Azerbaijan: between two "Gunesh" (35 years later)

The recent shift in Azerbaijan's policy towards renewable energy sources (RES) marks a significant distancing from its traditional dependence on thermal power plants (TPPs) powered by gas. This strategic turn, formulated by President Ilham Aliyev during COP-28, is aimed at strengthening the country's potential in the field of green energy while simultaneously releasing traditional fuels to increase gas exports.

Currently, a staggering 93% of Azerbaijan's electricity generation is produced at gas-fired thermal power plants. This strong dependence underscores the urgency of switching to alternative energy sources from renewable sources. In 2022, 28.998 billion kWh of electricity was produced in the country, while the share of hydroelectric power plants was just over 6%, and the share of renewable energy sources was only 0.7%.

The economic rationale for this transition is compelling. The gas supplied to the thermal power plant is supplied at a relatively low price - 120 manats or $ 70 per thousand cubic meters. For comparison, European gas prices have fluctuated between $200 and $2,200 per thousand cubic meters over the past three years. Even in Turkey, where prices are comparatively lower, they remain significantly higher than at Azerbaijani thermal power plants.

In order to completely replace thermal power plants with renewable energy sources, Azerbaijan must create a capacity of 9 gigawatts. While thermal power plants currently produce 3 gigawatts per hour, considering various operational factors requires additional power. Estimates show that in order to achieve such a capacity in the field of renewable energy sources, investments of $6-8 billion will be required, which is approximately $800 per kW.

The potential benefits of this transition are substantial. By eliminating the need for gas consumption at thermal power plants, Azerbaijan can save 5 billion cubic meters of gas annually, which can be redirected for export. According to the most conservative estimates, this could bring annual revenue in the amount of 2.5 to 5 billion dollars, which will lead to a quick payback for the renewable energy project within 3-5 years.

However, problems remain in the current approach to the development of renewable energy. Azerbaijan's dependence on imported equipment and stations for green energy infrastructure raises concerns about technological dependence. Moreover, purchases from countries with questionable environmental performance, such as the UAE, highlight the need for strategic partnerships with renewable energy pioneers.

With significant financial reserves exceeding $70 billion in the treasury, Azerbaijan has the means to invest directly in advanced renewable energy technologies. By partnering with leading innovators in this field, the country can use its financial resources to create a sustainable and self-sufficient renewable energy sector, ensuring both economic prosperity and respect for the environment for future generations.

Transition to a three-tier strategy

A paradigm shift is needed in Azerbaijan's renewable energy strategy, a transition from the passive role of consumers of imported technologies to active architects of a reliable, self-sustaining renewable energy sector. Located at the junction of human capital, climatic advantages and natural resources, Azerbaijan is ready to make renewable energy sources the backbone of its economy, akin to its current dependence on oil.

To achieve this transformation, it is necessary to adopt a comprehensive three-level strategy:

Science: It is necessary to create a powerful research apparatus to promote renewable energy technologies. This involves a systematic study of global developments in this area, combined with national research and development initiatives. The concentration of the country's scientific talents within this framework is of great importance to promote innovation and competitiveness.

Production: In tandem with scientific research, it is extremely important to create reliable production facilities for equipment and materials for the use of renewable energy sources. This requires the integration of scientific research with production capabilities, promoting synergy between theoretical innovation and practical application. The creation of design bureaus at production associations for the production of green industry products can further improve production efficiency and adaptability.

Service: Maintenance companies are indispensable to ensure the long-term viability of renewable energy infrastructure. These organizations will be responsible for equipment repairs, preventive maintenance and technological support, thereby ensuring the operational integrity of renewable energy facilities.

It is important to note that the concept of renewable energy goes beyond traditional sources such as wind and solar energy. It covers a range of innovative solutions, including energy-efficient building materials, the production of composite materials and batteries for electric vehicles. By expanding the scope of renewable energy sources to cover these diverse areas, Azerbaijan can benefit from a multifaceted approach to sustainable development and technological progress.

Azerbaijan's transition to a three-tier strategy for the development of renewable energy sources represents a key step towards economic diversification, respect for the environment and technological leadership. By prioritizing scientific research, increasing domestic production capacity and creating a reliable service infrastructure, Azerbaijan can position itself as a global pioneer in innovation in the field of renewable energy sources, opening up new ways of growth and prosperity for future generations.

The strategy of the Trinity

Against the background of changing trends in global energy dynamics, Azerbaijan is at a critical stage, ready to begin a transformational path from an oil-oriented economy to a beacon of innovation in the field of renewable energy sources. Realizing the strategic imperative of diversifying its energy portfolio, Azerbaijan sees a future in which the export of clean energy and technological excellence will take center stage.

The beginnings of this vision can be traced back to the late 1980s, when the seeds of renewable energy potential first began to germinate. Unfortunately, inertia and entrenched beliefs hindered progress, while the prevailing sentiment echoed the statement of former Minister of Industry and Energy Natik Aliyev that the development of renewable energy sources is economically unviable in light of Azerbaijan's rich oil and gas resources. However, the winds of change began to blow with the publication of works such as "Azerbaijan: Between Two "Gunesh", challenging entrenched dogmas and igniting a discussion about the country's energy future.

The central place in this discourse is occupied by the concept of the trinity strategy, which advocates a holistic approach to the development of renewable energy sources, considering the harmonious combination of the interests of the individual, society, the state, as well as the harmonization of the interests of the state, its neighbors and interested powers.

It is important to note that the trinity strategy goes beyond simple economic imperatives, embracing a coordinated trinity of interests encompassing: personality-society-state. For example, as the country transitions from incandescent lamps to LED lighting, not only consumers benefit in the form of lower energy costs, but also the state treasury, freed from the burden of subsidies for traditional fuels. In these symbiotic relationships, the interests of individuals, society and the state converge, contributing to harmony and progress.

Moreover, the geopolitical consequences of Azerbaijan's turn to renewable energy sources cannot be overestimated. By positioning itself on the world stage as a producer and investor in renewable energy sources, Azerbaijan can contribute to regional stability and development by involving neighboring powers in an agreed troika of interests: country-neighbors-powers. Such strategic harmony not only strengthens Azerbaijan's geopolitical position, but also promotes interconnectedness with the rest of the world through the arteries of green energy.

Ultimately, the merging of these internal and external twin trinity promises internal cohesion and external prosperity of Azerbaijan. If the country embarks on this transformative path, guided by the principles of sustainable development, innovation and inclusivity, it will pave the way for a brighter and more environmentally friendly future for future generations.

AZERBAIJAN: BETWEEN TWO GUNESH (The year 2009)

At the end of summer 1988 my story headlined “Where Does Wind Blow?” published in “Azerbaijani Youth” newspaper was under discussion. The story was about implementation of the state program “Gunesh”, which envisaged alternative power development. It was the daughter program of the wide-scale Soviet project “Power.”

The Soviet program envisaged development of alternative power, including wind and solar energy and power-saving technologies. The USSR was dependent on import – food stuff and consumer goods were bought at the expense of exported oil. By mid 1980s world oil prices went up and oil revenues declined, deepening crisis at the consumer market. The Soviet government had nothing to do than to increase oil production – oil has become priority of the new Soviet policy along with glasnost and perestroika. Another way to increase oil export was alternative power. It was planned to reduce consumption of traditional type of fuel as soon as alternative power is put into operation. But the wasteful Soviet system did not pay a proper attention to power saving and alternative power and the Communist party’s attempt has failed.

In my story I proved that Gunesh program is formal and makes no progress. 16Kv wind power utilities for the agro-industrial sector were installed formally and were actually not used and production of solar water heaters in Buzovna district has caused no interest. They have been installed at several objects in Baku, but were not used. The scientists of sun and wind rich country were not interested in this direction of research. The Academy of Sciences had an old laboratory with one old researcher and there was godforsaken “Vetron” ground for wind power utilities in Mashtaga district. Construction of the plant for production of wind power utilities in Neftchala town was delayed. The project has been approved by the USSR government, but has not been implemented.

Azerbaijan’s attitude towards alternative power did not change 20 years after adoption of Gunesh program. The officials are irritated with the phrase alternative power and try to justify their negative attitude towards this type of power wit its high cost price, non-profitability and etc. Alternative power is rather advantageous, perspective and dynamically developing direction in the world, especially in the developed countries, which lack their own natural resources.

Our officials have either miscalculated something or simply did not go deep into the matter. Alternative power is very advantageous for the oil-rich country, because it uses inexhaustible sources, such as sun, water and wind, for production of power and heating. But traditional power uses mainly exhaustible resources, such as oil and gas. Replacement of traditional power by alternative one will allow exporting more fuel and profit from this operation is rather impressive.

Solar water heaters

There are at least 270 sunny days a year in Azerbaijan. Therefore, the republic can actively use solar energy for production of hot water using solar water heaters. Their application is especially advantageous in individual houses and enterprises. According to the State Statistical Committee, more than 4 million people live in the rural regions. Average family has four members and it means that the country must have about 1 million houses. Lets’ say that each family consumer 100 liters of hot water a day and almost 4 Kwt power is needed for its production. 350 grams of conditional fuel (c/f) at the price of $150 per 1,000 cub.m. of gas is spent for production of 1 Kwt power.

4 kWt x 270 days = 1080 kWt x 1.000.000 houses = 1.080.000.000 kWt x  350 grams  c/f = 378.000 tons  c/f x $150 = $56.7 million.

As a result the population economizes a total of $56.7 million. If solar water heaters are used, people can use hot water for free and standard of living will be improved. Secondly, the government will earn $56.7 million at the expense of fuel export.

If the republic produces its own boilers, tanks and other components, its installation will cost about $300, which is cover the expenses during 4-6 years.

Windmills

Wind power becomes perspective and application of new technologies enables reducing cost price of production of 1 kWt power to $0.6 at the wind power utilities. During the past 20 years cost price dropped by 2-3 times and further reduction of wind power cost price can be forecasted.

Azerbaijan and first of all Absheron peninsula is perspective for wind power development. According to the wind power cadastre, annual average wind speed on the Absheron peninsula is 8 m/s, which is a good index. Wind speed of 4 m/s is enough for operation of big wind power utilities and we have at least 300 windy days a year.

Construction of wind power utilities network with total power of 1000 mWt will enable economizing about 2.5 million tons of c/f a year or obtaining income of $378 million from import.

1000 mWt = 1.000.000 kWt x 24 hours = 24.000.000 kWt/h x 300 days = 7.200.000.000 kWt/year x 350 grams c/f = 2.520.000 tons c/f a year x  $500 = $378.000.000

Total cost of wind power utilities network will cost $80 million and the project will be recouped within3 years.

Economizing fluorescent lamps

The campaign to replace traditional lamps by power saving fluorescent ones started in leading world countries several years ago. These lamps are fivefold efficient.

Adoption of such program in Azerbaijan promises huge profit. Considering that 2 million families consume almost 4 million kWt a day to lighten the houses, consumption can drop to 800,000 kWt, if power saving lamps are applied.  Every year 1,168 million kWt power or 408,000 tons of fuel will be saved. Income from export of economized fuel will total $61.2 million a year.

 1,6 kWt x 2.000.000 sectors = 3.200.000 kWt x 365 days = 1.168.000.000 kWt/year x 350 grams c/f = 408.000 tons c/f x $500 = 61.200.000

Only in three positions total economy of population and government’s income from fuel export will total about $0.5 billion a year.

There are also ecological advantages. Discharge of hydrocarbon with admixture of harmful substances to the atmosphere will drop by 6 million tons a year.

There are also other examples of perspectives of alternative power, for instance photoelectric transformation of light and solar houses, construction of which is in progress in  many countries. In the solar houses consumption of traditional energy is decreased by 40-60%.

The analysis shows that use of alternative power is advantageous for the oil-rich country. Reduction of local costs of traditional fuel and export of economized volume enables accumulating huge resources, which must be first of all spent for a wide development of alternative power. As high technologies have been developing, we will become mass consumers and importers of power generated from sun, wind and etc.

Each country has its own priority field (agrarian sector, finance, IT and industrial sector) and alternative power can become such a sector for Azerbaijan. It must include science, production and consumption:

 - science (institutions, test grounds and specialized faculties);

- industrial complexes for production of photo-thermal and photoelectric transformers of light, windmills, special building materials and etc.

 - alternative stations producing light and heat.

And of course the republic will need new program Gunesh-2, which will turn Azerbaijan into a high technology country of the world.

October, 2009

Mehman Aliyev, director of Turan IA