7th annual workshop of the Eastern Partnership Energy Regulatory Bodies in Budapest on 14-15.06.2018

Security of supply and solidarity

Azerbaijan Energy Regulatory Agency (AERA)

Recent Developments

• Decree of the President on December 22, 2017 on establishment of Energy Regulatory Agency in line with Strategic Roadmap for development of national economy.

• Cooperation with EBRD and ADB

• Kick-off meetings with electricity market players

• New Electricity Law is being developed

• Procurement notice for Law on Energy Regulator was prepared and published by EBRD. The applications submitted to the tender commission are under evaluation.

• Azerbaijan Energy Regulatory Agency (AERA) became the associate member of ERRA

Main goals and objectives of AERA • Regulator law consistent with the EU model of energy regulation

• Guarantee reforms and harmonize the Azerbaijani legislative system with EU practice

• Calculate and propose tariffs and submit them to Tariff Council for implementation

• Reshape the market through transparent mechanisms and competition

• Implementation of unbundling strategy

• Regulate the market of producers, distributers and traders

• Modernize system operators (TSO and DSO)

• Trainings and capacity building of staff

Energy generation

• Positive dynamics in social-economic development is also influencing the energy sector of Azerbaijan. For the last 12 years, modern, high-tech and energy-saving generation capacities of 2,300 MW have been put into operation. For the present the installed power capacity of Azerbaijan is 6 257,7 MW, incl. the following:

- 14 thermal power plants (5 113,7 MW);

- 17 hydro power plants (1122 MW);

- Nakhchivan Solar Power Plant (22 MW);

• The largest electrical power producer Azerenerji OJCS ( 90 % of generating capacity of Azerbaijan); power distribution operator – Azerishig OJSC – executes the distribution of electricity throughout the country, with the exception of the Nakhchivan Autonomous Republic.

• It is planned to commission about 400 MW of additional generating capacity by the year 2020. Considering that the current consumption is about 3 500 MW, it is safe to say that country's energy security has been ensured.

• It is of importance to increase the share of the renewable energy in the total electricity generation. The installed capacity is currently 103.4 MW in total, where: wind farms - 60.7 MW; solar power plants - 5 MW (with the exception of Nakhchivan); BioPP- 37.7 MW. The installed capacity is planned to be increased to 420 MW in the coming years.

Southern Gas Corridor (SGC)

Projects of Southern Gas Corridor

Southern Gas Corridor (SGC) – one of the largest gas development projects in the world, aiming to increase European energy security by delivering natural

gas from the countries around the Caspian Sea Basin to markets in Europe. The Projects, which comprise upstream and midstream operations, form a core

part of the Southern Gas Corridor project. The Southern Gas Corridor comprises the following four projects:

→ 1st and 2nd Phases of Shah Deniz Field Development (SD1&SD2) – is the full-field development of the Shah-Deniz natural gas and condensate

field. In SD2, 16 bcma of gas will be added to the current 9-10 bcma from Shah Deniz Stage 1 (SD1). Approximately 6 bcma of gas produced from

SD2 will be transported to Turkey and 10 bcma to Europe. In the framework of FID (Final Investment Decision), taken on December 2013, the

Shareholders agreed on steps to prepare for the implementation of the 3rd Phase of Shah Deniz Field Development.

→ South Caucasus Pipeline Expansion (SCPX) – is the expansion of the South Caucasus Pipeline (SCP) to afford transportation of additional volume

of gas. Expanded SCP/SCPX pipeline will transport natural gas from the Shah-Deniz field to the Georgian-Turkish border for further transportation via

TANAP through Turkey to consumers in Turkey (by 2018) as well as to Southern Europe through TAP (by 2020). Cumulative capacity of SCP/SCPX

will be 23.4 bcma (7.4+16).

→ Trans-Anatolian Pipeline (TANAP) – is a new pipeline that connects SCPX on the Georgian-Turkish Border running through the territory of Turkey up

to its Border with Greece. Initial transportation capacity is 16 bcma (expandable to 31 bcma).

→ Trans-Adriatic Pipeline (TAP) – is the last link in the SGC, which will transport natural gas produced by the SD2 development in Azerbaijan to

European markets. The route starts in Greece at the Greek-Turkish border and terminates in Italy (near San Foca) crossing Greece, Albania and the

Adriatic Sea; the Pipeline connects at its entry point to TANAP and downstream to the Italian natural gas network Snam Rete Gas (SRG). The Pipeline

will have an initial transportation capacity of 10 bcma (expandable up to 20 bcma).

The SGC project is also high spot in the light of EaP and Georgia is involved in project implementation process. SGC is an exemplary project for regional

cooperation.

Address: 152, Heydar Aliyev ave., AZ 1029, Baku, Azerbaijan E-mail: info@regulator.gov.az

Web: aera.gov.az

Thank you for your

attention!