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Narrative Report November 25
Narrative Report November 25
1. Description
1.1. Name of beneficiary of grant contract: State Company AREA (State Company on
Alternative and Renewable Energy of Azerbaijan Republic)
1.2. Name and title of the Contact person: Rasul Efendiyev, Project Manager
1.3. Name of partners in the Action: Government of Norway/Government of
Azerbaijan/UNDP
1.4. Title of the Action: Promoting Development of Sustainable Energy in Azerbaijan
1.5. Contract number: DCI-ENV/2010/254-973
1.6. Start date and end date of the reporting period: 25.11.2011 – 24.11.2012
1.7. Target country(ies) or region(s): Azerbaijan
1.8. Final beneficiaries and/or target groups1 (if different) (including numbers of women
and men): State Company AREA , rural population of Azerbaijan
1.9. Country(ies) in which the activities take place (if different from 1.7): N/A
2. Assessment of implementation of Action activities
2.1. Executive summary of the Action
The overall objective of the action is to promote the development of sustainable energy in
Azerbaijan. The specific objectives of the project are as follows:
(a) To undertake studies with the aim to identify a suitable site for a small hydro-power
station and to carry out its construction leading to successful commercial operation.
1
“Target groups” are the groups/entities who will be directly positively affected by the project at the Project
Purpose level, and “final beneficiaries” are those who will benefit from the project in the long term at the
level of the society or sector at large.
(d) To develop new legislation for the promotion of renewable energy for approval by the
Cabinet of Ministers.
(e) Prepare detailed feasibility reports of three pilot projects, using wind, solar and
biomass/biogas technologies.
Two steering committee meetings took place during the reporting period on December 8 2011
and July 6 2012, which were attended by the management of the State Company AREA as
well as representatives of EU, Norway and UNDP. The decisions taken in these meetings
helped in the timely completion of most of the activities under the project.
2.2.1 The Project Manager (Rasul Efendiyev) and Project Assistant (Narmin Mirzayeva)
have been performing in their respective positions since 1st March 2011 (70% of the elapsed
time to date). However, the Hydropower Technical Expert (Ayten Poladova) left the project
in February2012 on her own accord and was replaced by a Project Consultant (Ilgar
Gurbanov). Besides coordinating the activities of external experts, the project team has been
monitoring the project budget, maintaining project accounts, processing the consultants’ Daily
Subsistence Allowances (DSAs) and Requests for Direct Payments (RDPs), etc.
2.2.2 The Lead Project Advisor (international expert) successfully completed all
assignments given to him and his contract was concluded in August 2012. However, he
continues to provide useful advice on the project from time to time on “as needed” basis.
More recently, in September-October 2012, he assisted the project team in the formulation of
an international training program on renewable energy for the AREA team members.
Results
2.2.4 Most of the tasks assigned to international and local consultants for the various project
components were completed and the hired experts were released from their assignments. As
mentioned above, the Lead Project Advisor successfully completed his assigned tasks, the
international hydropower expert completed his detailed feasibility report and the international
training expert also submitted her final report during the last 12 months.
Component 1: Support the building of one small hydro-power plant as a demonstration of its
viability in Azerbaijan.
2.2.5 The team of international and local consultants (Hans Sandkuhler and Nazim Garayev)
completed the feasibility report of the small hydropower station in Sheki on Deyirmanarxi
River in the town of Sheki. A strong factor in favour of this site is that a new upstream
reservoir is currently being built on Kish River to meet the future water needs of Sheki’s
residents. After this facility is built, it is expected that the amount of water in Deyirmanarxi
River will double and, therefore, the output capacity of the planned SHPS can also be made
two-fold – from the presently planned 817 KW to an ultimate installed capacity of 1.634 MW.
2.2.6 It was expected that the detailed information and preliminary design of the project
included in the feasibility report will be sufficient to attract private investor(s) to the project.
However, AREA is still studying whether it should undertake the project construction itself or
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Narrative yearly report periodending 24 Nov 2012
through a C&I firm to be selected for this purpose. This has delayed the actual construction
works as well as procurement of equipment for the station. It may be noted that the total
estimated cost of the power station is US$ 2.24 million, however more precise figures will be
available when tenders for turbine, generator and other equipment are conducted.
2.2.7 Due to the above reasons, the actual construction of the hydropower station has been
delayed by about 6 months. This may require respective no-cost extension.
2.2.8 The request for proposal for design and supervision (D&S) services was sent to all
three Azerbaijani firms that are registered and licensed by the State Committee on Urban
Planning and Architecture companies. In response to the request for proposals one company
refused to take part in the tender, and two other submitted their proposals. The firms are M/s
Khazar Scientific-Technical Creativity Center of Youth and M/s S&Q Mart Azeri LLC.
Based on the technical and financial evaluation of the two proposals, M/s Khazar was selected
and awarded the contract. As the feasibility report of the hydropower station at Sheki was
completed in the reporting period and the D&S firm’ selection and contract award process has
been finalized, the overall progress on this component during the reporting period is estimated
to stand at approximately 40% of the target that was planned at the start of the reporting
period.
2.2.9 Through the holding of seminars led by a local consultant (Ayten Aliyeva) and an
international expert (Svetlana Frenova, a Russian citizen who is currently working in the UK),
a large body of experts from media, industry, academia, etc. have been made aware of the
benefits of renewable energy. The events arranged under the project have attracted the
attention of journalists from the print and electronic media and they were widely reported.
2.2.10 A database of over 250 national level as well regional stakeholders has been developed
who will act as the opinion leaders for bringing about changes in public perception regarding
renewable energy throughout the country.
2.2.11 An Education Roadmap document has been developed which provides program-based
guidance on achieving a systemic development and implementation of 4 different types of
training packages targeted to the specific needs of: (a) policy-makers and energy-managers;
2.2.12 The only remaining activity is the publication (preparation is already done) of a book, a
teacher’s manual and children album on sustainable energy, which will be finalized in 2012
Component 3: Evaluation of the economics of wind, solar and biomass sources of energy in
Azerbaijan
2.2.12 The team comprised of a local expert (Nazim Mamedov) and an international
consultant (Arvid Kruze) finalized their report on the economic and financial analysis of the 3
selected renewable energy (RE) technologies, namely, wind power, solar PV power and
biomass power from animal waste. Their report basically covers the following areas: (i)
International costs and benefits; (ii) Environmental, social and training costs of implementing
the selected RE technologies; (iii) Azerbaijan specific costs and benefits; (iv) Experience of
other countries similar to Azerbaijan in implementing RE technologies; (v) Economic
analyses of particular wind power, solar PV and biomass projects; and (vi) Financial analyses
of these projects.
2.2.13 At the request of AREA, the international expert was asked to submit a proposal for
arranging and conducting a study tour by a team of up to 2 AREA professionals with the
following objectives: (i) Learning in detail through practical models the methodology for
assessing the viability of renewable energy projects and comparing different models for the
design of Feed-in-Tariffs (FIT); (ii) Visit to a regulatory agency responsible for enacting the
legal framework for renewable energy to gain an understanding of the methodology used in
arriving at the FIT; (iii) Visit to a functioning solar PV facility; (iv) Visit to an operational
wind farm; and (v) Visit to a biomass-to-energy plant.
2.2.14 Arvid Kruze submitted a proposal of a study tour to Canada. A similar proposal was
requested from the international consultant on Component 5 (Rod Hacker) for a study tour of
U.K. Both the submitted proposals were accepted, however, due to visa constraints and time
consideration, it was decided not to undertake the Canadian part of the study tour during this
year. In addition, UNDP office discussed and agreed with UNDP-Turkey office to organize
Expected result at the end of reporting period - The final report which includes the
- To finalize the renewable energy law after its recommendations on institutional
clearance by the working group and submit it to the improvements that are necessary for promotion
Cabinet of Ministers for adoption. of renewable energy was submitted and
- Prepare a detailed plan for the institutional accepted by AREA.
improvements necessary for the successful adoption of
renewable energy technologies based projects in - All activities under this component were
Azerbaijan. completed successfully thus attaining a
progress of 100%.
2.2.15 The draft law on renewable energy, which was prepared during the previous reporting
period, was further reviewed by the local lawyer (Asya Chalabova) with the help of a newly
hired international expert (Chad Laurent). The focus of the review was on how the draft law
interacts with related laws and legislation along with international best practices and lessons
learned. A gap analysis of Azerbaijan’s final draft law with that of South Korea was carried
out. In the result the draft of the more complete law “On the Use of Alternative and
Renewable Energy Sources” was prepared and submitted to the State Company AREA in
September 2012 both in English and in Azeri.
2.2.16 The international expert (Chad Laurent) prepared and submitted an institutional
roadmap for the continued promotion of renewable and alternate energies in Azerbaijan. His
report covered the role of AREA as a Regulator, balancing of the roles of AREA and MIE
(Ministry of Industry and Energy), grid management and interconnection regime, generation
and power supply management and recommendations on how to induct the private sector in
the development of renewable energy projects in Azerbaijan.
2.2.17 Since by the Decree of the President on June 1 2012 the State Agency has been
transformed into the State Company AREA, there is a need to evaluate the needs of the
newly-created Company and assist AREA in successful transition to the Company. Therefore,
the Project Team intends to provide necessary support to the State Company AREA in this
transition process.
2.2.17 After the selection of a single site (Siyezen broiler farm in Guba area) for all three
types of project, three separate detailed feasibility reports of wind, solar and biomass/biogas
projects were prepared by the international expert (Rod Hacker) with the assistance of local
consultant (Faig Mammadov). Subsequently, the 3 reports were integrated as a single
comprehensive report which is being translated into Azeri language.
2.2.18 As mentioned above, upon request, Rod Hacker has submitted a proposal of a study
tour for AREA staff to the United Kingdom. As the proposal has been accepted and details of
a combined study tour of U.K. and Turkey are under finalization, the study tours are expected
to take place in December 2012. As mentioned above, the Canada part of the study tour has
been postponed for the time being.
2.3 Please list activities that were planned and that you were not able to implement,
explaining the reasons for these.
2.3.1 For Component 1 (small hydropower project development and construction),
substantial delay in the start of construction of the power station has been encountered.
Unless the financing and implementation arrangements are finalized at the earliest, further
delays in the completion of this component appear to be highly likely. (Also see para 2.2.6
and 2.2.7 above.)
2.4 What is your assessment of the results of the Action so far? Include observations
on the performance and the achievement of outputs, outcomes and impact in relation
to specific and overall objectives, and whether the Action has had any unforeseen
positive or negative results (please quantify where possible; refer to Logframe
Indicators).
2.4.1 Most of the objectives of the project have been achieved while the remaining ones are
expected to be achieved by the completion date of the project – with the exception of
component 1, which will need additional 6 months for completion at a minimum.
2.3 Please list all contracts (works, supplies, services) above 10.000€ awarded for the
implementation of the action during the reporting period, giving for each contract
the amount, the award procedure followed and the name of the contractor.
As mentioned in section 2.2. Activities and Results, Project Management part, all positions
were filled through the open and competitive process in accordance to UNDP rules and
regulations.
3.2.1 AREA provides organizational and administrative support to project team and
assists in the development of project activities. It is fully engaged in the project and is
given regular briefings about the progress of the project. The project team carries out
regular consultations with AREA, especially at key stages of the project. The leadership
of AREA is keen about receiving regular progress reports and all visiting international
consultants call upon its officials to provide updates on their respective components.
3.2.2 The relations with AREA are satisfactory, however, to speed-up the processes and
avoid delays, the Project Team is in need of a more substantial support from AREA. For
example, a timely identification and introduction to the prospective investors of the
hydropower project by AREA would have helped to avoid delays on Component 1.
3.2.3 The project associate is the Ministry of Industry and Energy which is the main
entity responsible for the energy policy in the country and, as part of this, for developing
new legislation and regulatory acts to support the development of local renewable energy
resources. With the creation of an independent State Company AREA, which previously
with the status of a state agency was under the Ministry of Industry and Energy, requires
clear delineation and separation of authority and responsibility between newly-created
State Company AREA and the Ministry of Industry and Energy, and other ministries as
well. To the extent possible, the Project Team intends providing necessary consultation to
the State Company AREA during remaining period on this transition.
3.3.Where applicable, describe your relationship with any other organisations involved in
implementing the Action:
4. Visibility
How is the visibility of the EU contribution being ensured in the Action?
4.1 The project team created a website for the project (http://www.greenazerbaijan.org/)
which carries the EU logo. The EU contribution to the project receives regular mention in
the media. It is planned to continuously inform the general public about the progress on
the project as it undergoes the various implementation steps. The books, manuals and
brochures for children being prepared under the project and planned to be published
before end of 2012 carry the EU logo, contain the EU disclaimer note and mention that the
project and publications became possible due to generous contribution of the EU.
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Narrative yearly report periodending 24 Nov 2012
4.2 All the materials of the seminars carry EU logo.
The European Commission may wish to publicise the results of Actions. Do you have
any objection to this report being published on the EuropeAid website? If so, please
state your objections here. - NO OBJECTION
Name of the contact person for the Action: Rasul Efendiyev, Project Manager
Signature: ………………………………………