EEF.DEL/44/13 12 September 2013

ENGLISH Original: RUSSIAN

PRESENTATION BY MR. TAHIR JAFAROV, CHIEF POWER ENGINEER OF THE STATE AGENCY FOR ALTERNATIVE AND RENEWABLE ENERGY SOURCES OF THE REPUBLIC OF , AT THE CONCLUDING MEETING OF THE 21st OSCE ECONOMIC AND ENVIRONMENTAL FORUM

Prague, 11 to 13 September 2013

Increasing stability and security: Improving the environmental footprint of energy-related activities in the OSCE region

Session II: Strengthening policy and regulatory frameworks and fostering international co-operation to promote renewable energy and energy efficiency

Slide 1

Reducing the environmental impact in the energy sector

Slide 2

Current situation in Azerbaijan’s energy industry:

– Installed generating capacity of the national power supply system:

– By 2001 it was 5,181 megawatts;

– By 2012 it had reached 7,198 megawatts;

– By 2020 it is scheduled to reach 8,000 megawatts.

– Over the last ten years, the generating capacity of Azerbaijan’s energy system has grown by 40 per cent.

EEF21EW11 Translation by OSCE Language Services - 2 - EEF.DEL/44/13 12 September 2013

Slide 3

Map of the energy system of the Republic of Azerbaijan

Mahaçqala Ksani AZƏRBAYCANIN ENERJİSİSTEMİNİN XƏRİTƏSİ Dərbənd

G Ü R C Ü S T A N Balakən R U S İ Y A Yalama Katex Tbilisi Zaqatala DRES Xudat

Qusar çay

Xaçmaz Bəhmənli Qax Qusar Böyük kəsik 202 km Əyriçay Soyuq bulaq Şıxlı Əlibəyli Çarxi Muğanlı Quba Şəki İpək kom-tı Quba Rəhimli

Şəki Daş Şalahlı Poylu Şəki Dəvəçi

Qazax Ağstafa Qazax dartıcı Kirzan Oğuz Siyəzən Ağstafa Siyəzən broyler f-k 89 km Qəbələ Səməd Vurğun Şəmkir su anb. Cəfərabad Tovuz Şəmkir SES Nasos st

km Qəbələ Düyərli Kür NS Mingəçevir su anb. dartıcı 96 km Zəyəm Şəmkir Yenikən d SES Xəzri 425 Şəm k ir SES Giləzi tikinti Xızı dartıcı Şampan z-d Azərbaycan Yenikən d SES Hacallı tikinti DRES Mingəçevir SES Dəllər Samux İsmayıllı Yaşma dartıcı Sitalçay Goranlı dartıcı Yaşma 94 km İstixan 50 km AZDRES zavod tikinti M ingəçevir ş-r Quba-Xəlilli 250 km Sumqayıt İEM1 İEM2 Alabaşlı Sumqayıt Dəliməm-li Varvara SES Ağsu Kurəkçay Şamaxı Polimir Yevlax 250 km Goradil Gəncə 2 Gəncə 3 Gəncə Ağdaş Böyük şor Goranboy 89 km 243 km Sənaye qovşağı Zavod Şimal DRES Maşınqayır Mərkəz km Gədəbəy Göyçay 108 250 km Yeni Bakı BF Gəncə 1 63 km M aştağa Gəncə Yevlax dartıcı 123 km Ağsu Mərəzə İEM Ucar dartıcı Az.KT Ləki dartıcı 1 Broyler Abşeron Xırdalan Vahid Nizami Az.KT 1 Qala Dübəndi Daşkəsən Bağman Xanlar Naftalan Ucar Günəşli 30 km Hovsan Müsüslü Əh-i YSK Müşviq dartıcı Zığ Bakı İEM 1 Bərdə km Buta G ö y ç ə g ö l ü Kürdəmir 99 km Tərtər 121 DÖZ Qaradağ Sığırlı Səngəçal 2 Dəyirman dartıcı Səngəçal 195 km Hacıyev Qazı Səngəçal 1 Tərtər SES Zərdab Məmməd KS Radio stansiya Göytəpə Xındırıstan Düvannı Sırxa v ənd 71 km E R M Ə N İ S T A N Kəlbəcər AğdamGöytəpə Muradxanlı Qazı Səngəçal Cavadlı Məmməd Cihazqayırma Nəvahi Dənizi AğcabAğcabədiədi dartıcı Ələt Zülfuqarlı Mollalar Çəmənli Sabirabad Axtacı Xələfli K Talşlı 1 Cənub Sol Salahlı AEK K Talşlı 2 İstisu Ağdam Mursəlli Əli Bayramlı Xocalı Saatlı dartıcı 97 km Kürsəngi

Xankəndi Qaraçala Yeni Beyləqan İmişli Xocavənd Yeni İmişli Şuşa Bəhramtəpə km BeyləqanXalac Türkiyə 58 km 40 Laçın Turşsu Daşburun Parsabad Sədərək Dövlətyarlı Salyan km Qaraxanbəyli Səmədabad BSK Sabir NS 114 Şərur Füzuli Böyük Haramı Şorsulu NST km 110

Sükurbəyli km Qıvraq Qozluçay Biləsuvar Neftçala A mankənd Bazirqan Qıvraq Şahbuz 143 Qubadlı BSK Cəbrayıl Allar Şəhriyar Yod-brom Babək Qızılağac zavodu Sumqayıt Qarğalıq BSK Qoruğu İEM2 İEM Xalçaçılıq Xudafərin Cəlilabad Naxçıvan 2 Yazı Düzü 2 Alkilbenza Naxçıvan YP 300 Koroğlu Yazı Düzü 1 135 Sənaye Qovşağı Zəngilan Masallı Qızılağac Araz 2 Araz Xudafərin Polimir Körfəzi Sumqayıt Zavod Araz 1 Masallı Saz 1 Sumqayıt 2 İEM 1 Go radil Şot Maştağa Culfa Saz 2 Buzovna Ordubad Boradigah Şimal DRES Qaraziyəddin Tüklə Böyük Şor Türkiyə Ordubad Ceyranbata Yeni Bakı Televar Broyler f- 65 km Ordubad Yardımlı SES A.Vah id Mərənd 2 ETK Zabrat Xoy 2 Poladəritmə Nasaqi Abşeron Binəqədi 50 km Lənkəran 1 Dərnəgül 1 Aeroport 30 km Mərənd 1 Azər Nizami Ramanı Lerik Dərnəgul 2 Xoy Lənkəran 2 BETK VBNZ II Xoy 1 Əhər km 205 8 km Qala 118 Şəfa Suraxanı Salfan 98 km MKZ Ulduz H.Aslanov VBNZ I km Əhmədli 105 km Salaxanı 1 Radio zavod Bakıxano Sardroud 80 Səttərxan 227 Gün əşli Təmizləyici qurğu Dübəndi Tagi Dize Dağlıq Bakı İEM 1 Təbriz 43 km Hövsan Astara Salaxanı 2 Nemət Abad Ziğ Müşviq 63 km Ərdəbil 60 km Patandar

Tikmədaş km Urmiya Astara Bayıl 7 gölü 96 km km 84 km Astara

km 180 426 km Urmiya Panel 99 Lökbatan Bonab el. sta dartıcı Miyanit km

110 km 76 346 km Minbad 2 200 km Gilan C.C Hasan Keyf Zəncan 1 Sefidr İraq Qəzvin Zəncan 500-400 kV Ziyaran İ R A N Alboni 330 kV Həmədan 230 220-230 kV IES Tehran 154 kV BQQ 132 kV 110 kV 35 kV

Slide 4

Construction of new power plants and renovation of existing ones:

– New gas turbine power plants have been commissioned in recent years:

– Sumgait power plant with a capacity of 525 megawatts;

– Shimal thermoelectric power plant with a capacity of 400 megawatts;

– Dzhanub thermoelectric power plant with a capacity of 780 megawatts;

thermoelectric power plant with a capacity of 106 megawatts;

– Seven modular power plants with a total capacity of 850 megawatts;

– Four generating units have been replaced with new ones at the Mingechevir hydroelectric power plant;

– Generating units one to eight have been modernized at the Azerbaijan thermoelectric power plant with a capacity of 2,400 megawatts. - 3 - EEF.DEL/44/13 12 September 2013

Slide 5

Development of the installed generating capacity (in megawatts) of Azerbaijan’s energy system between 2000 and 2012

No. Name of power plant 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1. Azerbaijan thermoelectric 2,400 power plant (1981) 2. Shirvan thermoelectric power 1,050 plant (1962) 3. Dzhanub thermoelectric 780 power plant 4. Shimal thermoelectric power 150 400 -150 plant (1954/2002) 5. Baku thermoelectric power 53.3 53.3 plant 6. Sumgait thermoelectric 420 -420 power plant-2 (1960) 7. Sumgait gas turbine 420 -420 525 thermoelectric power plant 8. Baku modular power plant 104.4 9. Astara modular power plant 87 10. Shaki modular power plant 87 11. Khachmaz modular power 87 plant 12. Shahdagh modular power 104.4 plant 13. Sangachal modular power 300 plant 14. Mingechevir hydroelectric 401.6 power plant (1953) 15. Varvara hydroelectric power 16.5 plant (1956) 16. Shamkir hydroelectric power 380 plant (1982) 17. Yenikand hydroelectric 150 power plant (2000) - 4 - EEF.DEL/44/13 12 September 2013

No. Name of power plant 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 18. Fizuli hydroelectric power 25 plant Total 5,021.4 5,074.7 5,054.7 5,054.7 5,054.7 5,054.7 5,315.7 5,420.1 5,570.1 6,199.5 6,199.5 6,199.5 7,004.5 18. Nakhichevan thermoelectric 84 60 power plant (1993) 19. Nakhichevan modular power 87 plant 20. Araz hydroelectric power 22 plant (1970) 21. Vaikhyr hydroelectric power 4.5 plant 22. Bilyav hydroelectric power 20 plant Total for the Republic 5,127.4 5,180.7 5,160.7 5,160.7 5,160.7 5,160.7 5,402.2 5,593.6 5,743.6 6,373.0 6,393.0 6,393.0 7,198.0 - 5 - EEF.DEL/44/13 12 September 2013

Slide 6

Strengthening energy supply links with neighbouring countries

In order to ensure the safe and stable operation of Azerbaijan’s energy system, the electrical link has been strengthened through the construction of new high-voltage power transmission lines (500 kilovolts and 230 kilovolts) with neighbouring countries (Georgia and Iran).

The Mukhranis-Veli 500-kilovolt power transmission line has been completely renovated as part of the planned Azerbaijan-Georgia-Turkey-European Union (EU) energy corridor, a 500/400-kilovolt high-voltage direct current back-to-back station is being installed in the Georgian-Turkish border region and the concluding stage of work to hook it up to the participating countries’ energy systems is currently under way.

A link to the Russian Federation is provided by the 330-kilovolt Derbent power transmission line and the recently constructed 330/110-kilovolt Khachmaz substation.

Slide 7

In order to improve the transmission capacity of the Azerbaijan-Georgia-Turkey-EU European energy corridor, and in the future the transmission capacity between the Central Asia Regional Economic Cooperation (CAREC) and the EU, it is necessary to increase the cross section of the 500- and 330-kilovolt power transmission lines along the entire length of the corridor and construct new substations.

To that end, we suggest preparing a feasibility study on linking the CAREC countries’ energy systems with the Azerbaijan-Georgia-Turkey-EU energy corridor by means of Trans-Caspian submarine power cables.

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Slide 8

Import and export of electric power during the period 2002 to 2012:

[Y-axis: electric power in billion kilowatt-hours; X-axis: years 2002 to 2012, import in million kilowatt-hours (first column for each year), export in million kilowatt-hours (second column for each year), balance in million kilowatt-hours (third column for each year)]

Slide 9

Electric power production and consumption during the period 2001 to 2012:

– In 2001, 18.8 billion kilowatt-hours of electric power were produced and 19.5 billion kilowatt-hours were consumed. The difference of 0.7 billion kilowatt-hours was covered by imported electric power;

– By 2012, electric power production stood at 20.6 billion kilowatt-hours and consumption at 18.8 billion kilowatt-hours. Azerbaijan is becoming an exporter of electric power and the country’s export potential is currently estimated at 8 billion kilowatt-hours per year. - 7 - EEF.DEL/44/13 12 September 2013

Slide 10

Electric power production and consumption during the period 2001 to 2012

[Production in billion kilowatt-hours (first column for each year), consumption in billion kilowatt-hours (second column for each year)]

Slide 11

Energy efficiency:

– Thanks to energy-efficiency measures in the energy industry, electric power consumption fell from 23.8 billion kilowatt-hours in 2006 to 18.8 billion kilowatt-hours in 2012;

– The use of high-performance technologies in electric power production means that over the last ten years fuel consumption fell from 413 grams per kilowatt-hour to 312 grams per kilowatt-hour, which resulted in an average annual saving of 1.5 million tons of fuel and a 4.1 million ton reduction in atmospheric emissions. There are plans to reduce fuel consumption to 260 grams per kilowatt-hour by 2020, which will reduce atmospheric emissions by an additional 2.5 million tons. - 8 - EEF.DEL/44/13 12 September 2013

Slide 12

Fuel consumption in the energy system during the period from 2000 to 2012

[Rate of fuel consumption in gram of fuel equivalent/kilowatt-hours]

Slide 13

Losses within Azerbaijan’s energy system:

– Thanks to large-scale investment in the energy system in recent years, the country’s potential as an exporter of electric power has increased and fuel consumption has decreased, but this has had little impact on reducing losses within the energy system. Thus, as was mentioned earlier, electric power consumption fell during the period 2006 to 2012, but losses did not reach the desired level;

– By 2020 it is proposed to reduce electric power losses within the energy system to the level adopted in developed countries in accordance with international standards:

– In the case of transmission networks, from the current 4.3 per cent to 2.8 per cent;

– In the case of distribution networks, from the current 16 per cent to 6.5 per cent.

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Slide 14

Prospects for the development of electric power in Azerbaijan:

– There are plans to raise generating capacities to more than 8,000 megawatts, which will make it possible to increase the export of energy resources in a more high-tech form, i.e. electricity;

– The diagram below shows the targets for electric power production, consumption, export and import up to 2020.

Slide 15

Energy balance forecast up to 2020

[First Y-axis: production and consumption of electric power in million kilowatt-hours, second Y-axis: import and export of electric power in kilowatt-hours, X-axis: years 2009 to 2019, production of electric power in million kilowatt-hours (first column for each year), consumption of electric power in million kilowatt-hours (second column for each year), circle plotted on the line equals import in million kilowatt-hours, triangle plotted on the line equals export in million kilowatt-hours]

Slide 16

State policy on renewable energy sources:

– Replacing natural gas with renewables is the main way of reducing atmospheric emissions in the production of electric power;

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– Improving legislation;

– Developing the private sector;

– Financial support by the State and subsidies;

– Developing modern technologies;

– Research and development, sharing information;

– Education, training and promotion of environmentally friendly energy.

Slide 17

State strategy for the use of alternative and renewable energy sources from 2012 to 2020:

– Identification of the main areas for the generation of electric and thermal power using renewable energy sources;

– Development of a regulatory framework for renewable energy sources;

– Preparation of promotional events on the use of renewable energy sources;

– Application of alternative and renewable energy sources in various economic sectors.

Slide 18

Since 1 February 2013, the State Agency for Alternative and Renewable Energy Sources has, as the central executive body concerned with renewable energy sources and energy efficiency, been responsible for:

– State policy and regulation;

– Effective organization and co-ordination of activities;

– Exercise of State control.

Slide 19

The Alternative Energy limited liability company established under the auspices of the Agency is responsible for:

– Design;

– Development;

– Equipment for energy production, design of units and facilities, construction and operation;

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– Infrastructure-related work.

Slide 20

Hydropower is the most important source of renewable energy.

In 2010 hydropower accounted for 18 per cent of the electric power generated, and other types of renewables for 1 per cent.

By 2020 the share of renewables will account for 20 per cent. Azerbaijan currently has approximately 1,000 megawatts of hydropower capacity at its disposal and there are plans to introduce an additional capacity of 62 megawatts.

Slide 21

Azerbaijan has at its disposal economically sound wind energy potential amounting to approximately 800 megawatts. The shores of the Caspian Sea are the most promising in this respect.

Making use of solar energy, which is estimated at 5,000 megawatts, is a task for the future involving relatively high initial investment costs.

There is potential for using geothermal energy for the purpose of energy saving in terms of heat production.

Slide 22

The main current tariffs:

– 2.5 euro cents per kilowatt-hour for small hydroelectric power plants;

– 4.5 euro cents per kilowatt-hour for wind turbines.

Azerbaijan is searching for solutions to problems regarding environmental protection and rational use of natural resources.

Slide 23

The Gobustan hybrid power plant established in 2011:

– Wind-driven power station – 2.7 megawatts;

– Solar power station – 1.8 megawatts;

– Biogas power station – 1 megawatt;

– Use of heat pumps;

Total capacity – 5.5 megawatts.

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Slide 24

Potential of renewable energy sources in Azerbaijan

Type of renewable energy source Capacity in megawatts Solar energy >5,000 Wind energy >4,500 Bioenergy >1,500 Geothermal energy >800 Small hydroelectric power plants >350 Total >12,150

Slide 25

Thank you for your attention!