Azerbaijan Finalises COP30 Energy Plan with 3 GW Caspian Offshore Wind and Germany Green Hydrogen Deal

The National Energy Transition Plan: Architecture and Targets

Azerbaijan's COP30 National Energy Transition Plan was developed over 18 months in consultation with the IEA, IRENA, and the World Bank's Energy Sector Management Assistance Program. The plan sets out a pathway to 30 percent renewable electricity by 2030, rising to 60 percent by 2040, through a combination of Caspian offshore wind (the dominant new technology), expanded solar PV (targeting 1.5 GW by 2030), and geothermal capacity in the Nakhchivan exclave. The 30 percent 2030 target is ambitious relative to Azerbaijan's current renewable share of approximately 9 percent — mostly legacy Soviet-era hydropower — and will require a substantial acceleration of project permitting, grid connection investment, and offshore construction capacity that Azerbaijan does not currently possess domestically.

The plan's treatment of the oil and gas sector is notably calibrated. Azerbaijan's current economy depends on hydrocarbon revenues for approximately 45 percent of government revenue and 90 percent of export earnings. The transition plan explicitly states that domestic renewable energy development will substitute for fossil fuel consumption within Azerbaijan — reducing the country's own gas consumption and thereby increasing the volume available for export to Europe — rather than replacing gas exports on any near-term timeline. The plan's modelling shows Azerbaijani gas exports to Europe remaining at or above current levels through 2035, while domestic gas consumption declines by 25 percent as renewable electricity displaces gas-fired power generation. This framing presents the energy transition as augmenting rather than replacing Azerbaijan's role as a European energy supplier.

Offshore Wind and the Caspian Development Challenge

The 3 GW Caspian offshore wind programme represents Azerbaijan's most technically ambitious energy project. The Caspian Sea presents distinctive offshore wind development challenges: it is an enclosed body of water with variable wind resources, extreme temperature fluctuations, high seismic activity, and the legal complexity of Caspian sea-bed rights that were contested between the five littoral states until the 2018 Convention on the Legal Status of the Caspian Sea provided a partial framework. Azerbaijan's offshore concession zones in the Pirallahi and Nakhchivan areas have been assessed through preliminary wind measurement campaigns as suitable for fixed-bottom turbine installations in water depths of 20-40 metres, with average capacity factors estimated at 38-42 percent — comparable to North Sea second-tier sites.

The EUR 2.4 billion estimated cost for the first 1 GW of offshore wind at Pirallahi is to be financed through a mix of SOCAR equity, EBRD and IFC green bonds, and a competitive tender for international developer equity. Siemens Gamesa and Vestas have both expressed interest in the project, and the government has indicated it may structure the first phase as a pioneering project with above-market power purchase agreements to establish track record before transitioning to competitive procurement for subsequent phases. Grid connection to Baku's high-voltage transmission network requires a 60-kilometre submarine cable and a new 330 kV onshore substation, infrastructure whose construction timeline is the primary scheduling constraint for first power delivery in 2028.

Germany Green Hydrogen Agreement and Export Pathway

The green hydrogen framework agreement signed with Germany on 20 October 2026 establishes a bilateral cooperation framework for the development of green hydrogen production in Azerbaijan and potential export to Germany via the Southern Gas Corridor pipeline infrastructure or future dedicated hydrogen pipelines. Germany's hydrogen import strategy, published in June 2023, identifies Azerbaijan as one of twelve priority supplier countries due to its combination of renewable energy potential, existing gas export infrastructure, and stable bilateral relationship. The framework agreement establishes a joint technical working group, commits both sides to a feasibility study for hydrogen pipeline conversion on the TAP section from Albania to Italy, and sets an indicative target of 2 billion cubic metres hydrogen-equivalent deliveries by 2032 — a target that assumes electrolysis capacity of approximately 800 MW deployed by 2031.

The 2032 timeline for hydrogen exports is contingent on several factors that remain unresolved. Electrolytic hydrogen production requires dedicated renewable electricity capacity beyond what Azerbaijan's domestic power system can spare without curtailing industrial and residential supply. The 3 GW offshore wind build-out, which will not reach full capacity before 2030-31, is a prerequisite for dedicated hydrogen electrolysis. Pipeline conversion or construction from Azerbaijan to EU markets involves multiple transit countries and regulatory frameworks under different energy law regimes. The EBRD has published a pre-feasibility assessment suggesting the technical pathway is achievable but that the capital cost — estimated at EUR 3.5-4 billion for electrolysis, compression, and pipeline adaptation — requires multilateral development finance backstop that has not yet been mobilised. The Germany-Azerbaijan agreement should therefore be understood as a directional commitment rather than a firm commercial contract.

Sources

• Azerbaijan Ministry of Energy – COP30 National Energy Transition Plan
• IRENA – Azerbaijan renewable energy assessment 2026
• German Federal Ministry for Economic Affairs and Climate Action – Hydrogen import framework: Azerbaijan
• EBRD – Caspian offshore wind pre-feasibility study