Boost for Caspian Sea offshore wind plans as Middle East giants confirm gigascale ambitions
Azerbaijan has potential to develop more than 7GW of offshore wind capacity according to the World Bank
COP29 host Azerbaijan received a boost to plans to develop offshore wind in the Caspian Sea as it signed new agreements with Middle East utility giants Masdar and ACWA Power over a potential 3.5GW of projects.
Masdar, the United Arab Emirates clean energy powerhouse, and Saudi Arabia's ACWA Power signed a memorandum of understanding (MoU) with SOCAR Green, an arm of Azerbaijan's state oil company.
The two Middle East players and SOCAR have all previously been linked with plans for offshore wind off oil-rich Azerbaijan's coast, but the three-way partnership could indicate more progress for potential development.
Azerbaijan's deputy energy minister Elnur Sultanov, who is also CEO of the COP29 climate conference underway this week, has previously suggested that the heavy capital demands of building offshore wind farms meant the government in Baku would be open to “something like power production sharing agreements” to accelerate the build-out.
The EU in 2022 indicated interest in tapping the region as a new source of renewable power when national leaders unveiled plans for a 1,200km, 1GW line connecting Azerbaijan and Georgia with Romania and on into Hungary.
The plan to develop offshore wind forms part of Azerbaijan's ambition to build renewable energy, green hydrogen and water desalination projects, according to a statement.
"Azerbaijan is a key strategic partner for Masdar and the signing of this (MoU) with our partners today paves the way to accelerate the scale of Azerbaijan’s clean energy vision, said Mohamed Jameel Al Ramahi, CEO of Masdar.
Masdar’s existing renewables projects in Azerbaijan include around 1GW of solar jointly developed with SOCAR Green.
ACWA Power is behind the 240MW Khizi-Absheron wind power project which is expected to commence operations in Azerbaijan in the first half of 2026.
Earlier this week ACWA announced financial close for senior debt facilities worth $238m to finance the Absheron-Khizi project. The debt issue was also backed by the European Bank for Reconstruction and Development (EBRD) and the OPEC Fund for International Development.
An equity bridge financing facility of $120m, based on shariah-compliant structure, was secured from First Abu Dhabi Bank (FAB) in December 2023.
The Absheron-Khizi project has a 25-year power purchase agreement with the national electrical power company, Azerenerji.
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