Use Of Renewables To Generate Electricity

• Published date: 29 July 2021
• Subject Matter: Energy and Natural Resources, Energy Law, Oil, Gas & Electricity, Renewables
• Law Firm: BM Morrison Partners LLC
• Author: BM Morrison Partners LLC

Law No 339-VIQ, dated 31 May 2021, On Use of Renewables to Generate Electricity, is enacted with effect 14 July 2021 with supposedly no retroactive effect vis-à-vis any existing projects. The Law is aimed at promoting generation of electricity from renewables by addressing legal, economic, and organisational grounds for their use and providing for mechanisms to support the developments. The Law is passed pursuant to the State Program of Use of Alternate and Renewable Energy Sources.

Site

The Law provides for the Atlas, a mapping of potential renewable energy sources in Azerbaijan. The Atlas will include land plots and water objects appropriate for renewable projects based on their initial assessment, potential, boundaries, and other appropriate features. Information held by the State land, water, forest, and other appropriate cadastres shall be transmitted to the authority that will maintain the Atlas, the Ministry of Energy.

The decision to qualify and declare a site for renewables is made by the Cabinet of the Ministers with the participation of the state electric power generation and supply companies, Azerenerji JSC and Azarisiq JSC. Before declaring, the Cabinet must consider, among others, rights in the site and/or water object and request an approval of the affected persons. The decision is issued together with the map providing for the location, dimensions and boundaries of the site.

Once so qualified, the category and designation of the site is updated accordingly. The energy generation must commence in the next two years. The Ministry of Energy takes measures to select a power producer, transfer rights in the concerned land plot, and inform the affected persons.

Power Producer

A producer is selected through an auction or direct involvement. In auctions, the winner is selected based on the lowest price offered to Azerenerji JSC for the energy to be generated from a renewable source.

The producer can also be selected by the Cabinet of Ministers subject to an approval from the President upon implementing pilot projects of state and strategic importance or if the auction could not be held. The selected energy producer shall make: (i) an investment agreement with the Ministry of Energy; (ii) a power purchase agreement with a guaranteed buyer (offtaker); and (iii) a transmission connection agreement with either Azerenerji JSC or Azarisiq JSC, depending on the network to be connected to. The producer shall also make agreements to obtain rights in the...