TODAY.AZ / Business

Azerbaijan's energy sector undergoes major overhauls

07 October 2015 [13:40] - TODAY.AZ

/By AzerNews/

By Gulgiz Dadashova

The momentum for harnessing the potential of Azerbaijan’s energy sector has increased alongside growing instability in the global energy market.

The Industry and Energy Ministry of the energy-rich Azerbaijan is now working on determining the main avenues for sector development based on the views and suggestions of local and foreign experts, as well as from enterprises operating in the energy sector.

The aim of identifying these priority areas are to use all of Azerbaijan’s energy resources – oil, natural gas, electricity, water, sun, wind, biological waste – efficiently, achieving the full participation of these commodities in the energy balance of the country and ensuring high rates of economic development, according to the ministry.

Energy sector development initiatives will cover a broad range of reforms and upgrades in strategic development concepts and complex measures.

"In particular, it suggests the preparation of the development strategy of the energy sector for 25-
30 years, the ‘State program for the efficient use of energy, the energy efficiency of end-users, the use of alternative energy sources’ for 15-20 years, as well as the ‘State program on the
development of the energy sector of Azerbaijan’ for five years, the ministry reports.

An extremely important step in ensuring the effective development of the energy sector is to improve the legislative and regulatory framework in this area.

To ensure this, the ministry seeks to prepare a number of documents, including a bill to regulate domestic electricity consumption, a bill to regulate the domestic natural gas market and a bill for an independent regulator to oversee the internal electricity and gas market and the Grid Code for electricity and natural gas, the ministry announced.

It also proposes to improve the structures of energy companies and tariff policy; particularly, to streamline Azerenergy, Azerigaz and Azerishig and to create a system of flexible tariffs, reflecting the interests of end-users based on the ability of distribution and cost of goods and services.

Enormous potential for growth

Azerbaijan, a resource-rich South Caucasus republic, announced that currently the country's proven gas reserves are at the level of 2.6 trillion cubic meters, while the oil reserves amount to 2 billion tons.

The country constitutes only small portion of its reserves and production, thus it exports its hydrocarbons to other countries, in the first place, to Turkey, Georgia and soon it will supply gas to Europe.

The development of Azerbaijan’s renewable energy sector gained momentum under the enactment of the State Program on the Use of Alternative and Renewable Energy Sources in 2004.

Under its strategic plan of renewable energy development, Azerbaijan will build solar plants that will produce 2,065 of megawatts of power and wind farms with an energy output of 1,512.5 megawatts. Renewable energy development will reduce the use of gas in the domestic market and increase export volumes.

Azerbaijan's power system, with an export potential of six billion kilowatt hours, is the most powerful in the South Caucasus. The country has not been purchasing electricity from abroad, being that it has been a net exporter since 2008. The country’s power capacity has increased by 2,300 megawatts over the last 10 years after commissioning new energy generating facilities. The primary sources of electricity generation are: gas (92 percent), hydro resources (7.9 percent) and alternative sources (0.1 percent).

The energy saving potential in Azerbaijan is around 8-10 million tons of fuel equivalent and that this process being developed gradually in Azerbaijan.

National energy efficiency targets, including increased use of renewable energy, are set forth by the “Azerbaijan in 2020: Look into the Future” state strategy. The program aims to accelerate the development of alternative energy sources, strengthen environmental institutions, increase scientific-technical potential, continue training specialists, and raise awareness among consumers. Alongside state initiatives, private sector involvement will be promoted and alternative energy tariffs will be reformed.

The country offers numerous opportunities for foreign companies interested in investing in alternative energy or penetrating the local market.

URL: http://www.today.az/news/business/144190.html

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