Energy Ministry: Azerbaijan guarantees purchase of electricity at fixed price for period of 20-25 years

In Azerbaijan, a standard package of state support is applied, including a Power Purchase Agreement (PPA), under which the state guarantees the purchase of electricity at a fixed price for a period of 20-25 years.

As Report informs, this was stated by the Deputy Minister of Energy of Azerbaijan, Orkhan Zeynalov, during the 30th anniversary Baku Energy Forum.

"There is also a Transmission Connection Agreement (TCA), and in addition, a number of tax benefits and exemptions are provided for private investors and companies. This is a basic set of mechanisms that differs from approaches used, for example, in the EU or the UK, where similar guarantees are implemented through Contracts for Difference (CFD). We have a more specific and direct set of measures," he noted.

Orkhan Zeynalov emphasized that with the development of renewable energy, the stability and balance of the energy grid becomes particularly important:

"This should not only be technologically feasible but also properly integrated into the overall system. The first task is technical: how the facility will be connected to the grid. The second is working with investors."

The Deputy Minister also touched on the issue of localization: "This is one of the key elements. So far, this issue has not been implemented in Azerbaijan, but it is on the agenda. I think at a certain stage we can start a dialogue on this matter - both in Azerbaijan itself and in the international arena. In some countries, this is already enshrined in legislation. For example, in Uzbekistan, there is a requirement for a minimum of 25% localization. This can be beneficial - local content, reducing dependence on external supply chains, especially given the geography of the region. But on the other hand, it can affect tariffs and the overall cost of projects (CAPEX). Therefore, the approach to localization should be balanced and well-thought-out."