Azerbaijan Dives into Renewable Energy Boom Amid Oil Rich Heritage

Azerbaijan, one of the world's oldest oil producers and exporters, is shifting its focus towards a clean energy boom. The country has long relied on oil and gas to meet its energy needs and as a major economic contributor. However, it now aims to diversify its energy mix by deploying more renewable energy capacity.

Natural gas contributed 67 per cent of Azerbaijan's energy supply in 2023, while oil and oil products accounted for 31.1% and hydropower and other renewable energy sources contributed less than 2 per cent of the energy mix. Despite its longstanding reliance on oil and gas, hydrocarbons still account for almost half of Azerbaijan's GDP, the government has major plans to expand its renewable energy capacity.

The World Bank approved the Azerbaijan Scaling-Up Renewable Energy Project (AZURE) in March 2025, which aims to strengthen Azerbaijan's power transmission network, support energy diversification, and meet the country's growing energy demand. The $173.5 million loan from the International Bank for Reconstruction and Development (IBRD) is expected to help expand and modernise Azerbaijan's energy infrastructure and encourage private investment in its renewable energy sector.

Azerbaijan now aims to reduce its greenhouse gas emissions by 40 per cent, from 1990 levels, and boost the share of energy that comes from renewables to 30 per cent by 2030. Significant progress in renewable energy expansion in recent years means that Azerbaijan may surpass this target, generating up to 38 per cent of its power from clean sources.