Structure of the electricity market in the Republic of Azerbaijan

Currently, there is a vertically integrated monopoly in the electricity market of the Republic of Azerbaijan.

For almost 20 years, relations in the electricity market have been governed by the terms of the agreement between the participants.

"Azerenergy" OJSC

"Azerenergy" OJSC, whose shares are wholly owned by the state, is a major player in the electricity market with a vertically integrated monopoly as a producer and transmitter of electricity.

As the manager of state-owned power plants, "Azerenergy" OJSC produces, in general, about 90 percent of the electricity needed to meet the country's electricity needs.

"Azerenergy" OJSC performs the functions of a transmission system operator as the owner of system transmission lines with a voltage of 110 kV and above, their substations, and dispatch control facilities.

As a transmission system operator, "Azerenergy" OJSC carries out activities related to the import-export of electricity and parallel work with the energy systems of neighboring countries and energy exchange.

As a wholesaler of electricity, "Azerenergy" OJSC sells the purchased electricity to "Azerishig" OJSC as a distributor.

As an electricity retailer, "Azerenergy" OJSC sells electricity to a limited number of large consumers directly connected to the transmission network.

"Azerishig" OJSC 

"Azerishig" OJSC performs the functions of a distribution and supply system operator as the owner of power distribution lines up to 110 kV, including 110 kV submarine lines, and associated substations and control rooms.

At the same time, 1 wind farm operates under its auspices and receives electricity from several power plants directly connected to the distribution network system and (or) in transit through the distribution system.

Privatization: Four small HPPs were privatized under the Second State Privatization Program and these plants are now active market participants and their post-privatization activities are carried out only through private investment.

New Investments: After the restoration of independence, several small power plants entered the market through private investment.

Active consumer: There are several power plants to meet their needs, some of which are connected to the transmission or distribution network. At the same time, there is an active consumer operating in island mode.

As of January 1, 2024, the number of subscribers registered by "Azerishig" OJSC in the country is 2,946,419 subscribers.

Structure of the electricity market of the Nakhchivan Autonomous Republic

The power supply of the Nakhchivan Autonomous Republic is carried out by the State Energy Service of the Nakhchivan Autonomous Republic. The service does not have a physical connection to the country's main transmission network and operates in island mode.

In the first years of the restoration of our independence, as a result of the blockade carried out by Armenia, difficulties arose with the supply of electricity to the Nakhchivan Autonomous Republic. During this period, thanks to the far-sighted policy of the Great Leader and the support of the fraternal Republic of Turkey, the power supply of the Nakhchivan Autonomous Republic was provided by replacing electricity.

In the next period, as a result of the commissioning of new power plants, in particular, the expansion of the use of renewable energy sources, the power supply of the Nakhchivan Autonomous Republic will be carried out entirely at the expense of local production.

The State Energy Service of the Nakhchivan Autonomous Republic is a vertically integrated monopoly for the production, transmission, distribution, and sale of electricity.

Taking into account the operation of the power supply of the Nakhchivan Autonomous Republic in the island mode and the reliability of supply, it is considered expedient to maintain the state monopoly until a physical connection to the country's backbone power transmission network is established.