Electricity can be generated in two main ways: by harnessing the heat from burning fuels or nuclear reactions in the form of steam (thermal power) or by capturing the energy of natural forces such as the sun, wind or moving water. Contact online >>
Electricity can be generated in two main ways: by harnessing the heat from burning fuels or nuclear reactions in the form of steam (thermal power) or by capturing the energy of natural forces such as the sun, wind or moving water.
Unlike other energy commodities such as coal, oil and natural gas, electricity trade between countries is relatively limited as it is more technically complex and requires a direct cross-border interconnection. Such connections can help to balance out supply and demand across regions, which will be increasingly important as variable renewables like solar and wind make up a larger share of electricity generation.
Power generation, which includes electricity and heat, is one of the largest sources of CO2 emissions globally, primarily from the burning of fossil fuels like coal and natural gas in thermal power plants.
Growth in electricity demand has slowed down or even reversed in many advanced economies due to energy efficiency efforts and the shift towards less energy-intensive forms of economic activity, such as services. But it is still growing rapidly in many emerging market and developing countries, especially those where a significant fraction of the population still lacks access to electricity.
Electricity is primarily used for heating, cooling, lighting, cooking and to power devices, appliances and industrial equipment. Further electrification of end-uses, especially transportation, in conjunction with the decarbonisation of electricity generation, is an important pillar of clean energy transitions.
The new report proposes several ways Azerbaijan can make its energy supply and consumption more efficient and diverse. The overarching recommendation is to gradually shift from the current energy system to one based on competitive markets, significant private sector participation and prices that cover operating costs.
Azerbaijan''s government has recently drafted proposals for electricity and gas market reforms, as well as laws on energy efficiency and renewable energy. The report encourages Azerbaijan to move swiftly to adopt all these proposals and to ensure their effective implementation.
Tariffs are a critical issue for electricity and gas markets. Low levels of tariffs, often below the full cost of supply, lead to distortions and inefficiencies in the heat and electricity sectors. The policy review makes the case for phasing out the implied subsidies while recommending support measures for financially vulnerable households.
Successful electricity and gas market reforms would also attract new entrants and investment in the renewable electricity sector. Azerbaijan has recently started to develop its world-class potential for solar and wind power. The IEA policy review recommends Azerbaijan to be ambitious, and welcomes the government''s plans to raise the share of renewable energy in total generating capacity from 16% in 2018 to 30% in 2030.
Azerbaijan has plenty of scope to improve its energy efficiency. The new report strongly encourages the government to recognise that greater energy efficiency can benefit the economy, reduce pollution and create jobs. The report therefore recommends the rapid adoption of the laws, strategies, policies and measures needed to realise this potential.
Measures to diversify energy supply, cut subsidies and increase efficiency would also help reduce greenhouse gas emissions. With further economic growth and urbanisation expected in Azerbaijan, the report encourages the government to integrate energy and climate aspects into long-term urban development and transport planning.
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