Azerbaijan has announced plans to invest in its renewable energy infrastructure, in order to build capacity in the country, with investment estimated to reach $7 billion. According to Ramiz Rzayev, of the Ministry of Industry and Energy in Baku, investors will provide most of the funds for this development.
Azerbaijan, the third-largest oil producer amongst the post-soviet states, aims to increase its renewable energy capacity to cover about 20 percent of total power demand by 2020. This decision has come after Azerbaijani energy minister Natig Aliyev met visiting Director of the Swiss Federal Office of Energy Walter Steinmann, in order to discuss furthering energy cooperation between the two nations.
Analysts have recently highlighted oil-rich Azerbaijan’s increasing dependence on oil money, in spite of funds being poured into other sectors of economic development, with the capital, Baku, still providing 98 percent of all revenue. Next year, for the first time, Azerbaijan will find itself in a multi-billion-dollar deficit, as its oil reserves begin to taper off. The Azerbaijani government has stressed that greater investment and infrastructure is central to regional growth, with economists emphasizing the need to combat the monopolization and corruption that plagues the country’s economy.
Furthermore, Azerbaijan’s plans to diversify its economic and technological sectors, and improve over-all governance and transparency, presupposes stronger cooperation, and heavier reliance, on its EU neighbours and the EU’s close economic allies, Norway and Switzerland, rather than deepening ties with its Eastern, less developed allies, Russia, Turkey, and Iran.
This motion to shift towards greater reliance on renewable energies has come on the heels of criticism of Norway’s “profits over risks and ethics” approach to investment in Azerbaijan. Norway’s Statoil operations in Azerbaijan are the second-largest oil and gas investor in the country and have come under fire over ethical concerns–as Azerbaijan continues to generate concerns over its human rights record and its increasingly oppressive regime. Norway has downplayed such criticism, saying that they prefer to engage in cordial relationship-building with their authoritarian hosts.
Azerbaijan has spent approximately $90 million on testing various renewable-energy projects throughout the past four years, as output of crude oil decreased for the second year in a row, in 2012.