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WSHPDR_2013_Final_Report-updated_version

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potential of 28,000 GWh, of which 5,000 GWh is the<br />

technically feasible potential.<br />

Another boost to the small hydropower sector in<br />

Azerbaijan was given when the Asian Development<br />

Bank (ADB) and Government of Finland funded and<br />

technically assisted in the preparation of the<br />

Renewable Energy Development Project (December<br />

2005). It confirmed 21 sites as technically feasible (16<br />

sites are under 10 MW equaling to 40.59 MW), 4 of<br />

which were most attractive having a total of 10 MW<br />

installed capacity. 6 These four sites have been<br />

considered by ADB for financing at about US$25<br />

million, the construction time of the sites remains<br />

unconfirmed. However, it was the institutional<br />

structure and administrative barriers that were<br />

discouraging investment into this sector.<br />

The Ministry of Industry and Energy looks forward to<br />

constructing 61 small hydropower units with a total<br />

installed capacity of 350 MW until 2020. 2 The Islamic<br />

Development Bank has also expressed its interest in<br />

hydropower investment of around US$50 million-<br />

US$150 million in Azerbaijan. 2<br />

Renewable energy policy<br />

Renewable energy policy in Azerbaijan is reflected in<br />

The State Program on Use of Alternative and<br />

Renewable Energy Sources (2005-<strong>2013</strong>) which focuses<br />

on diversifying the sources of primary energy and<br />

ensuring energy security, particularly with reference<br />

to small hydropower and wind power potential, in<br />

order to improve access of energy to rural and remote<br />

areas. Azerbaijan’s 2020 target includes a 20-per cent<br />

share of renewable-generated electricity. The main<br />

objectives of the programme include: 7<br />

Determination of potential of<br />

renewable/alternative energy sources.<br />

Increase of energy efficiency.<br />

Creation of new employment opportunities.<br />

The Ministry of Economic Development developed<br />

The State Program on Poverty Reduction and<br />

Economic Development (SPPRED) in 2003-2005 that<br />

recognizes development of renewable energy as a<br />

means to fulfill its pursuit of sustainable<br />

development. 8<br />

‘unlimited purchase of energy produced at these<br />

(small) plants’ (Article 3). 4<br />

Barriers to small hydropower development<br />

Lack of environmental priority.<br />

Legislative gaps and statistical problems.<br />

Weak institutional coordination.<br />

Resource curse- too narrow foreign direct<br />

investment, crude dependence, lack of operative<br />

decision making, clashes of interest.<br />

Sluggish technological transfer.<br />

Inadequate relationship with relevant regional<br />

and global institutions.<br />

References<br />

1. Central Intelligence Agency (2012). The World<br />

Factbook. Washington, D.C. Available from<br />

www.cia.gov/library/publications/the-worldfactbook/.<br />

2. Economist Intelligence Unit (2012). Azerbaijan:<br />

Energy <strong>Report</strong> 2012. London. Available from<br />

https://store.eiu.com/product.aspx?pubid=11771149<br />

17&pid=1187096918&gid=1177114917.<br />

3. Azerbaijan’s power generation at hydroelectric<br />

power stations has grown (2011), ABC.az, 9 June.<br />

Available from http://abc.az/eng/news/54902.html.<br />

4. Huseynov, Firudin (2010). Guidebook on legislation<br />

regulating small hydropower in Azerbaijan. Ministry of<br />

Industry and Energy of Azerbaijan; United Nations<br />

Development Programme.<br />

5. United Nations Development Programme (2009).<br />

United Nations Development Programme and Ministry<br />

of Industry and Energy of Azerbaijan Republic <strong>Report</strong>:<br />

Small Hydropower Potential in Azerbaijan.<br />

6. United Nations Development Programme (2012).<br />

Azerbaijan. Baku. Available from www.unaz.org/undp/sehife.php?lang=eng&page=021101.<br />

Accessed 27 March 2012.<br />

7. Aliyev, F. G. (2010). Renewable Energy Sources<br />

Development in Azerbaijan: Policy to Barriers and<br />

Regional Cooperation. Presentation at the<br />

International Energy Efficiency Forum. 28-30<br />

September. Astana.<br />

8. Asian Development Bank (2005). Country<br />

Environmental Analysis. Azerbaijan. Metro Manila.<br />

Available from www.adb.org/documents/countryenvironmental-analysis-azerbaijan.<br />

Legislation on small hydropower<br />

There are no customized laws for renewable energy.<br />

The legal framework is built on regulations concerning<br />

the energy sector. Small hydropower effectively falls<br />

under Law on Utilization of Energy Resources (1996),<br />

Law on Electric Energy (1998), Law on Energy (1998)<br />

and Law on Electrical Power and Heating Stations<br />

(1999). These laws invoke a subsidy for the<br />

construction of small hydropower plants having<br />

capacity from 50 kW to 10 MW with a guaranteed<br />

300

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