Azerbaijan discovers the use of renewable energy

Nov 01, 2007 01:00 AM

by Ellen Koehrer

The first initiatives aiming to provide alternative energies to the gas and oil-producing region between the Caucasus and the Caspian Sea are still in the beginning stages. These ambitious projects could, however, see the light of day soon with the support of foreign capital and technological aid.
Azerbaijan’s economy is in full boom. Thanks to its gas and oil reserves, the country ranks among the world’s fastest growing economies. Its GNP rose 34.5% last year. Aside from oil and gas reserves, the construction of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline in 2005 also contributed to the economic growth.

However, according to experts, Azerbaijan’s oil reserves will only be exploitable for the next twenty to thirty years. The Azerbaijani government has recognized this challenge and launched new initiatives for the use of alternative energy. These alternative energy sources can be funded with profits generated by the exploitation and sale of the country’s oil reserves.
These efforts have, however, only barely seen the light of day. At the end of 2004, the use of alternative energy was ratified by state decree. Legislation satisfying European standards with regards to energy supply payment does not exist, although foreign investors are demanding it. Rafiq M. Aliyev, director of the Ministry of Industry and Energy’s economic department gives the following explanations: with financial aid from the European Union, the Asian Bank and the UNDP, the use of wind and water power is being studied. Azerbaijani legislation must be adapted to European standards; with these efforts, the Azerbaijani government hopes to attract investors.

The first foreign investors are already in the starting blocks
A service infrastructure adapted to the new needs is still lacking in terms of the introduction of renewable energy in the old electricity network, remarks Gila Altmann, a consultant for the Ministry of the Environment in Baku. According to the federal agency for the externaleconomy, losses brought on by the transfer in the Azerbaijani network reached more than 18% in 2005.
Electrical current supply must be improved by repairing existing facilities, a third of which have already been in use for 30 or 40 years, and by constructing gas-powered power plants.

The first foreign investors are already in the starting blocks. Climatic conditions favour the use of wind power. On the Absheron peninsula, on which rests a part of the Azerbaijani capital, average wind speeds vary between 7 and 8 meters per second. These speeds were recorded 280 days out of the year.
Furthermore, facilities for offshore wind power could be constructed in the Caspian Sea. They could border the oil platforms that can be seen by the dozens from Baku's peer. Azerbaijan’s first wind park is already planned. The South Korean company KEPKO is presently negotiating details for the construction of a facility in Baku's Garadag district with the Ministry of Energy.

Wind power could supply many smaller towns
The problem of introducing wind power in the electricity network has not yet been resolved, says Michael Nosiadek from the German-Azerbaijani Economic Foundation. However, he thinks that the problem can be resolved in the future with the know-how of German businesses: the use of wind power would be ideal for this country, which is the size of Austria and in where a very large number of small towns are located next to the city of Baku which counts 2.8 mm inhabitants.
Precisely for the villages, effectively functioning units could be created with wind power. Because no costly large-scale electricity network would have to be created, it would be possible to maintain stable energy costs in the long-term. At the start of the year, prices tripled. With the alternative of wind power, they could be uncoupled from oil and gas prices, argues Nosiadek.

The region between the Large and Small Caucasus is rich in mountain streams and lakes. Using small hydraulic installations, this low cost energy source is already in use. According to statements from the Ministry of Energy, negotiations are currently underway to increase their number.
Azerbaijan has strong solar intensity per sq km. Plans for the low cost use of thermal or photovoltaic solar installations can be established. However the use of these techniques is made difficult by the high rate of air pollution and by frequent sand storms, particularly on the Absheron peninsula, where a large part of Azerbaijan's 8.1 mm residents live. However, an interesting market of economic photovoltaic installations could be created due to the large number of private homeowners, provided that the economy continues to develop as rapidly as it has.

Using the potential of German businesses
Rafiq M. Aliyev hopes to use the technological potential of German enterprises in the domain of renewable energies, particularly wind power. In May, Azerbaijani experts from the energy sector visited Germany to inspect first-hand installations for such renewable energies, to study the appropriate legislation and to research investors for future projects.
The Ministry of Industry and Energy and the Ministry of the Environment are responsible for investors in the renewable energies sector. The German embassy, the German-Azerbaijani Economic Foundation and the GTZ (German Agency for Technical Cooperation) of Baku provide information and supplementary support aimed at generating business and holding newcomers in the market.

Michael Nosiadek is optimistic that the use of renewable energy will be a success in the medium term. He believes with certainty that an interesting market can develop. Investments in the next five years will be important for the future of Azerbaijan if the oil reserves are depleted in the near future. It is therefore not only a matter of buying the know-how from abroad. Just as important will be the training of qualified experts and the creation of new jobs in the country itself.
“If oil revenue is reinvested in a targeted manner, with a priority placed on the education of young people, this country could certainly attain widespread prosperity and secure prosperity for the long term. This must be one of the most important tasks in the coming years.”

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