Green Energy: key to future cooperation between Azerbaijan and Saudi Arabia – OPINION

By Faiq Mahmudov

Yesterday, during an official visit to Azerbaijan, a meeting took place between Azerbaijan's Minister of Energy, Parviz Shahbazov, and a visiting delegation from Saudi Arabia led by their Minister of Energy, Prince Abdulaziz bin Salman Al Saud. The discussion centered on the current and future cooperation in renewable energy sources (RES), particularly focusing on wind power projects in Azerbaijan.

The meeting highlighted the successful advancement of projects with Saudi company ACWA Power, which are aimed at building wind power stations with a total capacity of 2.5 GW. The importance of these initiatives is emphasized by their role in accelerating the shift towards clean energy.

The meeting culminated in the signing of the protocol from the 3rd session of the joint technical committee, setting the stage for further collaboration. Additionally, an executive contract was signed for the development of a 200 MW battery energy storage system (BESS) and a framework contract for a 200 MW onshore wind power project. These agreements pave the way for further RES development in the region and underscore the commitment of both nations to a sustainable energy future.

Azerbaijan and Saudi Arabia, despite being geographically distant, have the potential for cooperation across various sectors, having seen significant growth in the fields of energy and economy. Their partnership has broadened to include renewable energy.

While Azerbaijan and Saudi Arabia are both major oil and gas producers, they have also shown an increasing interest in green energy and renewable resources as part of their long-term sustainability and diversification efforts.

ACWA Power, a well-known Saudi Arabian firm that specializes in renewable energy and has a power generating capacity of 42,800 MW, of which 14,900 MW is in the field of renewables, and a $67.2 billion investment portfolio, plays a crucial role in this collaboration.

In 2023, Azerbaijan's Azerenergy OJSC and Saudi Arabia's ACWA Power signed an investment agreement, a Power Purchase agreement and a Transmission Connection agreement on a 240 MW wind power plant.

Based on the agreement, on 13 January 2022, ACWA Power held a groundbreaking ceremony for the construction of the 240 MW Khizi-Absheron Wind Power Plant in Azerbaijan, which was attended by Azerbaijani President Ilham Aliyev and Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman Al Saud.

The 240 MW project will contribute to Azerbaijan's energy diversification and progress in the field of renewable energy. Using its rich experience, ACWA Power will support Azerbaijan's efforts to meet its electricity needs economically and in line with international standards. ACWA Power will use its rich experience to support Azerbaijan's efforts to meet its electricity needs efficiently and in line with international standards.

According to preliminary estimates, the wind power station will annually generate 1 billion kWh of electricity, which will make it possible to save 220 million cubic metres of natural gas per year, prevent 400,000 tons of carbon dioxide emissions and supply 300,000 homes with electricity. The total cost of the project is approximately $300 million. It is expected to be fully funded with foreign investment.

Furthermore, Azerbaijan's State Oil Company (SOCAR) and ACWA Power have reached agreements concerning green fertilizers and renewable energy initiatives, reinforcing their dedication to sustainable progress. As members of the Southern Gas Corridor Consultative Council, SOCAR and ACWA Power signed a pact in 2023 to work together on wind, solar, and green hydrogen ventures in Azerbaijan.

The cooperative endeavours go beyond just energy generation. In April of this year, Azerbaijan's Minister of Economy Mikayil Jabbarov engaged in discussions with Amin Nasser, President and CEO of Saudi Aramco, Saudi Arabia's national oil company. The sides explored investment opportunities in Azerbaijan's energy sector and potential joint ventures.

Partnership between Azerbaijan and Saudi Arabia shows potential for upcoming projects such as wind power and seawater desalination endeavours. By exploring alternative energy sources and considering green energy initiatives, both countries demonstrate a lasting dedication to environmental responsibility and economic growth.

Thus, the trade turnover between Azerbaijan and Saudi Arabia amounted to $22.9 million in 2022 and $30.8 million in 2023. The 36.3-percent increase in one year actually reflects the significant potential available for the development of bilateral economic relations.

"There is great potential for further increasing the trade turnover between the two countries," Saudi Arabia's Minister of Investment and co-chairman of the Saudi-Azerbaijani Intergovernmental Joint Commission, Khalid Bin Abdulaziz Al-Falih, said at the Azerbaijan-Saudi Arabia Investment Forum held in Baku on 19 December 2022.

To further strengthen economic ties, delegates from Azerbaijan's Export and Investment Promotion Agency (AZPROMO) undertook a corporate visit to Saudi Arabia in April 2024. They held meetings at a number of institutions in the capital Riyadh within the framework of their working visit to Saudi Arabia, and discussed potential cooperation. During the meeting with Khattab Group, the executive director of AZPROMO provided information about the investment potential of the country, including special economic zones, concessions and privileges.

The Small and Medium Business Development Agency of the Republic of Azerbaijan (SMBDA) and the Federation of Chambers of Saudi Arabia inked an agreement in December 2022 to establish the Azerbaijan-Saudi Arabia Joint Business Council.

The Council, which will be represented by businesspersons from both countries, will support entrepreneurs' initiatives, help to establish direct ties between them, organize mutual visits, meetings and various events, and exchange information between businessmen.

P.S. In light of recent meetings and agreements signed between Azerbaijan and Saudi Arabia, both sides are on the threshold of a new era in the field of alternative energy. This cooperation not only accelerates the transition to clean energy sources but also strengthens the economic ties between our countries. It is particularly encouraging to see the launch of major projects such as the construction of wind power plants and the creation of energy storage systems, which will undoubtedly push both countries towards achieving global sustainable development goal.