Despite the fact that the Republic of Azerbaijan has vast oil and gas resources, onshore and offshore, the government has announced its plans to exploit its alternative and renewable sources of energy. Last year, the country produced about 52 million tons of crude oil and 30 milliard cubic meters of gas, which remains the main traditional source of revenue for Azerbaijan. Nevertheless, the Ministry of Industry and Energy confirmed that there is good potential for developing wind energy in Azerbaijan, and the government is interested in increasing the capacity of hydroelectric stations and developing solar energy facilities. It is estimated that just wind-related energy could produce 800MBt. Also, in the near future, there are plans to construct a plant that manufactures solar batteries. Although the State Agency on the Use of Alternative Sources of Energy is established within the Ministry of Industry and Energy, developing alternative sources of energy is still relatively new sphere, and there is no developed legislation regulating the area.
Special State Programme
The Azerbaijani government introduced a special State Program on Use of Alternative Sources of Energy on October 21 2004 (the Program). The implementation and control over the use of alternative sources of energy is assigned to the State Agency on Use of Alternative Sources of Energy.
The designated purposes of the Program are:
- to determine the potential of alternative sources of energy in the production of electrical energy;
- to increase effectiveness in the use of energy resources by putting alternative sources of energy into exploitation stage;
- to provide additional employment opportunities by creating new areas of energy production;
- given the general capacity of available traditional sources of energy in Azerbaijan, to increase the capacity of energy power through alternative sources of energy and thus achieve strengthening of energy security in the country.
Types of alternative energy source
Azerbaijan has determined the following energy resources as alternative energy:
Wind energy
The most favourable areas of wind energy are considered to be Absheron peninsula and the north-west coastline of the Caspian Sea. In 1999 a Japanese company, Tomen, and the Institute of Scientific Research on Energy and Energy-related Projects of the Republic of Azerbaijan signed an eco-technical memorandum on the installation of two towers in Absheron, and an electric station in Gobustan.
Solar energy
For the past years a number of developed countries have started to apply Photovoltaic Programs (PVP) to the use of solar energy. Azerbaijan is considering joining this program as a long-term goal as it will significantly help the development of alternative energy in the country.
Small-volume hydroelectric stations
The government's plan is to set up 61 hydro-electric stations.
Energy of biomass
There are several sources of biomass energy in the country:
- flammable industrial residues;
- residues from forestry and wood-procession areas;
- agriculture products and organic residues;
- utility and communal residues;
- residues obtained from the areas polluted by oil and oil products.
Geothermal energy
Using alternative sources of energy
The Program stipulates specific measures that are aimed at the effective exploitation of alternative energy, including:
- preparing proposals on the sophistication of legislative mechanism;
- learning and applying international practices on the use of alternative energy;
- encouraging the use of alternative energy;
- preparing experts in the area of alternative energy and training energy producers.
Existing legislation
As noted, there is no specific legislative act regulating a wide range of issues related to alternative and renewable energy. However, some legislation is worth mentioning as it now serves as a resource to refer to when questions dealing with alternative energy arise.
- State Program on Use of Alternative Sources of Energy dated October 21 2004;
- Law on Use of Energy Resources dated May 30 1996
- Law on Energetic Power dated November 24 1998
- Decree of the President No 594 on Measures Related to Use of Alternative and Renewable Energy dated November 16 2009. This Decree envisages allocation of the proceeds in the amount AZN1 million to the Ministry of Energy and Industry and AZN1 million to Azerenergy, each aimed at the development and use of alternative energy resources.
Considering the vast opportunities available in alternative energy it is most important to attract as much investment as possible so as to maximise use of these energy resources. Identifying major investors in this area is part of the Program. Nonetheless, as long as there is no specific legislation governing issues of use of alternative energy, the Program may prove to be less effective than hoped.
 |
About the author
Ismail Askerov established Baku practice in 1995 under the name Jura Consultants. It was one of the first foreign law firms in Azerbaijan to provide legal support to foreign investors. He was previously a director of McGrigors Baku Limited which was renamed MGB Law Offices in September 2007.
Ismail is a member of the College of Advocates, Azerbaijan and a member of the International Bar Association. Ismail studied at Moscow Military Academy of Economics, Finance and Law where he received his diploma in law, and he has also a certificate of academic study in law from the University of London, Centre for Commercial Law Studies.
Ismail has contributed to articles on privatisation, bankruptcy and power sectors reforms for a number of leading textbooks. He speaks English, Russian, Azerbaijan and Turkish. |
Contact information
Ismail Askerov
MGB Law Offices
11 Rasul Rza street,
apt 28-30
Baku, AZ 1000
Azerbaijan
Tel: +994 12 493 2939
Fax: +994 12 498 7132
Web:www.mgb-law.com |