The current instability on the international oil market and low prices on “black gold” pose new challenges for Azerbaijan, namely, the development of its export opportunities and the delivery of new goods to the market. Alternatively however, electricity is the current real commodity for Azerbaijani export.
Azerbaijan’s electric energy industry has achieved significant results for the last 10 years. To be precise, the power grid capacity increased by 40 percent, exceeding 7,100 megawatts. This increased the export potential of the country. Increasing of the power grid capacity was possible due to the construction and commissioning of new power stations and power facilities.
In spite of great progress in the establishment of new energy generating facilities, it is still necessary to conduct certain reforms to develop the export potential of the country and to increase the energy system’s efficiency There remain problems related to the obsolete infrastructure in the districts, the loss of electricity during its transmission and distribution.
However, there are plans on reducing these losses and it has not taken long to put the wheels of reform in motion.
A single operator of electricity distribution network – Azerishig JSC has been established in the country upon Azerbaijani President Ilham Aliyev’s order. According to the decree, the new organization obtained the electricity distribution powers in all districts of the country. Earlier, Azerenergy JSC had these powers.
Azerishig JSC will be in charge of implementing the reforms needed to resolve the problems remaining in the country’s energy system.
The technical loss level in Azerbaijan’s electricity distribution networks is planned to be reduced from 16.5 to 6.5 percent by 2020. The level of losses at energy transmission lines is planned to be reduced from 4.3 to 2.8 percent by 2020.
The high loss level in the distribution networks is explained by their extended length and the need for huge funds to restore and upgrade the infrastructure. Several billion dollars of investment is required.
Thus, the transfer of certain privileges, in particular the ones regarding the distribution of electricity to consumers from “Azerenergy” to “Azerishig” will make it possible to share the responsibilities and risks and allow structures to focus on of well-defined objectives.
“Azerenergy” will be able to further intensify its efforts in increasing the generating capacity of the republic and electricity transmission. Especially now, when the republic is on the verge of its electricity exports to Turkey and then to Europe within the framework of Azerbaijan-Georgia-Turkey energy bridge. It will now be possible for JSC to concentrate on increasing export potential, which would then allow Azerbaijan to become one of the major regional power centers.
It is obvious that the problems in the field of electricity distribution are significant and require special attention, which “Azerishig” can surely pay.
But the results that have been achieved by “Bakielektrikshebeke” in improving the quality and quantity indexes of the distribution network in Baku are an example of a successful concentration of effort in this field. The power of the power grid (reception and distribution) of Baku at the end of 2014 reached 5,980 MW against 3,048 MW in 2006. Last year, the level of technical losses was reduced to 7.4 percent and excessive network workload was eliminated.
New structural changes will serve a common goal – increasing the capacity of the energy system and its export potential, reduction of losses in transmission and distribution of electricity, and therefore strengthening the energy security of Azerbaijan.