Azerbaijan intends to launch large-scale production of blue and green hydrogen in order to decarbonize hard-to-electrify sectors of the economy, the relevant provisions of which are recorded in the country’s long-term low-carbon development strategy, Report informs.
According to this document, Azerbaijan assigns a central role to hydrogen in the process of transitioning heavy industry and the energy sector to a carbon-free operational model.
Taking into account the already established gas transport infrastructure, at the initial stage, the most cost-effective approach is recognized as the production of blue hydrogen through steam methane reforming (SMR) using carbon capture, utilization, and storage (CCUS) technologies, which allow capturing up to 85% of the generated CO₂ emissions.
Excess generation from renewable sources is planned to be used in the future for the electrolytic production of green hydrogen, oriented both towards domestic consumption by energy-intensive industries and promising export destinations.
Azerbaijan’s electric power industry, whose share in the country’s total emissions in 2022 was about 21% (14.4 million tons of CO₂ equivalent), is intended to become the foundation for the large-scale electrification of the national economy.
As noted in the strategy, the technical potential of renewable energy in the republic exceeds 135 GW on land and 157 GW in the Caspian Sea, while the economically viable potential is estimated at 27 GW (including 23 GW of solar generation, 3 GW of wind, 520 MW of small hydropower on mountain rivers, and 380 MW of bioenergy).
The document also envisages a significant strengthening of high-voltage power lines, the construction of new substations, and the integration of digital control systems (SCADA, ADMS, GIS), which will ensure a reduction in technical losses in distribution networks by 1-2%.
In order to compensate for the intermittent nature of renewable energy generation and maintain the stability of the power system, the implementation of long-duration energy storage (LDES) systems has been launched. In particular, the AzerEnerji company has already commissioned battery storage facilities with a total capacity of 250 MW.
In accordance with the National Hydrogen Strategy prepared by the Ministry of Energy of Azerbaijan with the assistance of the European Bank for Reconstruction and Development (EBRD), provided the viability of CCS (carbon capture and storage) technology, blue hydrogen will become the most economically attractive type of hydrogen in the country.
Its cost will be 2.87 euros per kilogram, where 1.98 euros account for energy costs, 0.31 euros for capital expenditures (CAPEX), and 0.59 euros for operating expenses (OPEX). At the same time, the production of green hydrogen based on renewable energy sources is associated with higher costs.
For an average-scale production facility, its price will reach 4.02 euros per kilogram (of which 2.52 euros are energy costs, 1.2 euros are CAPEX, and 0.3 euros are OPEX). Nevertheless, the improvement of technological processes can reduce the cost to 3.6 euros per kilogram (energy costs – 2.55 euros, CAPEX – 0.84 euros, OPEX – 0.21 euros).
For comparison, the average cost of green hydrogen in European Union countries reaches 5.05 euros per kilogram. In the structure of these expenses, 2.74 euros are energy costs, 1.85 euros are capital expenditures, and 0.46 euros are operating costs.
