AIIB mobilizes USD 1.1 million in MCDF grants to advance green energy connectivity in Azerbaijan
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AIIB mobilizes USD 1.1 million in MCDF grants to advance green energy connectivity in Azerbaijan
The Asian Infrastructure Investment Bank (AIIB) and the Republic of Azerbaijan have signed two grant agreements totaling USD1.1 million, financed by the Multilateral Cooperation Center for Development Finance (MCDF) Finance Facility and mobilized by AIIB, to support the preparation of the Caspian Green Energy Corridor and associated coastal infrastructure for large-scale offshore wind development in the Caspian Sea.
This is AIIB’s first pair of grant agreements with Azerbaijan, backed by the MCDF, for the Caspian Green Energy Corridor and the Coastal Infrastructure Project to Support Large-Scale Offshore Wind Farm in Azerbaijan. The milestone creates a new channel for cooperation on project preparation and helps establish the basis for future investment in sustainable energy infrastructure and stronger regional connectivity.
A USD 1 million grant will fund the first phase of a feasibility study for the Caspian Green Energy Corridor, including a proposed 400-kilometer submarine electricity cable linking Azerbaijan and Kazakhstan, with Uzbekistan connected via onshore transmission networks. The study will examine the project’s technical, economic, financial, environmental and social feasibility, including transmission alternatives and prospects for cross-border electricity trade. Alongside USD1 million in technical assistance from the Asian Development Bank (ADB), total preparation support for the study will amount to USD2 million, with AIIB and ADB jointly preparing the project.
A second USD100,000 grant will back concept development for the coastal infrastructure required to enable large-scale offshore wind development in Azerbaijan, including port facilities, specialized vessels, substations and grid connections.
“This support is an important step toward translating the Caspian region’s renewable energy potential into investable infrastructure,” said Konstantin Limitovskiy, Chief Investment Officer, Public Sector (Region 2) & Project and Corporate Finance Clients (Global), AIIB. “By supporting early-stage preparation of cross-border electricity connections and offshore wind infrastructure, we are helping lay the groundwork for greater regional energy integration, energy diversification and sustainable growth.”
The grants will finance early-stage technical and feasibility work intended to strengthen preparation of infrastructure that could allow Azerbaijan to tap its offshore wind potential while also enabling greater cross-border electricity connectivity between Central Asia, the South Caucasus and, potentially, European markets.
“The grant agreements signed with AIIB demonstrate international support for Azerbaijan’s strategic objectives of developing large-scale offshore wind energy in the Caspian Sea and advancing regional and intercontinental green energy transmission,” said Parviz Shahbazov, Minister of Energy of the Republic of Azerbaijan. “Both projects are of strategic importance for translating Azerbaijan’s abundant renewable energy potential into economic value, facilitating the export of green energy resources from the Caspian region and Central Asia, and further strengthening our country’s strategic role in regional energy integration.”
The grants are part of AIIB’s wider efforts to work with partners to prepare high-quality, cross-border infrastructure and mobilize resources for projects that enhance regional connectivity and support the green transition.