Kazakhstan and Azerbaijan are setting the stage for extensive renewable energy collaboration through the Trans-Caspian Power Line, as highlighted in a joint report by the Astana International Financial Centre (AIFC) and the Institute for Development and Diplomacy (IDD) at ADA University.

Source: Trend

Analysts have noted that this submarine high-voltage cable will connect the electricity systems of both nations, contributing to a larger initiative - a submarine cable project across the Black Sea that links the South Caucasus with Europe.

The implementation of this project will facilitate the export of clean electricity, primarily generated from solar and wind sources in Central Asia, to the European Union. This initiative will not only diversify energy sources but also play a vital role in achieving the EU's decarbonization climate goals.

The report highlighted Kazakhstan's ambition to raise the share of renewable energy sources in its energy mix to 15 percent by 2030, leveraging its potential in solar and wind energy. Meanwhile, Azerbaijan possesses one of the largest offshore renewable energy potentials globally and is actively developing onshore solar and wind power plants, particularly in Karabakh and Eastern Zangezur.

The establishment of the Trans-Caspian cable will create a reliable export channel and enhance the investment appeal of renewable energy projects. Beyond bilateral collaboration, the region is advocating for the creation of a unified electricity market for Central Asia and the South Caucasus, complete with harmonized standards and the development of intra-city energy trading. These efforts receive support from the EU, the World Bank, and the EBRD.

The report also underscored the substantial investment requirements of the project, particularly for the subsea and cross-border sections, highlighting the need for a mix of financing options - including concessional loans, sovereign guarantees, and 'green' bonds. The European Investment Bank, the EBRD, and climate funds could play crucial roles in financing. The Global Gateway initiative is viewed as a potential mechanism for strategic support.

Experts from AIFC and IDD stress that this project signifies the strategic shift of Kazakhstan and Azerbaijan from hydrocarbon trade to low-carbon electricity exports, which will bolster the sustainability of the energy framework in the Silk Road region and generate new economic opportunities.