Page 46 - Small Stans and Causcasus Outlook 2022

production of semi-trailers increased by 1.6%, machinery and
equipment by 11.1%, clothing by 16.4%, wood processing and wood
products by 18.9%, electrical equipment by 19.1%, printing by 44.1%. ,
other vehicles in production decreased by 90.2%.

The volume of production in the sector of electricity, gas and steam
production, distribution and supply increased by 7.2%, and in the sector
of water supply, waste treatment and disposal by 14.9%.

3.1.4 Energy & power

Proposals for a gradual transition to a liberal market model in the field
of electricity and a new bill containing market principles in this area
have been prepared in early 2021. The Ministry of Energy of Azerbaijan
released a statement that the expansion of the use of renewable
energy sources is one of the priorities of Aliyev's course of reforms and
economic diversification. Pilot projects related to wind and solar power
plants with a total capacity of 470 MW were already being implemented
back in January 2021. At the same time, the steps taken to study the
international experience in the transition to a liberal market and the
integration of renewable energy sources into the electricity grid,
including the experience of Turkey from 2019, were discussed by the
Ministries of Turkey and Azerbaijan. However, there is still no National
Energy Efficiency Action Plan in the country.

As reported before, Azerbaijan is still largely reliant on gas and oil
exploitation. The country actively participates in “EU4Energy”
programme, however the government likes to stress the role of natural
gas as a low-carbon energy source in the energy transformation and
the growing importance of hydrocarbons in ensuring energy security in
the context of energy crisis. “We believe that a fair energy transition is
not possible with the decommissioning of traditional energy sources,
but with it,” Minister Shahbazov said in November 2021.

Shahbazov has announced that the country plans to introduce a new
energy law, to take effect from July 2022, which will boost renewable
energy. "Focusing on contributing to 'green growth', as well as being the
first law regulating a number of innovations in the renewable energy
sector, such as the participation of foreign investors, the private sector,
and citizens, will bring us closer to our goals of green energy. The
adoption of a number of sub-legislative acts to support active
consumers, create an information system, and issue a certificate for the
source of electricity generated from renewable energy sources will
accelerate the process", he said.

Azerbaijan is also keen on developing the hydro energy sector,
especially in newly retaken Karabakh. After the war, 30 out of 36 HPPs
in Karabakh fell to Azerbaijan. According to forecasts, in 2020 the
Armenian authorities in Karabakh were to export 330mn kWh of energy
to Armenia. This met about 7% of Armenia's electricity needs. The
station with the largest capacity and share among the HPPs under the
control of Armenian forces in Karabakh is Sarsang HPP, which has a
production capacity of 50 MW (90-140mn kWh/p). Azerbaijan eyes
expanding HPP capacity and use it in the process of rebuilding

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