Page 8 - bne monthly magazine June 2024 Russian Despair Index

8 I Companies & Markets bne June 2024
Azerbaijan
According to official data, in 2023 Azerbaijan increased its electricity production by 0.9% and its exports by 8.3% year on year. The country's electricity production rose to 29.3bn kWh. In 2023, thermal power plants (TPPs) generated 27.2bn kWh of electricity, hydroelectric power stations produced 1.8bn kWh, and other energy sources contributed 359mn kWh.
Wind power plants generated 56.6mn kWh of electricity, solar power plants 79.4mn kWh, and solid waste processing facilities 223mn kWh. Meanwhile, energy imports increased by 54.5%, significantly outpacing the growth in export figures. However, considering the projects currently underway and those planned to start in the coming years, Azerbaijan's capabilities are expected to increase significantly due to the expanded use of renewable energy sources.
The production of green energy is expected to rise to about 3,000-4,000 MW in the next 3-4 years. The country has significant potential in renewable energy, particularly with a confirmed potential of 157,000 MW on the Caspian.
It should be noted that Azerbaijan has already signed contracts and memoranda with leading global companies
in renewable energy, aiming to produce 10,000 MW of electricity from renewable sources. Experts believe that even if only a third or half of this volume becomes a reality, it will be a major energy source for Europe.
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The issue of transforming Kazakhstan into an electricity exporter has raised some questions domestically, due
to Kazakhstan's own electricity shortage. However, the country's Ministry of Energy has alleviated concerns
by stating that, despite the current electricity deficit in Kazakhstan, there is significant potential for renewable energy development, including wind and solar power, in the western regions. In the future, with the development of generation capacities, the balance of the Western region could have the potential to export electricity to European countries.
The national electric grid of the Republic of Kazakhstan serves as the system-forming network within the Unified Energy System, which also facilitates electrical connections between the republic's regions and the energy systems of neighbouring countries (the Russian Federation, the Kyrgyz Republic and the Republic of Uzbekistan). To ensure reliable energy supply for the country's economy and population,
a phased introduction of new energy capacities and the modernisation of existing power stations are planned in the coming years. To facilitate the systematic and sustainable development of the energy sector, an Energy Balance up to 2035 has been approved, which anticipates nearly doubling the new capacities.
Uzbekistan also plans to double its electricity production by 2030 to ensure the country's energy security and to connect
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to the export of electricity to Europe. By 2025, the capacity of the country's energy system is expected to reach 25.6 GW, with thermal power plants providing 18.8 GW, hydroelectric power stations 2.5 GW, and solar and wind energy 4.3 GW. Uzbekistan has already gone since overtaken Kazakhstan to become Central Asia's renewable energy leader. By 2030, the total production capacity will reach 29,200 MW, effectively doubling from today's level.
Why does the EU need electricity from Central Asia?
Azerbaijan and Central Asian countries possess significant solar and wind energy potential, thanks to their relatively low population density, large territories, and many sunny days per year, making them unique platforms for the development of green energy. Collaborative participation in projects related to alternative energy sources will allow each country to efficiently use its potential in this economic sector. However, there are challenges, such as the high costs of modernising existing electricity generation infrastructure in Central Asia – costs so substantial that international development banks are reluctant to fund entire projects, opting instead for targeted investments in specific components. Integrating the energy systems of these three countries may help solve this problem to some extent.
As the Black Sea Power Line project progresses, there may be growing interest in investing in the Caspian submarine cable and the energy infrastructure of Kazakhstan and Uzbekistan. Europe is highly interested in diversifying its energy supplies and in importing electricity, even from such great distances. The problem is that EU countries, having set the ambitious goal of phasing out fossil fuels within ten years, do not have the capacity to achieve this goal on their own. Typically, European countries are small in area and have high population densities, while solar and wind power plants require large spaces. Compensating for the lack of space for large solar power plants with innovations would be even more costly, hence the EU is forced to import.
Unlike crowded Europe, Central Asia and Azerbaijan have
all the conditions necessary for the development of green energy. Additionally, Kazakhstan and Uzbekistan can play a significant role in the mining of critical raw materials used in the production of solar panels, wind turbines, and batteries. These include lithium, cobalt, copper, nickel, silver and others. For instance, demand for lithium is growing globally, with its price having increased by more than 400% in recent years. Central Asia contains large deposits of many types of critical raw materials. For example, Kazakhstan currently produces 19 of the 34 types of raw materials listed as “critical” by the EU.
In summary, the region is attractive both for its renewable energy potential and for its capabilities in raw material extraction and equipment production for green energy generation. It seems likely that Azerbaijan, Kazakhstan and Uzbekistan will fully capitalise on these advantages.