BAKU, Azerbaijan, October 21. EU companies,
participating in the survey for the EU Business Climate Report
Azerbaijan 2025/26, have highlighted Azerbaijan’s substantial
progress in renewables.


As stated by the interviewed European companies, Azerbaijan is
proactively attracting international developers for large-scale
projects.


“The sector is seen as offering strong long-term growth
potential and generating new opportunities in engineering,
infrastructure, logistics and advisory services. However, only a
small number of companies are currently active in renewable energy.
Although the pipeline of green-energy projects has expanded,
European companies remain largely limited to second-or third-tier
subcontracting roles, and the pipeline of major new projects is
expected to be more limited over the next two to three years as
current projects are already underway. Representatives recommended
that Azerbaijan also pursue smaller-scale, bottom-up projects,
rather than focusing primarily on large utility-scale schemes,”
reads the report.


The report’s authors point out that Azerbaijan is reducing its
dependence on hydrocarbons to strengthen its climate resilience and
diversify its economy.


“Renewable energy is the most important component of green
business in Azerbaijan. The country has pledged to reduce emissions
by 40% from 1990 levels by 2035, and aims to increase the share of
renewables in its installed electricity generation capacity to 30%
by 2030. Azerbaijan's onshore renewable energy sources have a
technical potential of 135 GW, while the potential of offshore
renewable energy sources is 157 GW. The economic potential of
renewable energy sources is estimated at 27 GW, most of which is
solar energy, with wind energy as the next largest share.







The country is actively pursuing plans to develop 8 GW of
renewable energy by 2032, with the integration of 2 GW into the
national grid due for completion in 2027. During 2025, Azerbaijan
produced 1,891.7 million kWh of electricity at hydropower plants
(HPPs), 475.7 million kWh at wind power plants (WPPs), and 282.7
million kWh at solar power plants (SPPs). The sector demonstrated
stronger momentum during the first half of 2026. During this
period, the electricity generation from renewable sources increased
by 5.3%. Wind became the fastest-growing renewable energy source in
the country, while thermal power production declined, indicating a
shift towards cleaner energy sources,” reads the report.


The authors also note that Azerbaijan has been implementing
large-scale projects through partnerships with bp, Masdar, ACWA
Power, China Gezhouba Group Overseas Investment and SOCAR
Green.


“In addition, the country is taking strategic steps to localize
supply chains for renewable energy, such as a solar panel
manufacturing project and plans for local production of wind
blades, towers and storage equipment at the Alat FEZ,” the report
says.