Azerbaijan, Central Asia agree to transfer green energy to Europe

The energy component of the trans-Caspian cooperation is expanding. And at the expense of not only oil and gas, but also green energy, which is trending today.

On August 9, President of Azerbaijan Ilham Aliyev took part in the Meeting of the Heads of State of Central Asia and the Republic of Azerbaijan, held in Astana. In his speech at the meeting, he spoke, among other things, about Azerbaijan's interest in close cooperation with Central Asian countries in the field of renewable energy. The Memorandum of Cooperation signed in Tashkent in May this year on the unification of the energy systems of Azerbaijan, Kazakhstan and Uzbekistan is the first step in this direction.

It should be noted that on August 6 in Astana, the Ministers of Energy of Azerbaijan, Kazakhstan and Uzbekistan signed a protocol following the results of a trilateral meeting on the project of connecting energy systems. As you know, a draft Agreement on strategic partnership in the field of development and transfer of green energy between the three countries has already been agreed, and the Terms of Reference for the preparation of an initial feasibility study, which will be developed by the Italian company CESI, have been approved. An agreement was also reached on the establishment of a joint venture with the participation of national energy companies of the parties.

The project provides for connecting the energy systems of the three countries by laying a high-voltage cable along the bottom of the Caspian Sea and on the territory of other countries with the implementation of the most technically and economically optimal trade in green energy produced in Azerbaijan, Kazakhstan and Uzbekistan.

In 2018, five Caspian littoral countries signed the Convention on the Legal Status of the Caspian Sea, which opened the possibility for the construction of underwater cables and pipelines. 

The only condition for the implementation of projects is now the coordination of issues with the countries whose sectors will be communicated. Azerbaijan and Kazakhstan will lay an electric cable within their maritime borders, and there will be no problems with other neighbors in the Caspian Sea. A year after the adoption of the "Constitution of the Caspian Sea", Kazakhstan and Azerbaijan announced the start of laying a fiber-optic communication line along the seabed - TransCaspian Fiber Optic, which will connect China and the European Union. 

Now Baku, Astana and Tashkent have conceived an even more ambitious project with great prospects. Today, this project no longer seems fantastic to anyone. Moreover, after the meeting of the Advisory Council of the Southern Gas Corridor in February last year, a new direction appeared in Baku - the export of green energy by Azerbaijan and its partners to Europe. The Memorandum signed in Tashkent in May is a natural consequence of these developments. As well as the agreement reached in November 2023 between Baku, Tashkent and Astana on the creation of a joint venture to export green energy to Europe.

The resources obtained as a result of the interconnection of the energy systems of the three countries will travel a long way to Europe. But the project is worth it. It will help the Central Asian countries to access the Black Sea Energy corridor through the Black Sea, an agreement on which was signed between Azerbaijan, Georgia, Romania and Hungary in December 2022 in Bucharest. The project involves laying an underwater cable with a capacity of 1 GW and a length of 1,195 km. The cable will be designed to supply green electricity produced in Azerbaijan through Georgia and the Black Sea to Romania for subsequent transportation to Hungary and the rest of Europe. The capacity of the underwater transmission line will be 1000 MW, the length will be 1195 km, of which 95 km is on land, 1100 km is underwater. Initially, plans were built between the EU and Georgia, Azerbaijan joined later, and with its connection, the project began to expand and now involves the export of electricity from Central Asian countries in the future. 

Do the countries of the region have the necessary potential to provide electricity to European partners? Let's figure it out.

According to official data, in 2023, Azerbaijan increased electricity production by 0.9 percent, and exports by 8.3 percent. Electricity production in the country increased to 29 billion 276.6 thousand kWh. Energy imports increased by 54.5 percent, which is much faster than the increase in exports. However, given the projects that are already being implemented in the field of renewable energy, and those that are planned to begin in the coming years, Azerbaijan's capabilities will significantly increase due to the expansion of the use of renewable energy sources. In the first half of the year, the share of green energy increased to 15 percent of the total electricity generation in the country. As you know, by 2030, the share of renewable energy sources is planned to increase to 30 percent.

The country has significant potential in the field of renewable energy. The proven potential of the Caspian Sea alone reaches 157 GW. It should be noted that Azerbaijan has already signed documents with the world's leading companies in the field of renewable energy, providing for the production of 10 GW of electricity from renewable energy sources. According to experts, even if half of this volume becomes a reality, Azerbaijan will turn into the most important source of energy for Europe.

Most of the questions arose about Kazakhstan as an exporter of electricity, due to the fact that the country itself is experiencing a shortage of electricity. However, the Ministry of Energy of the country dispelled doubts, saying that, despite the current shortage of electricity in Kazakhstan, there is a great potential for the development of renewable energy sources in the western regions, including wind and solar generation. The possibilities of developing nuclear energy are also being considered. And if the Kazakh people say "yes" to the NPP, it will eliminate many problems.

The role of the backbone network in Kazakhstan is performed by the national electric grid, which, among other things, provides electrical connections between the regions of the republic and the energy systems of neighboring states (Russia, Kyrgyzstan, Uzbekistan). In order to ensure reliable energy supply to the economy and the population of the country, phased commissioning of new capacities and modernization of existing power plants are envisaged in the coming years. In order to ensure the systematic sustainable development of the energy complex, the Energy Balance has been approved until 2035, according to which an almost twofold increase in new capacities is expected.

Uzbekistan also plans to double its electricity generation by 2030 to ensure the country's energy security, as well as to connect to the export of electricity to Europe. By 2025, the capacity of the country's energy system is expected to reach 25.6 GW.

In other words, Azerbaijan and the countries of Central Asia have significant potential for solar and wind energy. The relatively low population density, large territory and many sunny days a year make our countries a unique platform for the development of green energy. Joint participation in projects related to alternative energy sources will allow each country to ensure the effective use of its potential.

Of course, there are problems. In particular, the very high cost of upgrading the existing electricity generation infrastructure in Central Asia. It is so high that international financial institutions do not undertake to finance projects entirely, but only make point injections into individual components. The unification of the energy systems of our three countries will help to solve the problem to some extent. It is possible that as the Black Sea transmission line project is implemented, interest in investing in the Caspian submarine cable and the energy infrastructure of Kazakhstan and Uzbekistan will grow. Apparently, Europe is very interested in importing electricity, even from such long distances. The problem is that the EU countries, having set an ambitious goal to abandon the use of fossil fuels in ten years, did not calculate their capabilities. 

As a rule, European countries are small in area and have a high population density. Meanwhile, solar and wind power plants require large spaces. Attempts to compensate for the lack of space for a large solar power plant with some innovations will cost even more, so the EU decided to stop importing.

Unlike overpopulated Europe, Central Asia and Azerbaijan, as we have already noted, have all the conditions for the development of green energy. It should also be taken into account that Kazakhstan and Uzbekistan can play a big role in the extraction of critical raw materials, which these countries are rich in and which are used in the production of solar panels, wind turbines and batteries.

For example, Kazakhstan currently produces 19 of the 34 types of critical raw materials of the European Union.

In short, the region is attractive both from the point of view of the possibilities of using renewable energy sources, and from the point of view of extraction of raw materials and production of equipment for generating green energy. I think Azerbaijan, Kazakhstan and Uzbekistan will try to make full use of these advantages.