Javid Abdullayev: COP 29 will be a great platform to present Azerbaijan's investment attractiveness in the field of green energy - INTERVIEW

By the decree of the President of Azerbaijan, Ilham Aliyev, 2024 was declared the Green World Solidarity Year. Also, this year, Azerbaijan will host the 29th session of the Conference of the Parties (COP 29) to the United Nations Framework Convention on Climate Change (UNFCCC). In addition, it is expected that there will be several innovations related to the "green energy" policy this year. A number of goals are expected to be achieved in Eastern Zangazur and Nakhchivan. Taking all this into account, Javid Abdullayev, director of the Azerbaijan Renewable Energy Agency under the Ministry of Energy of the Republic of Azerbaijan, spoke in an interview with Report about the plans, some of which were implemented last year and some that will be implemented in the future.

- Mr. Javid, first of all, how do you evaluate the work done for the development of the "green energy" sector in Azerbaijan in 2023? What were the significant events in this area last year?

- Of course, the biggest significant event was the commissioning of the 230 MW Garadagh Solar Power Station (GES) with the participation of the President of Azerbaijan. As you know, this GES is the largest in the CIS and the first industrial-scale solar power plant in the Caspian Sea region. In this regard, I would like to emphasize the importance of this event.

At the same time, many new projects were founded at the same event last year. Contracts were signed on three new projects - a 315 MW solar power plant in the Banka settlement of Neftchala, commissioned jointly with the Masdar company, a 445 MW solar power plant in Bilasuvar, and a 240 MW wind power plant in the Absheron-Garadagh regions, which includes the commissioning of 1 gigawatt renewable energy source in total.

At the same time, contracts were signed with some new investors. I wouldn't name them all one by one. The work related to the signed pilot projects continued very successfully. At the same time, there were very important measures related to the formation of the normative legal framework.

You know that there is a law "On the use of renewable energy sources in the production of electricity," and four sub-legislative acts resulting from this law have been approved. As the most important among them, I would like to mention the "Rule for selecting electricity producers in the territory of renewable energy sources" approved by the President of the Republic of Azerbaijan. That rule unambiguously defines the legal framework related to the contracts concluded and the auctions to be held and is of great importance in our activities with subsequent investors. At the same time, I would like to mention the rules regarding active consumer support and green certificates. As you know, the information system on renewable energy sources has been formed and put into use, and its charter has been approved. All this has become very important in terms of the normative legal framework.

At the same time, the President of the Republic of Azerbaijan signed a decree increasing the number of employees of the State Agency. Until now, the number of our employees was 40 people, from now on, we will continue our activities with 60 people.

At the same time, huge work has been done to strengthen our export potential. So, work has been done on the implementation of the quadrilateral agreement signed between Azerbaijan, Georgia, Romania, and Hungary, a tender was held, and as a result of the tender, a contract was signed with the winning company in the first days of 2024, and important work is being done on one of the export lines.

Last year was marked by numerous events. In particular, I would like to mention the event on "green energy" held in Nakhchivan. At the onset of last year, we already witnessed the holding of the first Green Energy Consultative Council on "green energy." This will probably become a tradition, and these processes will continue. In this regard, important achievements have been made in the field of using renewable energy sources across the spectrum. From this point of view, of course, 2023 was quite successful.

- As you know, 2024 was declared the Green World Solidarity Year by the order of the President of Azerbaijan, Ilham Aliyev. What work is planned for the State Agency of Renewable Energy this year?

- Of course, this issue has made each of the specialists working in the green energy field very happy. As a State Agency, we are also working on outlining measures to be implemented. We are planning to break ground on several projects. This is our major work. At the same time, as I said, huge work is planned to implement the adopted legislative acts. Actions related to the establishment of the Green Energy Zone in the liberated territories will be continued. There are plans to implement the Nakhchivan-related agreements as well as the export of electricity from Nakhchivan to Türkiye.

- This year, Azerbaijan will host the 29th session of the Conference of the Parties (COP 29) to the United Nations Framework Convention on Climate Change (UNFCCC). What is being done about it?

- Of course, this is a remarkable and important event, and holding this event in Azerbaijan, an event that does not lag behind the UN General Assembly in terms of its scale, is one of the most obvious indicators of the growing influence of our country. We can note that our membership in the UN Security Council, along with our chairmanship of the Non-Aligned Movement, is one of the greatest successes of Azerbaijani diplomacy. The increase in production volumes in our current plans sets us very serious goals for identifying buyers of green energy abroad, especially in Europe, and each of these players will participate in that event. Of course, we have plans in this regard as well, and it will be a great platform to present Azerbaijan's investment attractiveness in the field of green energy. This will be no ordinary conference. It promises to become quite a global forum, and within the framework of the global forum, of course, we will have ample opportunities to present our implemented projects, identify new projects, and, most importantly, ensure the success of our export routes.

- Mr. Javid, according to the General Plan for the Development of Baku until 2040, which was published recently, by 2040, one wind and three solar power plants are proposed to be constructed on an area of 2,650 hectares with an installed capacity of 1,200 MW in Alat, Lokbatan, Sabunchu, and Mardakan. Has the work already started on it?

- Since 2015, I have been represented at different levels in the preparation of the Baku City Master Plan and in the working groups. Regarding green energy, I would like to mention that the Master Plan is mainly conceptual in nature, and conceptual bases are defined in it, and other documents are made in the next planning stages after that. The master plan was discussed for a long time, and there were delays in its adoption. But nevertheless, we were aware of the concepts there. One of the mentioned areas is the Alat settlement of the Garadagh district, where Masdar Company has already built a plant.

Regarding the second area, I can say that 300 hectares of land were allocated by the Cabinet of Ministers in the last days of 2023, which it announced as the area of renewable energy sources. Of course, those areas are being studied by us step by step. There are pros and cons to their use as renewable energy sites. These areas must be agreed upon with certain authorities. That is, we intend to implement solar and wind projects in each of these areas in stages.

At the same time, 3,300 hectares of oil-contaminated reserve areas have been identified there. They are also currently being researched, offered to investors, and studied by us. In this regard, we had already started implementing the Master Plan before it was adopted, and it is a gratifying event that, as I have already said, 2 large areas have been fully agreed upon and identified as areas of renewable energy sources.

- In the meetings held between AREA and the International Finance Corporation (IFC) last year, the possibilities of cooperation in renewable energy projects, offshore wind energy, hydrogen, and various export routes were discussed. In which projects is IFC's participation planned?

- As much as 157 gigawatts of wind potential has been identified in the Caspian Sea, and significant work has started to realize that potential. Frankly speaking, carrying out these works at sea and coordinating them requires new approaches and new views. From that point of view, IFC is ready to support us in the continuation of those projects and, perhaps in the future, holding auctions for offshore wind projects. In this direction, we may be interested in some consulting and technical support, as well as financial support from IFC.

- Several legislative acts in the green energy sector were adopted last year. What will be their role in the development of the sector?

- Legislative acts have very important effects on the development of the sector. As I mentioned, the producer choice rule in the renewable energy field in some ways defines the rules of the game. That is, as you know, according to the relevant law, two methods can be applied in the field of using renewable energy sources. Contracts can be signed through auctions and also through direct involvement in strategic and important projects. In both of them, the legal procedure was determined by the head of state in the manner I mentioned, and there are already special clauses regarding the content of the contracts to be signed. This makes our work easier. At the same time, it clearly signals to the investor that if they want to use renewable energy sources in Azerbaijan, what will be signed with them, what conditions will be defined there, and it is a rule that has clearly raised the investment attractiveness of this field in Azerbaijan to a very high level.

The second is the "Rules for the Implementation of the Active Consumer Support Mechanism.". This year, the most important issue before us is the deepening of the advertising and agitation work. Any citizen of Azerbaijan can install solar panels or small wind turbines under certain technical conditions in their private house. They can exchange the energy left over from their own consumption with the grid. At the same time, at the end of the year, they can sell the remaining energy to the grid and get funds to their card. This is a very important work that already supports the spread of renewable energy usage at the citizen level.

The regulation of the information system was, of course, important, and it was adopted. The fourth document is related to green certificates.

At the same time, I would like to specifically mention that our industry-wide agreements have certain provisions regarding green certificates. Their monetization is no longer an abstract thing, and the Azerbaijani side will also benefit from the certificates obtained from the commissioned station of Masdar.

- Mr. Javid, are there generally such statistical figures that show how much one kilowatt of solar, wind, and other types of energy costs the producer?

- There is one project that we have signed and implemented. That project is cheaper than the 0.057 manat ($0.035) approved by the Tariff Board for solar electricity. There will be more projects. Each project has its own specifications, but the first contract is within the price range determined by the Tariff (price) Council.

- What work is being done regarding the implementation of the "Agreement on Strategic Partnership in the Development and Transmission of Green Energy between the Governments of the Republic of Azerbaijan, Georgia, Romania, and Hungary"?

- Regarding this agreement, I should first note that two mechanisms are defined in it. First, there are meetings at the ministerial level. Five meetings üere held last year. The Secretariat of that Steering Committee is run by our agency, and we are involved in all processes. Currently, a decision has been made to establish a joint venture with the participation of transmission operators. Also, the technical assignment was approved.

As I said, a company has been selected to prepare the feasibility study of that project and the documents for the next tender. A contract has been signed with them, and during this year we should work intensively on the preparation of the feasibility study of that project. Determining the export route from the Caspian Sea to Europe, provided that it passes through the bottom of the Black Sea, is a very complex issue and requires a lot of research. Therefore, our work in this field will be very extensive this year. At the same time, as you know, at the end of last year, Central Asian countries also took the initiative to join this project. A document related to this has already been signed, and work has already started in that direction. European experiences should also be brought into this process. This process should be viewed comprehensively. Therefore, this project is one of our main priorities.

- What work is being done to create a Green Energy Zone in Karabakh and Eastern Zangazur?

- As you know, the liberated territories have been declared Green Energy Zones. With the involvement of an international consulting company, the Green Energy Zone concept was developed for those areas and was considered acceptable. Based on it, the Action Plan was approved by a special decree of the Cabinet of Ministers. One of the gratifying circumstances is that the Action Plan was fully included in the "I State Program on the Great Return to the liberated territories of Azerbaijan.". All measures are reflected there, and these processes are considered within the framework of the implementation of the State Program.

Equipping public buildings with solar panels and using renewable energy-based equipment for lighting roads and streets, parking lots, and other green energy concepts are also envisaged. In buildings without gas supplies, of course, the installation of certain devices for the purchase of excess heat energy and the application of certain approaches for the purchase of hot water are envisaged. A special Working Group was created to coordinate and monitor all these processes. The chairmanship of that Working Group is also held by the State Renewable Energy Agency.

At the same time, the monitoring plan has already been approved in all areas. Monitoring has been carried out since the second half of last year. Specific scores for the application of green technologies were calculated for each monitored area. They have been classified, and the positive solutions in each have been presented to the others. In particular, the Coordination and Monitoring Working Group, under the leadership of the Ministry of Energy, holds a meeting at least once every quarter. There, these issues are discussed, and if there are any deficiencies or delays in the process, they are identified and urgently eliminated so that the liberated territories can be fully transformed into Green Energy Zones. Obviously, every megawatt-hour of energy that will be consumed there will be obtained only from renewable energy sources. We have sufficient energy potential in Karabakh and Eastern Zangazur. Other projects are also on the agenda, whether it is Khudafarin, Giz Galasi hydroelectric power stations, or the 240 MW Shafaq project in Jabrayil, which is implemented with BP. We will probably witness serious information about them this year. In this regard, the application of green technologies in the liberated territories is very successful.

- A Green Energy Zone is also being created in Nakhchivan. According to the potential, what volume of green energy will be created there, and by what time is this zone supposed to be created?

- Currently, we have prepared a technical assignment for the development of a special concept related to Nakhchivan. Selection of an international consulting company is underway. In addition, it should be noted that Nakhchivan has special advantages in the field of green energy. There is also wind potential that can be used to balance solar electricity. At the same time, there is a large market like Türkiye nearby, and export opportunities are being considered there. A large number of technical issues have to be discussed, and contracts have been concluded between the transmission system operator of Azerbaijan and the relevant institution of the fraternal country.

At the same time, we have signed contracts with various companies to ensure production. The zoning work is almost complete, and we are looking forward to witnessing the next stage, i.e. the signing of implementation agreements and investment deals. We will probably soon witness the application of other elements specific to the Green Energy Zone in parallel with production from renewable energy sources in the Nakhchivan Autonomous Republic.

- How is the construction of Khizi-Absheron Wind Park going?

- Geological studies have been completed, and the routes for bringing the turbines to the site have been determined. The final approval stages are underway. As you know, the terrain there is complex, and there are many communications. Therefore, the approval process takes a lot of time. Work on the production of turbines has been started by the manufacturer. We hope that very soon we will inform the public about the completion of the construction of a large modern industrial-scale wind farm in Azerbaijan. But this process is very long. In particular, recent geopolitical and logistical issues bring special complexity. All possible measures are being taken to eliminate global negative impacts and to put the wind power plant into operation as soon as possible.

- Mainly foreign companies participate in the implemented projects. Are local companies interested in green energy in Azerbaijan? In general, have new investment proposals been presented?

- Of course, there have been. You know that these projects are quite large and require hefty financial resources. But I can say with complete certainty that during this year we will witness the participation of Azerbaijani companies in green energy projects. I don't want to name them. Except for one company. I can say that the State Oil Company of Azerbaijan (SOCAR) participates in many projects. But we will also witness the participation of other companies soon.

Besides, all this work is based on very serious research and analysis. In general, the use of renewable energy sources involves the solution of two global issues. Others are standard. One of them is the efficient use of land. That is, the land should be unusable for agriculture and should not cause problems for the area. Second, we need to be able to solve these grid problems. Because our grid is not that big. Our demand is not so great. It is impossible to integrate such a large amount of renewable energy into the grid. Even the integration of a part of them into the network requires serious analysis, and in this regard, the most advanced consulting companies in the world have studied the grid of Azerbaijan and made their proposals.

We know how much renewable energy can be integrated into the grid. Among these companies, I can mention Tetra Tech, a US company, and the EPRA company from brotherly Türkiye. Now, with the financial support of the World Bank, the famous Italian company CESI has joined the analysis of these projects and the analysis of grid possibilities. Work is underway on special programs related to strengthening the grid and integrating maximum amounts of renewable energy into it. That is, the main issue is that everyone should understand the philosophy of the projects we implement. This also applies to investors, of course, this information is important for internal use. These issues we implement are based on thorough analysis. That is, they have a systematic nature and are systematically managed.