A final investment decision document for the 240 megawatt (MW) Shafag 11 Solar Power Plant was signed during the 30th edition of the Caspian Oil and Gas international exhibition held in Baku, APA-Economics reported on June 2. The plant will be constructed in the Jabrayil district in southern Azerbaijan, on recently liberated territories.
The total investment for the project is estimated at approximately $200mn and involves a partnership between BP, the State Oil Company of the Republic of Azerbaijan (SOCAR), and the Azerbaijan Investment Company. It marks the first industrial-scale solar plant on this land and the largest direct foreign investment of its kind in the region.
Production targets and transmission mechanism
The Shafag 11 solar power plant is expected to generate around 500 million kilowatt-hours of electricity annually. This output would save an estimated 120 to 150 million cubic metres of natural gas per year, according to figures shared during the groundbreaking ceremony. In addition, annual carbon dioxide emissions are expected to fall by 260,000 to 330,000 tonnes.
The electricity produced will be injected into the existing power grid in Jabrayil. Through a mechanism known as the Virtual Power Transmission Agreement (VPTA), an equivalent amount of energy will be delivered to the Sangachal terminal near Baku, replacing conventional supply. This will allow BP to power part of its operations with renewable electricity.
Legal framework and institutional agreements
The project is based on an execution agreement signed on June 3, 2021 between the Ministry of Energy of Azerbaijan and BP. Two additional documents were formalised during the groundbreaking ceremony: an investment agreement with the Azerbaijani government and a land lease agreement between the Ministry of Energy and Shafag (Jabrayil) Solar Limited.
In addition, a second document concerning the electrification of the Sangachal terminal was signed at the exhibition, further strengthening cooperation between public stakeholders and BP in modernising the country’s energy infrastructure.
“The signing marks a decisive step in the implementation of the Shafag project,” said Bakhtiyar Aslanbeyli, BP’s Vice President for the Caspian region, quoted by APA-Economics.
