Commercial interests make harder the enforcement of laws

Question: President Ilham Aliyev signed the law “On the efficient use of energy resources and energy efficiency”. What is the content of this law?

Answer: The law primarily determines the state policy in the field of rational use of energy resources and energy efficiency. According to the Law, this policy is aimed at ensuring the reliability and safety of the power system. The purpose of the rational use of energy resources is to ensure competitive economic development.

The Law also defines the tasks of the state - bringing the regulatory framework in line with international best practices in this area, stimulating and encouraging the introduction of energy efficiency mechanisms, supporting investments in energy-saving technologies and services; educating and informing consumers about the benefits, economic, environmental and social benefits of energy efficiency, training personnel in the rational use of energy resources and energy efficiency, certification of buildings for energy efficiency.

The law provides for regular energy audits to determine the extent to which the steps taken allow energy to be used efficiently. The procedure for conducting a statutory audit is also determined, which is mandatory every 3 years.

The law also provides for the provision by suppliers of consumers with smart meters for measuring heat energy. Why is this so important? Why are not consumers interested in receiving heat from such a state institution as Azeristiliktejhizat? Because this structure delivers warmth at a low temperature and at the same time considers itself right. However, after smart meters are introduced, the supplier will have the right to demand payment from the consumer, depending on the amount of supplied heat.

In addition, the Law provides for informing consumers via the Internet, storing personal data related to consumption for a period of at least 3 years.

According to the Law, the main burden of ensuring energy efficiency falls on the state - the state creates its structure, primary base and supplies it to the consumer. The consumer, seeing the benefits of this in practice, begins to follow it and thus, in the end, an efficient and effective use of energy is achieved in the field of using economical technologies that become commercially profitable for both the state and each user.

Question: There was a law on the use of energy resources in Azerbaijan before. What was the need for the adoption of the new law?

Answer: Quite right, this law was called "On the use of energy resources of the Republic of Azerbaijan" and was adopted in 1996. It regulated the accounting of energy resources, the operation of mechanisms of state control over them, responsibility for violating the legislation on the use of energy resources, attracting foreign investment in this area, international cooperation. The law adopted 25 years ago also contained provisions on energy efficiency, but emphasized the need for education in the field of efficient use of energy resources and focused on training. Now, if we compare with the above, we see that the new law is significantly different and contains answers to the challenges of the modern era.

Question: In order to increase the efficiency of energy resources use, in accordance with the law, it is envisaged to install smart meters that determine the volume and cost of the energy used, meters in areas of heat and gas consumption. The problem with meters is one of the most pressing. Why are meters changed so often? For what purpose is this issue included in the bill? Will installing these meters put an end to fraud and theft?

Answer: The question of meters is indeed a painful topic for our society. It is impossible to condemn society for this. Because these people had seen enough at gas stations, both in Soviet times and after independence - “N” liters of gasoline were recorded in electronic format, but a different amount of fuel entered the car's gas tank. This is no longer a metrological issue - it is a purely psychological problem. Therefore, the problem is not at all about the use of smart or unreasonable meters. The main task of the government is to gain public confidence in one area or another to achieve quickly the set task.

I have concluded that the shortest path to gaining trust is through the application of the main attribute of the market economy - competition. If there is no trust, you can use the most expensive, most modern meters, but it will be difficult to achieve the desired result.

As for the direct answer to the question regarding the need to legalize the topic of smart meters, answering your previous question, I explained in sufficient detail why in this case it is necessary to do this.

Question: Does the Law "On Alternative Energy" provide for an increase in its production and availability?

Answer: No. The law does not contain any provisions on this; however, it indirectly raises a related serious issue.

Obviously, the main criterion for the rational use of energy resources and energy efficiency is largely related to the ability of buildings to retain heat or cold. That is why, when the European Commission back in 2005 adopted a strategy for the development of alternative energy in the European Union, it first focused on this issue and soon changed the existing building standards by that time and adopted special regulations concerning building materials. ... The new facility should be constructed of a material such that its energy efficiency is higher.

The law adopted by Azerbaijan also provides for the application of minimum energy efficiency standards for buildings and rules for certification of energy efficiency of buildings. As you can see, we were very late in this matter, because if you look at Baku from above, be it the city center or residential areas, we have filled them with all new buildings that do not meet the criteria for energy efficiency. Buildings that are built from materials that retain heat can be counted on one hand.

Question: The law also provides for the creation of an “Energy Efficiency Fund”. What will be the function of this "fund"?

Answer: In essence, I would not want the country to have so many extra-budgetary funds. I do not believe that any member of the government will be able to list all these funds without forgetting any of them.

The Article 16.1 of this law states that in order to stimulate and encourage measures for the rational use of energy resources and energy efficiency, a body (structure) determined by the relevant executive authority creates an “Energy Efficiency Fund”.

The Energy Efficiency Fund can be formed from six sources: the formation of tariffs and prices for energy resources, with consideration of  money required for allocation to the “Fund” (i.e. at the expense of funds received from the sale of energy resources), loans and grants, voluntary donations from legal entities and individuals, contributions from international organizations and other donors, income from the management of the Fund (as in the "Oil Fund") and other sources not prohibited by law (here the possibilities are wider).

However, what purposes can the money of the Energy Efficiency Fund be spent? The law clearly refers to the implementation of incentive measures to encourage energy efficiency measures.

The head of state instructed the government within 9 months, that is, until May 20, 2022, to prepare and submit to the President of the Republic of Azerbaijan a draft Procedure for the formation and use of funds from the Energy Efficiency Fund.

Question: What main points should be reflected in the Law? Are there any questions that are not reflected in this Law?

Answer: Our laws are being written and although much later than in developed countries, they are nevertheless adopted. However, there is a problem with the practical application of the law. Their laws work, but we have a slightly different picture, not all laws are enforced equally. Where there are commercial interests, the application of laws is more complex. In this regard, I would ask you to take some time to browse sites specializing in the purchase and sale of real estate and see how many apartments are put up for sale under the so-called "lighthouse" ... Do they have any advantages over the buildings built in "Ahmadli" or "micro-districts" during the Soviet era? Of course, in terms of energy efficiency. Has any state economically oriented research institute of the government calculated the number of kilocalories of energy that these apartments and buildings will subsequently consume? So ... I would like the constructed buildings to be both attractive and have a high coefficient of heat conservation ... individuals, contributions from international organizations and other donors, income from the management of the fund and other sources not prohibited by law.

Kamran Mahmudov