Caucasus-Balkans partnership: Towards a cross-border energy network

Romania, Azerbaijan, Georgia and Hungary create a joint venture to establish an energy corridor via a submarine cable, linking the electricity markets of Eastern Europe.

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Romania, Azerbaijan, Georgia and Hungary have embarked on a major project to build a submarine cable linking the Black Sea region to Europe.
This energy corridor aims to diversify sources of electricity supply while strengthening regional infrastructures.
The initiative, spearheaded by the Green Energy Corridor Power Company, was announced at a ministerial meeting in Bucharest, marking a significant step towards integrating the region’s power grids.
The project takes place against a backdrop of increased energy security in Europe, particularly in the face of geopolitical tensions.
It represents an opportunity to connect renewable energy sources in Azerbaijan and Georgia to European markets via Romania and Hungary.
According to the Romanian Energy Minister, Sebastian Burduja, this interconnection should support diversity of supply and enable greater flexibility of the European power grid.

Green energy and diversification of supply sources

Azerbaijan, a key player in this project, is seeking to increase its energy exports to Europe, in an effort to diversify its energy economy.
The country, while developing wind and solar projects in areas such as Karabakh and Eastern Zangezur, has not defined a carbon neutrality target.
However, its recent commitments include a 40% reduction in emissions by 2050 compared with 1990 levels.
The submarine connection is also a strategic initiative for Romania and Hungary, which are seeking to strengthen their role as energy hubs in the region.
Electricity exchanges with Black Sea countries could boost local markets while increasing the resilience of national grids.
Currently, the Hungarian electricity market shows future prices at €104.99/MWh on the EEX, while Romania’s are at €106.24/MWh, underlining the dynamics of price adjustment in the region.

Institutional partnerships and market prospects

The joint venture includes players such as CNTEE Transelectrica (Romania), MVM Group (Hungary), Georgian State Electrosystem (Georgia) and AzerEnerji (Azerbaijan).
These entities manage and develop the power grid in their respective countries.
Their collaboration is crucial to the technical and financial implementation of the project, with particular attention to safety and regulatory requirements.
The importance of these partnerships lies in the ability to pool investments and harmonize network standards for better integration of electricity markets.
The project will be presented at COP29 in Baku, providing a platform for mobilizing additional support and funding.
However, success will depend on coordination between regulators and national grid operators to align cross-border infrastructures.

Technical and financial challenges of interconnection

The installation of a submarine cable of this scale involves major technical challenges, particularly in terms of managing transmission losses and optimizing the flow of energy over long distances.
Feasibility studies are currently underway to assess the environmental and economic impacts, as well as the potential benefits in terms of grid stabilization and price regulation.
Returns on investment for stakeholders will largely depend on the corridor’s ability to deliver reliable, competitive energy to European markets.
The forecast growth in electricity demand in the region makes this project attractive to investors looking for projects aligned with energy transition and security of supply.

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