a major transformation - from ambitious plans to the implementation of major renewable energy projects. The European Bank for Reconstruction and Development (EBRD) is a key catalyst for these changes, providing not only financing but also the introduction of market mechanisms in the region's energy sector.
Today, the cooperation agenda is reaching a new level: from the construction of wind and solar power plants to the creation of cross-border green corridors, the integration of energy storage systems, and the development of hydrogen technologies.
In an exclusive interview with Report, Sule Topcu Kilic, Director, Head of Energy Eurasia at the EBRD, discussed the bank's priorities in the region over the next five years, the terms of financing the expansion of the Southern Gas Corridor, and support for the private sector as part of the green agenda.
Report presents the interview:
- Ms. Kilic, how do you assess the current progress of the energy transition in Azerbaijan and the South Caucasus region? Which areas of cooperation with the EBRD do you consider priorities for the next 3-5 years?
- Azerbaijan and the region have made significant progress. In recent years, we've seen the energy transition narrative shift from ambition to delivery, and we're proud to have played a strong role in this. In the past five years, the EBRD has been the only IFI involved in all utility-scale renewables projects in the country. In this period, we've financed over 1.2 GW of utility-scale wind and solar power.
What matters now is scaling this transition further, but also in a way that keeps the energy system reliable, competitive and affordable. Therefore, alongside financing the new capacity, we have been working with the Ministry of Energy through technical cooperation on a strategic roadmap to guide this transition, reduce emissions and improve energy efficiency, while aiming to ensure that the grid is prepared to balance future supply and demand.
We are actively supporting Azerbaijan's Low-Carbon Pathway, targeting a 40% reduction in greenhouse gas emissions by 2050, aligning our work with the ‘Azerbaijan 2030" strategy for green growth.
- Is the EBRD planning to expand financing for new renewable capacities in Azerbaijan and Central Asia? Is the creation of regional energy clusters or cross-border green corridors being considered a priority area of work?
- Yes, expanding renewables financing in Azerbaijan and the Central Asia region remains one of the top priorities for the EBRD. Across Central Asia, our strategy and direction are similar: scaling clean energy generation and green transition, alongside enabling investments and policy dialogue aimed at strengthening and expanding the grid connection.
We are following 'green corridor' developments closely and are ready to support the structuring and financing of these projects. One big advantage the EBRD brings is that we are actively supporting renewables and energy infrastructure development in all Central Asian countries, so we are well-positioned to engage across borders, supporting preparation with our people on the ground, helping mobilise private capital together with our international partners and financing sustainable infrastructure aimed at further regional integration.
One current example that comes to mind is our work with the Kyrgyz Republic, Kazakhstan, and Uzbekistan on the Kambar-Ata 1 project. Together with the European Union and the European Investment Bank, we are preparing to lend up to $1.5 billion for adding a combined 1.9 GW of renewable capacity to the region, in close coordination with the World Bank.
It is also worth addressing what ‘green corridors" can mean in practice. They are not limited to a single asset class; they are about cleaner, seamless connectivity, combining multimodal transport modes (rail–port–sea–road) and actors as well as practical energy-transition measures along that route.
A good illustration is our container study with Georgian and Azerbaijani railways, which, if implemented, would shift trucks onto rail between Batumi and Baku, reducing congestion and emissions across the Middle Corridor.
We are closely following these developments and with strong stakeholder commitment, we stand ready to support bankable cross-border projects.
- Under what specific conditions would the EBRD consider financing projects related to the expansion of the Southern Gas Corridor or the modernization of gas infrastructure in Azerbaijan? Would this be limited to projects that improve energy efficiency and reduce emissions, or could it also include capacity expansion?
- The EBRD could, in principle, consider financing an expansion of the Southern Gas Corridor only if a clear set of conditions is met.
First, the expansion would need to be aligned with the Paris Agreement – a prerequisite for all EBRD projects.
The expansion would need to accelerate decarbonisation and mitigate carbon lock-in risks, including by future‑proofing the infrastructure so it can transport low‑carbon gases over time.
It would also need to deliver a clear and positive impact in EBRD countries of operations, which in practice would likely mean meaningful gas offtake in the Balkans.
And last but by no means least, strong support from the EU and its member states would be absolutely vital.
- In 2024-2025, Azerbaijan, with the support of EBRD, held its first solar auctions. Does the Bank plan to support new tenders in 2026? Which technologies - solar, wind (including offshore), or small hydropower - may receive priority focus?
- We're glad to have supported Azerbaijan's first-ever renewable energy auction. It was a very important milestone showing that a competitive, transparent tender can deliver highly competitive tariffs in the country. It also sent a clear signal to potential investors, demonstrating Azerbaijan's preparedness to scale clean energy through a market-based framework.
Looking ahead, Azerbaijan has the potential to increase its renewable energy capacity by means of solar, wind, and offshore wind. However, it is important to develop it together with the necessary infrastructure, including transmission grid, regional interconnections and storage solutions, including green hydrogen.
As EBRD, we stand ready and looking forward to continuing to support the Government with future renewables tenders, to support the 'Azerbaijan 2030' strategy for green growth and directions for its Low-Carbon Pathway targeting a 40% reduction in greenhouse gas emissions by 2050.
On technologies, the right mix will depend on the system's needs and what can be delivered at scale. Solar and wind (including offshore) are great options and would be more meaningful if considered together with the storage and transmission infrastructure. Hydropower can also play a role where it is economically sound and environmentally sustainable.
The key is to keep building a steady, bankable pipeline that can attract private investment and support a reliable power system. We at the EBRD stand ready to further support Azerbaijan to have the right green energy mix and to mobilise finance for its green energy ambitions.
- As the share of wind and solar power increases, system balancing becomes critically important. Does the EBRD plan to finance industrial-scale battery energy storage systems (BESS) in Azerbaijan? Are hybrid models - renewables plus storage - considered a priority?
- Yes. The EBRD already has a very strong track record of financing battery storage in other markets, both stand-alone BESS and co‑located storage alongside renewables.
As wind and solar expand, storage becomes a natural complement to managing intermittency and support system balancing. That is why we are keen to explore financing for similar projects in Azerbaijan.
- Azerbaijan is actively promoting the concept of green energy exports and is exploring prospects for green hydrogen production. Is the EBRD prepared to finance pilot projects for electrolyzer installations and the development of hydrogen infrastructure, or does the Bank's focus at this stage remain primarily on renewable generation and grid integration?
- Azerbaijan's interest in green hydrogen and green energy exports is timely. We have been supporting the groundwork for some time now. In particular, we have worked with the authorities on the National Hydrogen Strategic Outlook, which was presented at COP29 and published more recently. Together with our Azerbaijani partners, we are now exploring ways to support its implementation.
At this stage, however, our investment focus remains on the fundamentals that are key to making the green hydrogen pathway credible: scaling renewable generation while strengthening and expanding the grid.
That said, the EBRD has a proven track record of supporting pilot green hydrogen projects in other countries, including successful examples in Egypt and Uzbekistan, and we would be happy to look at similar opportunities in Azerbaijan in the near future and support the authorities in the development of a pilot green hydrogen project as a follow-on outcome of the work we have done on the National Hydrogen Strategic Outlook.
- At the end of 2025, the EBRD allocated $100 million for the implementation of the Green Economy Financing Facility (GEFF) program in Azerbaijan. How will these funds help small and medium-sized enterprises become part of the green supply chain?
- Green Economy Financing Facility is a five‑year programme delivered through selected partner financial institutions, which will on‑lend to eligible private-sector borrowers for investments including in energy efficiency, renewables, resource efficiency, circular economy, and climate resilience.
For SMEs, this means access to finance via local banks for eligible upgrades that can help them participate in the renewables supply chain – for example, equipment modernisation and efficiency improvements.