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In the News

ADB Ready to Fund Alternative Energy in Azerbaijan

Azer News

May 13, 2013

By Nigar Orujova

The Asian Development Bank is ready to allocate some $40 million to Azerbaijan for developing alternative and renewable energy sources, ADB reported on its official website on May 10.

According to the report, the Project aims to promote renewable energy development in Azerbaijan through developing two pilot renewable energy projects (biomass cogeneration) with a total installed capacity of 16 megawatt (MW) for efficient electricity and heating supply in Oghuz and Agjabedi regions.

The project outputs will consist of construction of two biomass cogeneration plants in Oghuz and Agjabedi regions, construction of heating supply systems in Oghuz and Agjabedi regions, and project management and supervision, including consultancy services for project supervision, safeguards compliance, reporting, and capacity building for the executing agency.

According to the Bank, experiences from many other countries demonstrate that biomass power generation is an effective and economic solution to convert biomass fuel to electricity and heat. With the project, it is estimated that about 95 million cubic meters of natural gas will be saved per year for export, thus increasing the government revenue by at least $5.6 million per year. The project will also result in avoidance of GHG emissions, and a reduction of 24,000 tons of carbon dioxide equivalent per year.

The Government of Azerbaijan is committed to promote renewable energy and sustainable development to ensure environmental safety. Azerbaijan s total electricity production in 2011 reached 19.2 terawatt hours (TWh), of which 82% was generated from thermal power (gas-based) and 18% from hydropower.

Currently about 38 percent of the greenhouse gas emissions comes from thermal power generation plants. With increased renewable energy, the government could reduce GHG emissions, as well as increase export revenues and reduce gas subsidies.

Azerbaijan has a large potential for renewable energy, which to date remains largely untapped. The existing legal and regulatory framework supports renewable energy development where the government targets an increase to 20 percent capacity by 2020.

The project has potential for scaling up in the two agriculture-based regions of Oghuz and Agjabedi, and for replication in other regions in Azerbaijan with similar resources and conditions.

The use of other sources of bio-energy may also be explored such as the 2 million tons of solid and domestic wastes generated in the country annually.

At present, the ADB has seven active projects in Azerbaijan with a portfolio of $990 million. 46 percent of the portfolio falls to the transport sector, while 16 percent to the energy sector. Another 36 percent is made up by urban services, i.e., improvement of water supply and sanitation.

According to the updated business plan of the bank's operations in Azerbaijan for 2012-2014, the total amount of funding for approved ADB projects in Azerbaijan in this period will amount to $575 million. The projects approved under the business plan, as expected, required $250 million in 2012. The figure is expected to be $155 million in 2013 and $170 million in 2014.

Azerbaijan has been a member of the ADB since 1999. ADB's operations in Azerbaijan are undertaken in line with the government's own development strategies to reduce poverty and promote sustainable and inclusive economic growth.

The country's participating share in the bank's capital is 0.5 percent.

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