Moody's: Azerbaijan becomes regional leader in renewable energy dev't

Growing interest from foreign investors in Azerbaijan's renewable energy sector is expected to play a key role in helping the government achieve its strategic goals in this field.

According to Report, citing a recent analysis by Moody's, countries in Central Asia and the Caucasus have taken significant steps in recent years to attract private investment into their energy sectors. These measures include liberalizing energy markets, reducing subsidies, and restructuring utilities into separate generation, transmission, and distribution entities.

Moody's notes that independent regulators and standardized power purchase agreements have enabled the creation of public-private partnership (PPP) mechanisms. Countries like Kyrgyzstan, Tajikistan, and Uzbekistan are working to align electricity tariffs with cost-recovery levels, with Uzbekistan aiming for full transition to this model by 2027–2028. These reforms have fostered more competitive markets and attracted private capital, positioning Azerbaijan and Uzbekistan as regional leaders in renewable energy development.

The document highlights that in preparation for COP29, Azerbaijan has set a target to increase the share of installed renewable energy capacity to 35.5% by 2030. To support this goal, the country plans to commission solar and wind projects with a combined capacity of 2,250 MW.

State-owned Azerenerji intends to build nine solar and wind power plants with a total capacity of 2 GW, along with new hydroelectric stations.

Moody's emphasizes that foreign investor interest is a major driver behind the implementation of these plans. Key projects include:

- Shafag solar power plant (240 MW, approx. $200 million investment),

- Garadagh solar power plant (230 MW, $262 million),

- The UAE-based Masdar's Mega project (1 GW capacity),

- Khizi-Absheron wind power plant (240 MW, $34 million).

Additionally, Saudi Arabia's ACWA Power has signed agreements with the State Oil Company of Azerbaijan (SOCAR) to build 1 GW of onshore wind capacity, 1.5 GW of offshore wind capacity, energy storage systems, and green hydrogen projects.