NEWS

Azerbaijan has excellent opportunity to become green hydrogen supplier to Europe

JULY 28, 2023

Azerbaijan has the resources and the required infrastructure base to develop a green hydrogen industry for export to Europe, Charles Ellinas, nonresident senior fellow with the Atlantic Council's Global Energy Center told Trend.

"Europe is committed to achieving very ambitious climate targets by 2030 and achieving net-zero by 2050. This requires increasing supplies of green energy to replace fossil fuel consumption. The IEA identified Azerbaijan as one of the countries with significant renewable energy potential, both for domestic use but also for export. The country has the resources and the required infrastructure base to develop a green hydrogen industry for export to Europe. Given Europe's limited domestic potential to meet its targets for green hydrogen, it will require imports, offering Azerbaijan an excellent opportunity to take advantage," he said.

Ellinas pointed out that what has huge potential is the replacement of domestic gas consumption by renewables, freeing gas for export.

"By doing that Azerbaijan can free enough gas to export as much as 20bcm gas to Europe. Expanding TAP capacity to accommodate these increased quantities of gas will require European gas importers to enter into long-term gas supply contracts. Until last years that appeared to be a challenge because of EU policies, such as REPowerEU, casting doubts about the longer-term gas demand in Europe. However, there is now a growing realization that Europe will need gas for a long-time to come, with an increasing number of European companies entering into long-term LNG supply contracts with Qatar and US supplier. Azerbaijan must take advantage of this, guaranteeing increased and secure gas supplies to Europe. Given that most of the required infrastructure is in place, Southern Gas Corridor/TAP, an expansion project is easier and speedier to implement - the only requirement is securing long-term gas supply contracts to underpin the expansion," the expert added.

According to the analysis of the Energy Sector Management Assistance Program of the World Bank Group, the technical potential of Azerbaijan's offshore wind potential is estimated at 157 GW, which is a huge figure compared to the current total installed capacity of about 8 GW.

The Offshore Wind Power Roadmap published by the Azerbaijani Ministry of Energy, the World Bank and IFC shows that Azerbaijan has the potential to install offshore wind farms with a total installed capacity of 7 GW by 2040. This can provide over 69,000 person-years of full employment and up to $7 billion in local gross value added.

Besides, a study conducted by the European Bank for Reconstruction and Development (EBRD) confirmed the feasibility of producing green hydrogen in Azerbaijan.

Agreements with companies such as Masdar, ACWA Power, bp, as well as a contract with the Australian company Fortescue Future Industries for 12 GW, are of strategic importance in terms of increasing the supply of energy resources to Europe.