Support for the Development of Transition Mechanisms for Liberalization of the Electricity Market of Azerbaijan

This is the final report for the support for the development of transition mechanisms for liberalization of the electricity market of Azerbaijan project funded by the World Bank/ESMAP. The objective of the report is to set out recommendations of the Single Buyer Model (SBM) design and provide guidance for its implementation. The government of Azerbaijan (GoA) considers the development of the SBM a critical component for transition to a competitive market, as outlined in the strategy of socioeconomic development for 2022-2026. The goal of the SBM is to improve the efficiency of the electricity sector and support Azerbaijan's ambitions for exporting green energy. The SBM aims to reduce costs in the sector by optimizing the use of power generation sources, leading to greater flexibility in incorporating variable renewable energy (VRE) into the system. This will enable the realization of Azerbaijan's VRE potential, attract investment, and support the country's green energy export goals.