Caspian Energy - Will SOCAR engage in renewable energy production?
Caspian Energy Journal Caspian European Club
August 2018
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 31
Monday, 02 October 2017 17:30

Will SOCAR engage in renewable energy production? Featured

Will SOCAR engage in renewable energy production?

The impact of the renewable energy over the world energy balance is growing rapidly. The interesting fact is that the consumption of conventional energy reduced in the OECD countries over the last 12 years. At the expense of China and India, the consumption in the G20 countries increased by 2.1% over the same period. Within 15 years Germany’s GDP increased almost by 40%, annual electricity production rose by 18.5% while the consumption of conventional energy resources reduced. A certain segment of the production activity, an economic sector or even the entire region is getting gradually lifted out of dependence on such called “dirty” energy carriers. 



Majors and RES 


  • Thus, the lower part of Austria has fully switched its energy balance on the renewable sources of energy. This densely populated region with a population of 1.65mln people gets 63% of electricity from hydropower stations, 26% from wind farms, 9% from biomass processing and 2% from the sunlight. Such energy speed-march cost EUR 2.8 bln. This achievement will be spread all over the country. The referendum of 1978, when the majority of the citizens spoke against the nuclear plants, gave a momentum to a full shift to green energy. Today, Austria gets 75% of energy from renewable sources and only 25% from fossil fuels. This country is most likely going to be the first in the world to fully abandon outdated and pollution technologies. It is important that the price for electricity practically has not changed in the course of shift to alternative sources.


  • Since January 1, 2017 the entire railway connection of the Netherlands has been operating only on wind power generated on wind farms of the Netherlands, Belgium and Finland.

 The railway companies of the Netherlands signed a deal with Eneco firm in 2015 but the final full shift to the renewable energy should have taken place in 2018. However, with a 75% consumption rate reached in 2016 the aim was attained ahead of the schedule. At present, the total generation wind turbines makes 7.4 bln kWh per year whereas the country’s energy needs totaled about 12.5 bln kWh in 2015.

  • According to the RF Minister of Energy Alexander Novak, the sector of renewable energy sources is enough competitive now, the cost of energy generation out of renewable sources is declining, and their share in the world energy balance will grow whereas the share of fossil fuels will decline. 

“If it used to total 87% earlier, now it already makes 85% and will fall down  to 77-78% by 2040”, Novak predicts.

Renewable sources of energy now account for just 0.2% in the Russian energy balance. Gas and coal (in the ration of 60/40) account for 65% while hydropower and nuclear energy account for 18% and 17%.


  • According to the Israeli Minister of National Infrastructure, Energy and Water Resources Yuval Steinitz, the country is getting ready to ensure 10% of domestic power generation out of renewable sources of energy by 2020, mainly at the expense of solar energy, and about 20% by 2030. Besides, though the population makes about 9 mln people, there are over 200 companies operating in Israel and studying the generation and accumulation of solar energy, which tells about a sufficiently high competitiveness rate of this type of renewable energy in the given climate conditions.  


  • The solar energy market will extend by 50% a year in coming 10 years. The head of the subdivision for alternative energy of the French company Total Bernard Klemen made such forecast.  According to the estimate of the expert, substantial funds which can reach $51bln will be invested into the development of the solar energy in coming 20 years. Total plans to take its place in the three of the leading world equipment producers, as well as become a leader in biofuel production. Total Energy Ventures invested a total of $160mln into its projects AutoGrid, United Wind и Off Grid Electric.


  • By 2022 the Norwegian oil-gas company Statoil plans to invest $200mln (1.7 bln NOK) into the projects on construction of solar and wind farms, energy storage and transportation, as well as intellectual energy systems and green energy. The oil giant has established a special investment fund to finance renewable energy projects.


  • BP Ventures invested $325 mln mainly in development of new types of fuels, in which  start-ups such as Tricoya Technologies, Fulcrum and Solidia are engaged.


  • ExxonMobil is showing interest in biofuel, energy-efficient processes and energy saving materials. The company is cooperating with Synthetic Genomics Inc. and FuelCell Energy Inc. By 2035 the oil corporations will have to invest at least $350bln into the renewable sources.


Today, no one is also surprised at the fact that it is the alternative energy about which the heads of oil-gas companies speak a lot when addressing world information platforms. It is also closely associated with another global problem – climate change. Thus, Shell reduced emissions by 21% compared to 1994, Shell CEO Ben van Beurden says. He called companies to actively develop LNG projects. Global changes demand efforts. We are in the period of transition to renewable and more environmentally friendly sources of energy, and it is a challenge, the head of RoyalDutch Shell says. The shift to renewable sources will happen, but this process will run gradually, he assumes. In future the hydrocarbon resources will be used in the heavy industry.

But first, it is necessary to undertake a number measures, introduce market mechanisms, dedicated legislation, create working groups for efficient use of energy, quotas trade, stimulate consumption, develop technologies for CO2 capture and storage. It is important to move in the single direction and prevent the global warming over 2 degrees compared to 1994.

The climate change testifies to a mission to put in place cheaper and more climate-friendly energy, to deliver resources to as many people as possible, to be a reliable supplier, Patrick Pouyanné, Chief Executive Officer at Total, says. We expect big changes in the markets in the 2040s and 50s and maybe the situation in the next decade will differ from the today’s one. Shall we continue to use hydrocarbon feedstock as a fuel on ships or gas in combination with renewable energy sources, which will most likely form a basis of the energy mix in the future? To do this, we need to promote gas as an environmentally cleaner source for the purpose of investing in new sources.

Japan's energy demand is growing and we are also working to reduce dependence on fossil fuels from 76 to 41%. In this regard, we support the development of technology and this is the main element that will enable us to cope with the situation in the future, Katsuo Nagasaka, Chairman of the Board of Chiyoda Corp said.

India’s domestic demand for electricity is growing, Dinesh K Sarraf, CMD of ONGC, says. Within 10 years the country plans to increase significantly the share of natural gas in its energy mix. Production from renewable sources will be growing, and the number of electric cars will increase. Therefore, the main consuming countries should facilitate ways of obtaining energy sources.

It should be noted that 4 oil-gas companies Total, Chevron, Exxon and Idemitsu Kosan have been in the list of the 100 leading innovation companies of the world (Top 100 Global Innovators) for the second year in a row, which is made by Thomson Reuters (TR). The oil-gas companies fell into this list owing to their study over the hydraulic fracturing technologies, meant for natural gas production, and the work in the field of alternative energy.

SOCAR and renewables

Unfortunately, this list does not yet includes the national company SOCAR, as SOCAR does not incorporates, unlike majors, a research center, a venture fund and units involved in studying efficiency, financing and development of energy diversification at the practical level. Although SOCAR, as the world's leading national brand in the world markets, can no longer ignore global trends, which are ultimately changing the global energy balance. However, this year SOCAR announced the liquidation of its subsidiary SOCAR-KPS LLC, which dealt with the use of new equipment and technologies, and also offered services in the field of studying alternative and renewable energy sources.

The company does not pay due attention, it rather even ignores the prospect of development of alternative energy sources, limiting itself to statements on financing of single projects. Meanwhile, President of the State Oil Company Rovnag Abdullayev said: “Today the opportunities for alternative energy are expanding, and in 40-50 years the significance of oil in the energy market will decrease. At the same time the petrochemical industry will play a big role. This sector is increasingly developing and we have every opportunity to enter this market”, he stressed. The implementation of the Petkim wind farm project on the Aliaga Peninsula in the west of Turkey by SOCAR Turkey (the Turkish “daughter” of the Azerbaijani state company SOCAR) in 2017 is a very positive fact for the company. Once ended, the construction will enable to meet 12% of electricity demand of the Petkim complex.

The project costs 55 million euros. The operation of the Petkim wind farm not only contributes to power supply of the peninsula, but it will also become a major contribution to the development of alternative energy in Turkey. Construction works for the wind farm project are implemented by the world's largest company Alstom. The construction of the wind power plant will supply strategic projects of Petkim with energy.

Azerbaijan, where energy-intensive production is actively developing, has all preconditions for development of the renewable energy sector. The country has 9 of 12 climatic zones and there is a great potential for development of almost all known sources of renewable energy from solar, wind and wave energy to underground geothermal and methane hydrates lying in huge volumes in the depths of the Caspian. According to the estimates of the Azerbaijani scientists, in Azerbaijan on average 200-250 days round the year are windy days and this comprises about 6,000 hours. This indicator is extremely high and even surpasses the world average ones. The potential of wind energy in Azerbaijan is 2.4 billion kWh. The number of sunny hours on the Absheron Peninsula and along the whole coast of the Caspian Sea reaches 2,500 and 2,900 in the Nakhchyvan Autonomous Republic. Vice-President of the Azerbaijan National Academy of Sciences (ANAS) Arif Gashimov said: “According to the estimates, about half of Nakhchyvan's energy needs can be met by alternative energy sources”.

According to the Strategic road map on the development of economy of Azerbaijan, adopted as early as 2017, the volume of generation from alternative and renewable sources of energy is planned to be increased up to 15% till 2020. In this regard, a 50 MW hydropower plant and a bio-energy station on waste processing are currently construction. Apart from this, a feasibility study within the framework of the project on construction of the wind farm with a capacity of 200MW in the Caspian Sea water area is being prepared.

Development of the alternative energy in Azerbaijan is beneficial firstly for SOCAR. According to the calculations of the State Agency for Alternative and Renewable Sources of Energy, it is possible to save 1.1bcm at the expense of alternative energy development by 2020, which means GDP growth by 7.9%. Use of alternative energy resources is also justified for supplying sparsely-populated and distant areas to where it is unprofitable to lay gas lines. The alternative energy sector got an impulse for development from the government through the decision of the Cabinet of Ministers, which states that low-capacity generation facilities (up to 150 kW), small power plants with the capacity no over 500 kW can be built and operated without special permissions. It means that small farms will be able to supply themselves with energy at the expense of local resources, for instance, small bio-mass operated units.

Natural climate conditions of Azerbaijan, conditions created by the government for the development of renewable sources of energy, use of experience of the world oil-gas majors, make it possible to consider the renewable energy as the most promising line of developing the energy of the future. As President of Azerbaijan Ilham Aliyev mentions almost in all his speeches, “education and technologies, but not the availability of resources will determine the competitiveness of the states in future”. Hopefully, the development of the wind plant project in Turkey will be the first positive experience for the Company, which will let SOCAR pay much closer attention to the development of the renewable energy both in Azerbaijan and in global energy markets.


Natalya Aliyeva, Editor-in-Chief, Caspian Energy

Read 1379 times