Can Azerbaijan become hub for export of Green Energy to Europe and China?

By Azernews

Qabil Ashirov

Green energy, the promising sector of the future, gradually gaining momentum in Azerbaijan's agenda. As is known, Baku kicked off the initiative to supply 30 percent of its electricity from renewable sources and to export 4 GW of energy to Europe through the cables passing the Black Sea by 2030. Regarding the issue, the “Agreement on a strategic partnership in the field of green energy development and transmission between the Governments of the Republic of Azerbaijan, Georgia, Romania, and Hungary” was signed in Bucharest on December 17, 2022.

It seems Azerbaijan is not going to limit itself only to generating and exporting green energy, but also the country intends to turn into the hub of green energy by transferring the electricity produced in Central Asia through its territories. Regarding it, on November 14, 2023, Azerbaijan signed a joint communiqué with Kazakhstan and Uzbekistan over transferring electricity generated from renewable sources in the said countries to Europe.

This sector is very important for Azerbaijan to diversify its exports heavily dependent on oil and gas, but it is so ambitious project that poses some questions as well.

As is known, previously the Central Asian countries faced big challenges when they tried to export their oil and gas to the European Markets. Could these countries encounter the same problems in the future? Besides, China and India are emerging markets with over US20 trillion in Asia. If somehow, Azerbaijan connects with the Central Asian electricity grid, can it export its electricity to said countries?

Commenting to Azernews on the issue, economic expert Natig Jafali emphasized the importance of the project, saying that many international financial institutions, organizations, and banks are interested in this type of project as it looks much more attractive to them.

“That is why there will not be a serious problem in finding financial sources. It will even be possible to get access to credit in very favorable conditions. Also, this initiative is one of the directions of joining the South Caucasus to the European [market] or greater cooperation of the South Caucasus with Europe in energy and other fields. Therefore, the countries of the European Union take a deep interest in this project, and I think that this project has a better future,” Natig Jafarly said.

He also underscored that in the future, it is possible to ensure the participation of all South Caucasus countries in the same projects. For example, if Armenia will not hesitate to sign the peace treaty I think that it also has the opportunity to join this project through Azerbaijan in the future. For this, Armenia needs to establish normal neighborly relations with Azerbaijan.

As for obstacles before the Central Asian countries to export energy to the European Markets, the economist noted that it is inconvincible. He pointed out that Russia hindered the delivery of oil and gas produced from Central Asia to Azerbaijan and its transport to Europe through the infrastructure created and moderated by Azerbaijan. He reminded that in addition to the the status of the Caspian Sea, the environmental protocol was signed regarding the construction of communications with the bottom of the Caspian Sea. Based on this environmental protocol, Russia tried to obstruct the access of Central Asian oil and gas to the European market.

“But this is a different project. Because certain cables such as internet lines, pass under the Caspian Sea. It is also possible to lay electric lines along with them. I do not think that Russia will object to it because oil and gas are a strategic issue for them. However, it is worth noting that as a result of the steps taken by Azerbaijan together with other countries, it was able to evade the obstacles related to oil and gas. For example, Kazakh oil is brought to Baku by tankers and then transported to Europe through BTC. Besides, Azerbaijan inked reverse gas contracts with Turkmenistan via Iran, and so on. All this indicates that Azerbaijan can overcome these obstacles as a result of its successful policy,” N. Jafarli said.

Regarding exporting Azerbaijan’s green energy to China and India, the economist said that it is technically impossible. However, he added that cooperation in other energy sectors is possible. Natig Jafarli thinks that the Azerbaijani state can take certain steps in this regard.

“But when it comes to electricity, it can be a more expensive project. However, it should be noted that those countries have the opportunity to join the routes provided by Azerbaijan. If a big hub emerges here in the future, those countries can join this hub, but in the opposite direction is not very logical. Because the power and volume of electricity produced by Azerbaijan can only be enough to deliver it to Europe,” the expert concluded.