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All eyes on Azerbaijan

So far, raw material-rich Azerbaijan has relied primarily on fossil energy sources such as oil and natural gas. But even the country in the South Caucasus cannot escape the global energy transition. And so, in recent days, major investors from the Arab world have been coming to the country to initiate projects in the field of renewable energies.

This is what the completed wind farm in Azerbaijan will look like (Image: EBRD)This is what the completed wind farm in Azerbaijan will look like (Image: EBRD)

Representatives of Masdar, the energy company from the United Arab Emirates (UAE), took the opportunity to seal the next deal at the inauguration of the 230 MW Garadagh solar park - the largest in the region. And so contracts for further solar and onshore wind projects with a total capacity of 1 gigawatt were signed with the government of the country of 10 million inhabitants.

Al Jaber, President-elect of the upcoming COP28 global climate summit and Chairman of Masdar, said at the launch: "Azerbaijan’s ambition to develop low and zero-carbon solutions through renewable energy, is exactly what the world needs at this time. The UAE is proud to support Azerbaijan’s clean energy goals, to generate more than 30 percent of its overall energy capacity from renewables by 2030. We need all nations of the world to set out clear energy transition plans with clear targets for renewable energy capacity. As the UAE prepares to host COP28 in November, our North Star for climate action must be to keep the ambition of limiting global temperatures to 1.5C within reach."

The inaugurated Garadagh Solar Park is Masdar's first project in Azerbaijan and the first independent solar power project based on foreign investment. The park will generate half a billion kilowatt hours of electricity annually, enough to power more than 110,000 homes, and reduce carbon dioxide emissions by over 200,000 tonnes per year.

High-ranking representatives of the government of Azerbaijan and Masdar were present at the inauguration of the solar park (Image: Masdar)

However, Masdar is not the only company with big plans in Azerbaijan. ACWA Power from Saudi Arabia, another major investor in energy projects, also wants to expand renewables in the country and has now announced the construction of a wind farm with a capacity of 240 megawatts in eastern Azerbaijan. This is the first wind power project in Azerbaijan and the largest in the Caucasus region. Once operational, the wind farm's 240 MW in Absheron and Khizi will generate up to 893 gigawatt hours (GWh) of clean electricity annually and reduce the country's carbon emissions by more than 400,000 tonnes per year.

Marco Arcelli, Chief Executive Officer of ACWA Power, said, "ACWA Power is enthusiastic about playing a pivotal role in helping Azerbaijan achieve its goal of meeting 30 per cent of its energy needs through renewable sources by 2030. We are deeply grateful to our financing partners, the EBRD and the OPEC Fund, for their unwavering support in making this vision a reality. Our commitment to sustainability goes beyond borders and, as we mark another milestone for this significant project, we look forward to the continued support of all our stakeholders."

In this regard, both projects have one thing in common: financial support from the European Bank for Reconstruction and Development (EBRD). A syndicated loan of 197.1 million US dollars was guaranteed for the wind farm alone - in addition to support from the OPEC Fund for International Development (OPEC Fund).

The Bank sees itself as a major promoter of Azerbaijan's green agenda, both through investment and through technical cooperation and policy dialogue, which was enshrined in a Memorandum of Understanding signed in December 2022. To date, the Bank has invested more than €3.6 billion in 188 projects in the country, providing support to diversify the economy and achieve green climate goals.

In this way, it is fulfilling its mission to provide financial support to the countries in Central and Eastern Europe and in the former states of the USSR in their transformation process towards a market economy, and to bring them closer to the European Union. The parliamentary cooperation committee between the EU and Azerbaijan, which includes high-ranking politicians from both sides, even considers Azerbaijan's accession to the EU to be possible in the long term.

Katrin Radtke
EBRD, finances, Azerbaijan, Masdar, ACWA Power, Caucasus, energy transition, wind farm, solar park, inauguration, renewable energy

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