On May 29, 2019, the President of the Republic of Azerbaijan issued Order №1209, a landmark decree that established the comprehensive legal and institutional framework for accelerating reforms in the country's energy sector. This order represents a pivotal moment in Azerbaijan's energy transformation, setting in motion the legislative and regulatory changes necessary for the development of renewable energy and the modernization of the electricity market.

Legislative Mandates

The order tasked the Ministry of Energy, in coordination with the Ministry of Justice, Ministry of Economy, State Oil Company, Azerenergy JSC, and Azerişıq JSC, with developing several critical pieces of legislation within an eleven-month timeframe:

1. The Law on the Use of Renewable Energy Sources in Electricity Production
2. The Law on Energy and Utilities Regulatory Bodies
3. New drafts of the Energy Law and Gas Supply Law

These legislative initiatives were designed to replace outdated frameworks and align Azerbaijan's energy sector with international best practices. The coordination of multiple government agencies and state-owned enterprises ensured comprehensive stakeholder input and technical expertise in the drafting process.

Implementation Framework

Following the presidential order, the Ministry of Energy issued Order F-52 on June 7, 2019, establishing a detailed implementation roadmap. This action plan created specialized working groups with clearly defined responsibilities and timelines. The Ministry was authorized to engage internationally recognized consulting firms to provide technical expertise and support the reform process.

The implementation framework emphasized coordination between the Ministry of Energy, Ministry of Finance, and other relevant state bodies to ensure adequate financial resources for engaging international consultants. This collaborative approach brought world-class expertise from organizations including the European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC), and specialized energy consulting firms from EU member states.

Outcomes and Impact

The reforms initiated by Presidential Order №1209 yielded significant results. Most notably, the Renewable Energy Sources Law (Law №339-VIQ) was successfully enacted on May 31, 2021. This comprehensive legislation established the legal framework for renewable energy development, including provisions for grid connection rights, long-term Power Purchase Agreements, and investment incentives.

The order also led to the creation of the Energy Regulatory Agency, an independent body responsible for market operations, tariff setting, and compliance monitoring. The establishment of this regulatory authority was essential for ensuring transparent and competitive energy markets.

The investment climate created by these reforms has attracted over $2 billion in renewable energy investments, with major contracts awarded to international developers including Masdar, ACWA Power, and bp. The reforms introduced competitive auction mechanisms, 30-year tax holidays, VAT exemptions, and streamlined permitting processes.

Official Documents

Presidential Order №1209 (English Translation)

Ministry Order F-52 (Implementation Action Plan)