Advancing as green energy exporter: Black Sea Cable enhances regional energy security

Azerbaijan is adapting to emerging global challenges by transitioning from its historical reliance on oil and gas resources. While the country has traditionally depended on these energy sources, it is now effectively pursuing economic diversification. Promoting a sustainable energy future and advancing a green economy have become central priorities in Azerbaijan's recent strategic initiatives.

Azerbaijan: From green energy producer to European exporter

According to the "Agreement on Strategic Partnership in the Field of Development and Transmission of Green Energy," signed in Bucharest on December 17, 2022, Azerbaijan, Georgia, Romania, and Hungary have established a cooperative framework. This project, known as the "Caspian-Black Sea-Europe Green Energy Corridor" or "Black Sea Cable," aims to transport green energy generated from Azerbaijani wind power plants to Romania and, eventually, Europe.

The agreement outlines the construction of an energy bridge from the Caucasus region to Europe, connecting Azerbaijan, Georgia, Romania, and Hungary. The project includes the development of the "Black Sea Cable," a 1,195-kilometer submarine electric cable with a capacity of 1,000 megawatts. This cable will transport green electricity produced in Azerbaijan through Georgia and across the Black Sea to Romania, Hungary, and the rest of Europe, enabling up to four gigawatts of green energy supply.

On September 3, the 8th Ministerial/Steering Committee meeting was held in Bucharest to advance the implementation of this agreement. Azerbaijan was represented by Energy Minister Parviz Shahbazov, Romania by Energy Minister Sebastian-Ioan Burduja and Secretary General Mircea Abrudean, Georgia by First Deputy Prime Minister and Minister of Economy and Sustainable Development Levan Davitashvili, and Hungary by Foreign Affairs and Trade Minister Peter Szijjártó. Representatives from Bulgaria, the European Commission, transmission system operators, and the "CESI" company also participated.

The meeting addressed the status of the technical and economic justification (TEJ) conducted by the CESI company, progress on establishing the Joint Venture, the fiber-optic component of the green energy corridor, and the potential integration of Bulgaria into the project.

Minister Shahbazov highlighted that the preliminary results of the feasibility study for the "Caspian-Black Sea-European Green Energy Corridor" will be presented at COP29 in Baku this November. He also offered recommendations to ensure the project's progress.

Shahbazov emphasized Azerbaijan’s role as the primary resource provider for the Green Energy Corridor and its future as a key partner in renewable energy for Europe. He noted that with the signing of the founding documents for the Joint Venture, the project has entered a new phase. The "Joint Enterprise - Green Energy Corridor Energy Company" will finance the technical and economic evaluations, oversee project preparation and implementation, and manage measures entrusted by the participating countries.

Joint Venture established in Bucharest

Following the discussions, the "Shareholder Agreement" was signed, establishing a Joint Venture in Bucharest between Azerbaijan’s "Azerenergy," Georgia’s "Georgia State Electrosystem," Romania’s "Transelectrica," and Hungary’s "MVM." Additionally, a Protocol on the results of the meeting was signed. The Joint Venture and the Working Group were tasked with accelerating processes with the consulting company to complete the technical and economic feasibility study within the specified timeframe, preparing the Joint Venture’s action plan ahead of the next ministers' meeting, and initiating consultations on business models for the project.

It was agreed that the leadership of BM-Green Corridor Energy Company would follow a rotational basis. Tasks related to the Fiber Optic Cable Line (FOC) and the integration of Bulgaria into the project will be incorporated into the feasibility study of the quadrilateral project.

Furthermore, the parties agreed to collectively apply for status under the European Commission's process launched in September 2024 concerning the second list of Projects of Common Interest (PCI/PM). Support was also expressed for hosting a high-level event dedicated to the Project during the COP29 Climate Leaders Summit.

Hungary seeks European Union support for Black Sea Cable project

At a meeting in Bucharest focused on the Hungarian-Azerbaijan-Georgia-Romania "green energy" partnership, Hungarian Minister of Foreign Affairs and Trade, Peter Szijjártó, highlighted the need for financial support from the European Union for the Black Sea Cable project.

Minister Szijjártó emphasized that the project, which aims to export "green" electricity from Azerbaijan and Georgia to Hungary and Romania, is nearing a critical juncture. He underscored that energy security is a fundamental aspect of national security during these challenging times.

Hungary’s energy strategy revolves around four key pillars: expanding nuclear power, significantly increasing solar power capacity, seeking cooperation with reliable energy suppliers, and exploring new supply routes.

The "Green Energy Corridor" project is expected to introduce new "green" energy sources from Georgia and Azerbaijan, enhancing the sustainability of Hungary’s electricity consumption. Szijjártó noted that the project is advancing swiftly, with energy companies from the participating countries having established a joint venture and planning to sign a partnership agreement in the near future. He expressed hope that the European Union will provide the necessary financial support to develop the infrastructure for this initiative.

The European Commission is anticipated to allocate €2.3 billion to support the project.

World Bank Loan Supports Regional Energy Projects

The World Bank's Board of Executive Directors recently approved a $35 million loan for the first phase of the Enhancing Energy Security through Power Interconnection and Renewable Energy (ESPIRE) Program for Georgia. This initiative is a key part of a broader $500 million program aimed at boosting Georgia’s institutional capacity for submarine cable projects, enhancing its domestic power transmission system, and establishing a direct electricity interconnection between the South Caucasus and Southeast Europe.

The ESPIRE Program also focuses on improving digital connectivity by reducing internet costs and enhancing bandwidth through parallel fiber-optic interconnections across the Black Sea. This support aligns with the goals of the Black Sea Submarine Cable (BSSC) Project, which aims to create an integrated network of electricity and fiber-optic cables linking Georgia and Romania, further integrating regional energy and digital infrastructures.

Romanian Energy Minister: Caucasian energy market to lower prices in Europe

Romanian Energy Minister Sebastian-Ioan Burdujan has highlighted the potential impact of the Black Sea Energy Cable project on energy costs in Europe. Speaking about the project, Burdujan emphasized that accessing energy from the Caucasian market, specifically Azerbaijan, could lead to significant benefits for European countries.

"The availability of energy from a distinct market like the Caucasian region will diversify supply sources and contribute to lowering energy prices in our region," Burdujan stated. He added that the project's presentation at COP29 in Baku this November will provide further insights.

While acknowledging that the Black Sea Cable project is costly, Burdujan noted that the exact cost will be determined once the Technical Impact Assessment (TIA) is complete. He estimated that the construction of the submarine cable line between Georgia and Romania will require approximately €3.5 billion. Despite the high cost, he affirmed that the project will enhance energy security and market stability.

Additionally, Burdujan mentioned that the project includes the installation of a fiber-optic communication cable. The TIA will assess the feasibility of this component, which aims to connect the four participating countries and support regional information flow and digitalization.

In conclusion, the collaboration among Azerbaijan, Georgia, Romania, and Hungary underscores a commitment to enhancing energy security and sustainability across the region. As the project progresses, with financial backing from the European Union anticipated, it is expected to play a crucial role in diversifying energy sources, reducing costs, and supporting regional digital infrastructure. The forthcoming presentation of the Technical Impact Assessment at COP29 will provide further insights into the project's impact and future developments.