Azerbaijan: Renewable Energy Development (Biomass Cogeneration) Project

Sovereign Project | 47008-002 Status: Proposed

Summary

The Project aims to promote renewable energy development in Azerbaijan through developing two pilot renewable energy projects (biomass cogeneration) with a total installed capacity of 16 megawatt (MW) for efficient electricity and heating supply in Oghuz and Agjabedi regions. The project impact will be efficient and sustainable renewable energy development in Azerbaijan. The expected project outcome will be increased Renewable Energy share in power generation by demonstrating the viability of biomass cogeneration plants and heating supply systems in Oghuz and Agjabedi regions. The project outputs will consist: (i) construction of two biomass cogeneration plants in Oghuz and Agjabedi regions; (ii) construction of heating supply systems in Oghuz and Agjabedi regions; and (iii) project management and supervision, including consultancy services for project supervision, safeguards compliance, reporting, and capacity building for the executing agency.

Latest Project Documents

Consulting Notices See also: CMS

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Procurement Notices See also: Operational Procurement

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Procurement Documents

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Project Name Renewable Energy Development (Biomass Cogeneration) Project
Project Number 47008-002
Country Azerbaijan
Project Status Proposed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan: Renewable Energy Development Project
Ordinary capital resources US$ 40.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector

Energy - Renewable energy generation - biomass and waste

Gender Equity and Mainstreaming Some gender elements
Description The Project aims to promote renewable energy development in Azerbaijan through developing two pilot renewable energy projects (biomass cogeneration) with a total installed capacity of 16 megawatt (MW) for efficient electricity and heating supply in Oghuz and Agjabedi regions. The project impact will be efficient and sustainable renewable energy development in Azerbaijan. The expected project outcome will be increased Renewable Energy share in power generation by demonstrating the viability of biomass cogeneration plants and heating supply systems in Oghuz and Agjabedi regions. The project outputs will consist: (i) construction of two biomass cogeneration plants in Oghuz and Agjabedi regions; (ii) construction of heating supply systems in Oghuz and Agjabedi regions; and (iii) project management and supervision, including consultancy services for project supervision, safeguards compliance, reporting, and capacity building for the executing agency.
Project Rationale and Linkage to Country/Regional Strategy

The Government of Azerbaijan (the government) is committed to promote renewable energy and sustainable development to ensure environmental safety. Azerbaijan's total electricity production in 2011 reached 19.2 terawatt hours (TWh), of which 82% was generated from thermal power (gas-based) and 18% from hydropower. Currently about 38% of the greenhouse gas (GHG) emissions comes from thermal power generation plants. With increased renewable energy, the government could reduce GHG emissions, as well as increase export revenues and reduce gas subsidies. Subsidies for gas used for power generation has been conservatively estimated at $650 million per year. The use of indigenous clean energy such as biomass to partially displace gas use has attractive financial, economic, health, and environmental benefits for the country. Azerbaijan has a large potential for renewable energy, which to date remains largely untapped. The existing legal and regulatory framework supports renewable energy development where the government targets an increase to 20% capacity by 2020. The government's State Program on Use of Alternative and Renewable Energy Sources (2009) clearly articulated the importance of renewable energy and provided a framework for facilitating their development. The government is implementing the medium-term tariff policy with a transition to full cost recovery for utility service providers which is expected to be completed by 2018.

Experiences from many other countries demonstrate that biomass power generation is an effective and economic solution to convert biomass fuel to electricity and heat. With the project, it is estimated that about 95 million cubic meters of natural gas will be saved per year for export, thus increasing the government revenue by at least $5.6 million per year. The project will also result in avoidance of GHG emissions, and a reduction of 24,000 tons of carbon dioxide equivalent (tCO2e) per year. The project has potential for scaling up in the two agriculture-based regions of Oghuz and Agjabedi, and for replication in other regions in Azerbaijan with similar resources and conditions. The use of other sources of bio-energy may also be explored such as the 2 million tons of solid and domestic wastes generated in the country annually.

The government, in consultation with ADB, has identified the energy sector as a key pillar of the Asian Development Bank's upcoming Country Partnership Strategy (CPS) for Azerbaijan. The proposed Project is in line with the CPS priorities and fits with ADB's Strategy 2020 and Energy Policy (2009) by promoting inclusive growth, expanding the use of clean energy sources, and reducing GHG emissions.

Impact Efficient and sustainable RE development in Azerbaijan
Outcome Increase biomass generation capacity in power generation
Outputs

Biomass generation plants installed and commissioned in Oghuz and Agjabedi

Heating supply system installed and commissioned in Oghuz and Agjabedi

SAARES capacities on supervision and management of clean energy projects are enhanced

Geographical Location Oghuz and Agjabedi regions

Safeguard Categories

Environment B
Involuntary Resettlement C
Indigenous Peoples C

Summary of Environmental and Social Aspects

Environmental Aspects The project does not appear to involve major environmental and social issues that cannot be mitigated. Due diligence currently being undertaken.
Involuntary Resettlement The project does not appear to involve major environmental and social issues that cannot be mitigated. Due diligence currently being undertaken.
Indigenous Peoples The project does not appear to involve major environmental and social issues that cannot be mitigated. Due diligence currently being undertaken.
Stakeholder Communication, Participation, and Consultation
During Project Design Consultation will be carried out.
During Project Implementation Consultation will be carried out.

Business Opportunities

Consulting Services To assist the EA in implementation, a supervision consulting firm will be recruited using the quality- and cost-based selection (QCBS) method (90:10), in accordance with ADB's Guidelines on the Use of Consultants (2010, as amended from time to time).
Procurement The Project will be implemented by turnkey contractors. The indicative procurement methods will be international competitive bidding (ICB), in accordance with ADB's Procurement Guidelines (2010, as amended from time to time).

Responsible Staff

Responsible ADB Officer Tianhua Luo
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Energy Division, CWRD
Executing Agencies
State Agency on Alternative and Renewable Energy Sources
40 U.Hajibeyov str., Government House Bld.

Timetable

Concept Clearance 08 May 2013
Fact Finding 01 Apr 2016 to 08 Apr 2016
MRM 27 May 2016
Approval -
Last Review Mission -
Last PDS Update 30 Mar 2016

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

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Related Publications

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