Azerbaijan is making significant strides in transforming its energy sector by expanding its renewable energy capacity. As the host of COP29, the country has announced ambitious climate goals and urged other nations to follow suit. In the first nine months of this year, renewable energy accounted for 20% of Azerbaijan's total electricity production, a notable increase from 13.4% in 2025.
Official data reveals that Azerbaijan generated 21.2 billion kilowatt-hours of electricity from January to September 2026, compared to 28.7 billion kilowatt-hours for the entire year of 2025. The government aims to boost the share of renewables in its total installed electricity generation capacity to 33.3% by 2027.
The country has an estimated technical potential of 135 GW for onshore and 157 GW for offshore wind capacity in the Caspian Sea, offering substantial opportunities for solar and wind development. By 2032, Azerbaijan plans to develop 8 GW of renewable energy generation capacity, with 2 GW expected to be completed by 2027.
Some regions are transitioning to green energy more rapidly than others. The Nakhchivan Autonomous Republic met all its electricity demand from renewable sources between April 21 and July 2, according to Energy Minister Parviz Shahbazov.
The expansion of solar and wind projects has enabled Azerbaijan to avoid using an estimated 840 million cubic meters of natural gas in the first nine months of the year, thereby reducing carbon emissions from fossil fuels. The government plans to commission 11 solar and wind power plants totaling 2 gigawatts of capacity, with three facilities already online, contributing 570 MW.
By the end of the year, the 445-MW Bilasuvar solar power plant and the 25-MW Shams 1 solar power plant are expected to be operational. Work is also underway on UAE-based Masdar’s 200-MW wind power project. Several more renewable energy projects are slated for completion next year, including the 315-MW Neftchala, 240-MW Shafag, 50-MW Shams, 50-MW Ufug, and 25-MW Western Ufug solar power plants.
These projects are projected to produce a combined 5 billion kilowatt-hours of electricity annually, potentially reducing gas use by over 1.1 billion cubic meters per year and cutting carbon emissions by 2.4 million metric tonnes.
Foreign direct investment has played a crucial role in Azerbaijan's renewable energy expansion, surpassing $500 million. Companies from the UAE, Saudi Arabia, and China are involved in large-scale green energy projects in the country. Renewable energy auctions are expected to commence in 2028 to drive further development.
In October, the European Union’s Business Climate Report Azerbaijan 2025/26 highlighted the country's progress in expanding its renewable energy sector. The report states, “Azerbaijan has made significant progress in developing its renewable energy sector and is actively engaging international project developers to implement large-scale projects.”
The government is also investing in battery energy storage systems and electricity grid upgrades, including the AZURE project, the Navoi substation, and new 500-kilovolt transmission lines. By 2027, Azerbaijan plans to invest around $2.6 billion in renewable energy projects and power grid development, including $600 million to strengthen grid infrastructure.
Efforts are underway to develop domestic manufacturing capabilities in green energy, with a solar panel manufacturing project in progress and plans for wind turbine blade and tower manufacturing projects in the Alat Free Economic Zone.
Although Azerbaijan does not currently have a nuclear power program, the government is considering its development to further diversify the energy mix. In April, Shahbazov announced plans to include nuclear energy in the country's energy balance, describing it as a clean energy m.
To support these efforts, the International Atomic Energy Agency conducted a legislative assistance mission to Azerbaijan in late 2025, in cooperation with the State Agency for Regulation of Nuclear and Radiological Activity. The mission aimed to raise awareness of the importance of adhering to international legal instruments and the elements of comprehensive national nuclear legislation.
Azerbaijan's accelerated deployment of renewable energy capacity and strengthening of supporting infrastructure is expected to enhance the flexibility and reliability of its energy system, reducing dependence on oil and gas in the coming years.
