Exploring Green Hydrogen in Azerbaijan
This document provides an overview of the webinar ‘Advancing together: Exploring Green Hydrogen in Azerbaijan’, hosted by the WiRE Azerbaijan Chapter. It specifically highlights the presentation given by Rana Humbatova during the event.
Achieving the Paris Agreement target necessitates a fundamental transformation of the global energy mix to ensure that the global temperature rise remains below 1.5°C. According to the Paris Agreement, Azerbaijan signed on April 22, 2016, and ratified on January 9, 2017, the Paris Climate Agreement. In its Nationally Determined Contributions (NDC) in 2017, the country outlined climate change mitigation actions across its energy, oil and gas, residential and commercial, transport, agricultural, and waste sectors. In the 1st NDC, the Government of Azerbaijan aims, by 2030, to reduce GHG emissions by 35% from the 1990 levels.
The 2nd NDC, expected to be submitted at COP28, aims for a 40% reduction in GHG emissions by 2050 by the Government of Azerbaijan. Additionally, the plan includes the establishment of a net-zero zone in the liberated territories (Karabakh and East Zangezur economic regions) and aims to increase the share of renewable energy in installed capacity to 30% by 2030.
The "Socio-economic development strategy for 2022-2026 of the Republic of Azerbaijan" places significant emphasis on transforming into a cleaner and more sustainable nation under its 5th National Priority - "A clean environment and country of green growth”. Within this framework, various strategies are being implemented:
Regulatory reforms aim to liberalize energy, fostering a more competitive market.
Efforts to enhance the efficiency of gas and heat supply systems are in motion.
Increasing the utilization of renewable energy sources is a pivotal focus.
Establishing public-private partnerships is key to expanding the infrastructure for renewable energy sources.
Harnessing bioenergy and geothermal potential are part of the sustainable energy plan.
Aspiring to become an energy hub, fostering collaboration between Azerbaijan, Turkey, and Europe.
Embracing green technologies stands as a pivotal strategy in the fight against climate change.
Prioritizing low-carbon transport and integrating green technologies into the transportation sector.
Exploring low-emission hydrogen production as a sustainable energy source.
Implementing Carbon Capture, Utilization, and Storage (CCUS) in the energy sector.
Advancing energy storage systems to ensure efficient and effective energy management.
The "I State Program on the Great Return to the liberated territories of the Republic of Azerbaijan'' emphasizes the direction of utilizing energy-efficient and clean technologies. As part of the program's objectives (2022-2024), there will be an assessment of the Renewable Energy Sources (RES) potential, focusing on hydropower, geothermal energy, bioenergy, hydrogen technology, energy storage, and hydro-accumulation (2023-2025). The comprehensive strategy involves constructing solar and wind power plants, such as the BP Jabrail/Zangilan solar plant with a capacity of 240MW, scheduled from 2022 to 2026. Additionally, the initiative aims to rehabilitate decommissioned small hydropower plants within the timeline of 2022 to 2025 and simultaneously construct new SHPs. Pilot projects aimed at implementing green technologies are planned between 2022 and 2023 to test and refine their feasibility and efficiency. Enhancing energy efficiency within residential buildings is a key component of the program, with the aim to accomplish this between 2022 and 2024.
Wind Power
On 03.06.2022, with the support of the International Finance Corporation (IFC), plans were revealed concerning scenarios for offshore wind development in Azerbaijan. These scenarios present two trajectories: a low growth scenario with a 1.5GW fixed foundation capacity by 2040 (7% of Azerbaijan's electricity needs) and a high growth scenario targeting a 7GW fixed foundation capacity by 2040 (37% of the country's electricity requirements). Addressing logistics challenges is crucial for both scenarios, particularly for the ambitious high growth scenario. The success of the high growth scenario depends on factors like decarbonization, hydrogen integration, an upgraded transmission network, and interconnection with neighboring markets for zero-carbon electricity export. Implementing this scenario requires spatial planning, environmental and social legislation frameworks, and adherence to international industry practices.
Figure 1. Impact of Offshore wind in Azerbaijan under low and high growth scenarios, period 2020 to 2040.
In terms of technical potential, offshore wind in Azerbaijan offers 35GW in shallow waters and 122GW in deep waters, totaling a significant technical potential of 157GW. According to a report titled "Azerbaijan's Offshore Wind Roadmap", jointly launched by the World Bank and IFC, the focus is on the potential of offshore wind for producing green hydrogen. The Roadmap shows 2 scenarios for offshore wind development in Azerbaijan, a low growth and a high growth scenario. In a high growth scenario, excess offshore wind generation can be pivotal for hydrogen production, serving various applications like energy storage, transport, industry, and the creation of other green fuels domestically. Exploring hydrogen export, the long-term strategy involves pipeline transportation, despite barriers like a 10% increase in transport costs, technical adaptations for high-volume export, and existing pipeline commitments to natural gas until 2040. Offshore wind development holds a lasting opportunity for hydrogen export, contingent on Azerbaijan's ability to competitively generate green hydrogen globally.
Figure 2. Map of Azerbaijan’s offshore wind potential and identification of favorable development zones.
In the World Bank's report, Figure 2 demonstrates that Azerbaijan has the potential to establish the entire suggested Offshore Wind (OSW) capacity specified in the roadmap by utilizing fixed foundation projects in shallow waters ranging from 10 to 40 meters, situated relatively near the coastline. The analysis indicates that the lowest levelized cost of electricity (LCOE) is expected in areas north of the Absheron peninsula.
Hydrogen Production
On 01.09.2021, according to the order of the Minister of Energy - Parviz Shahbazov, a Working Group was established for the purpose of conducting research and preparing proposals related to the production and use of hydrogen in the Republic of Azerbaijan. The presence of large-scale grey hydrogen plants in Azerbaijan indicates a significant focus on hydrogen production within the country's industrial sector.
Heydar Aliyev Oil Refinery operates a Hydrogen Production Unit (U-33) with a design capacity of 45,000 m3/h and a PSA Hydrogen Purification facility (U-31-800) with a design capacity of 40,000 m3/h.
The SOCAR Carbamide Plant
The SOCAR Methanol Plant
While blue hydrogen has the potential to be more cost-effective than green hydrogen, its establishment in Azerbaijan faces short-term challenges. These challenges include uncertainties related to CO2 infrastructure and storage, concerns about upstream fugitive emissions meeting international low carbon standards, and an increase in natural gas demand.
Blue hydrogen, whilst having the potential to be lower cost than green hydrogen may be challenging to establish in Azerbaijan the short term, for 3 reasons:
• the uncertainty around CO2 infrastructure/storage;
• the upstream fugitive emissions (comply to international low carbon standards);
• increases in natural gas demand.
European net-zero laws are expected to incentivize the production of green hydrogen REPowerEU. Barriers to the implementation of green hydrogen include the high cost of technological solutions. Direct wire hydrogen faces challenges due to the intermittency of renewables, reducing the load factor for hydrogen production. Additionally, to be considered "green," grid electricity should ideally have zero carbon intensity, which currently stands at 411g CO2 e/kWh. Freshwater scarcity poses a challenge, necessitating a climate adaptation strategy for green hydrogen production. The environmental impact of water abstraction from the Caspian Sea should be explored, considering alternatives such as desalination for green hydrogen production, accompanied by a water transportation fee.
Exporting green/blue hydrogen via the Southern Gas Corridor requires collaboration between Azerbaijan, Georgia, Turkey, and European end users, presenting commercial and contractual challenges. Constructing new hydrogen pipelines involves considerations of development costs, timeframes, and technological constraints. Optimizing the New Transport Corridor Europe-Caucasus-Asia (TRACECA) route, including Kazakhstan, should include hydrogen or ammonia pipelines in rail-sea-rail-sea-rail transport. A potential strategy involves a new ammonia or methanol pipeline from Baku to the Georgian Black Sea ports for ship transportation or marine fuel use.
Open Tender
An open tender was announced by MoEnergy (November 2023), outlining the Terms of Reference for assessing hydrogen production potential and application areas, specifically focusing on green hydrogen.
The objective is to formulate proposals for pilot projects in this field:
Task 1 involves assessing the demand for hydrogen in the transport sector, encompassing maritime transport, rail transport (which constitutes 88% of goods transported), and road transport, including buses, LCVs, passenger cars, and trucks. The assessment extends to evaluating the volume of hydrogen that could be utilized for electricity generation, incorporating the retrofitting of existing gas turbine plants and planned new generation capacities. The HYFLEX POWER project is centered on the production, storage, and re-electrification of 100 percent renewable hydrogen. This involves the on-site production of hydrogen using a 1MW electrolyzer, followed by storage in an almost one-ton tank. The stored hydrogen is then used to power a Siemens Energy SGT-400 industrial gas turbine.
Task 2 involves several key components:
Identifying suitable sites for the construction of a green hydrogen production plant. This includes considerations such as connectivity with offshore wind (OSW) grid connection points and transport nodes, adherence to security and safety requirements for the hydrogen plant, assessing water resource availability, which encompasses wastewater, seawater, groundwater, etc., and exploring the possibility of hydrogen storage within the plant area. Conducting a technological assessment to identify the type and capacity of the electrolyzer required for the green hydrogen production plant. Evaluating the required magnitude of investments needed for the construction of the hydrogen plant.
Developing a comprehensive Request for Proposal to attract investors interested in participating in the construction of the green hydrogen production plant.
Deployment of H2 in Azerbaijan
Azerbaijan's Ministry of Energy and Australia's Fortescue Future Industries (FFI) signed a framework agreement for joint cooperation on renewable energy projects, targeting "green hydrogen." The agreement aims to explore and implement projects with a total capacity of up to 12 GW.
The Ministry of Energy, in collaboration with UAE's Masdar, signed Implementation Agreements for 1 GW utility-scale onshore solar and wind projects and 2 GW integrated offshore wind and green hydrogen projects. These initiatives are part of a historic 10 GW renewable energy program with Azerbaijan's Ministry of Energy.
We extend our sincere gratitude to Rana Humbatova, who holds the position as Head of the Hydrogen and Green Technology Department at Azerbaijan Renewable Energy Agency (AREA) under the Ministry of Energy. She is also a member of the UNFCCC Roster of Experts, serving as an international expert on the review of greenhouse gas inventories and impact assessment of mitigation measures. Her profound knowledge and dedication to environmental sustainability were truly inspiring. With such insightful perspectives shaping the discourse, we are optimistic about the future of energy production in Azerbaijan. Thank you for enlightening us and for your commitment to a sustainable future.
Written by Inara Ahmadova
Connect with the WiRE Azerbaijan Chapter Leaders @ azerbaijan@womeninrenewableenergy.ca
For more information on Rana Humbatova visit LinkedIn
For more information on WiRE Azerbaijan visit WiRE Azerbaijan
