Azerbaijan’s Multilateral Green Energy Diplomacy

In some parts of the world, the global energy transition is accelerating, driven by increased electrification, expanding climate commitments, and the political drive to decarbonize economies. As demand for electricity generated from renewable sources increases—particularly in the markets controlled by the European Union or influenced by its unwavering commitment to climate action—so too does the strategic importance of cross‑border transmission infrastructure that can deliver renewable energy across regions. However, today’s grid systems remain fragmented, constrained by national borders, technical incompatibilities, and insufficient investment in transnational connectivity. In this context, large‑scale regional initiatives have become more important as critical enablers of energy security, economic integration, and climate resilience.

Originally known as the Black Sea Submarine Cable, the project— now increasingly referred to as the Caspian–Black Sea or the Caspian–Black Sea–Europe Green Energy Corridor—represents one of the most ambitious and strategically significant responses to this challenge. The broader framing reflects both Azerbaijan’s prospective offshore wind contributions from the Caspian and the corridor’s potential to serve as a conduit for green electricity from Central Asia, including Kazakhstan and Uzbekistan. Although initially focused on a Georgia–Romania connection, the project has evolved to represent a broader strategic vision that links the South Caucasus and Central Asia, due to a combination of Azerbaijan’s geoeconomic ambition and the EU’s aspiration to lead the world in establishing a future powered by renewable energy systems.

This paper explores the Caspian–Black Sea–Europe Energy Corridor, focusing on its structure, governance, and broader regional implications. It analyzes Azerbaijan’s strategic shift from a hydrocarbons exporter to an enabler of renewable energy systems. It examines how the development of this corridor is reshaping regional diplomacy, fostering economic integration, and advancing multilateral cooperation. In doing so, it highlights Azerbaijan’s emerging role as both a green electricity supplier and a facilitator of cross‑regional energy connectivity.

This paper explores the Caspian–Black Sea–Europe Energy Corridor, focusing on its structure, governance, and broader regional implications. 

Evolution 

Since regaining independence in 1991, Azerbaijan has emerged as a key enabler of regional energy security and connectivity. Under the leadership of the late President Heydar Aliyev, the country laid the groundwork for its modern energy diplomacy by engaging with international partners and positioning itself as a bridge between East and West. The signing of the Azeri–Chirag–Gunashli (ACG) production sharing agreement in 1994—dubbed the “Contract of the Century”—marked a historic turning point, attracting major global energy companies and signaling Azerbaijan’s openness to multilateral investment and cooperation. This oil‑focused engagement firmly anchored Azerbaijan in international energy markets and provided the fiscal base for broader economic development.

Following these and similar achievements in the oil sector, Azerbaijan developed its natural gas strategy through the implementation of the Southern Gas Corridor (SGC). This landmark initiative physically connects Caspian gas reserves to European markets for the first time via a 3,500‑kilometer infrastructure system that traverses seven countries. At its core is the (i) Shah Deniz natural gas‑condensate field (“SD1”) and its full‑field development (“SD2”), which supply the gas volumes underpinning the corridor. In addition to the Shah Deniz natural gas field, the SGC includes the (ii) South Caucasus Pipeline (“SCP”) and its expansion (“SCPX” project), (iii) the Trans‑Anatolian Pipeline (TANAP), and (iv) the Trans Adriatic Pipeline (TAP). Additionally, the (v) Interconnector Greece–Bulgaria (IGB), which became operational in October 2022, links the Greek and Bulgarian gas transmission networks and diversifies gas supplies to Bulgaria and the wider Southeast Europe region. Together, these infrastructure elements form one of the most complex and geopolitically significant gas value chains ever constructed by a consortium of more than a dozen international energy companies, representing a total investment of approximately $35 billion.

Thanks to strategic projects such as the Baku–Tbilisi–Ceyhan oil pipeline and the Southern Gas Corridor—which connect the Caspian Sea to international energy markets—Azerbaijan now exports its oil to 25 countries and its natural gas to 12. These initiatives were not merely technical achievements; they required complex negotiations involving transit countries, international financial institutions, and energy consortia. By aligning diverse stakeholder interests and managing regional geopolitical dynamics, Azerbaijan established itself as a reliable and pragmatic partner in the EU’s energy diversification agenda. This legacy of pragmatic, multilayered engagement continues to shape Azerbaijan’s approach to the energy transition—now extending beyond hydrocarbons into renewables, electricity trade, and climate diplomacy.

Building on this foundation, Azerbaijan has taken concrete steps to operationalize its energy transition—adopting new legislation, launching institutional reforms, and advancing large‑scale renewable energy partnerships. The country has introduced several laws and regulatory frameworks to support the expansion of green energy—including the Law of the Republic of Azerbaijan, dated 31 May 2021, titled On the Use of Renewable Energy Sources in the Production of Electricity.

This law provides the foundation for integrating renewables into the national energy system and creating a favorable environment for international investment. In parallel, the government has launched strategic partnerships with developers such as the UAE’s Masdar and Saudi Arabia’s ACWA Power to implement large‑scale wind and solar projects. These efforts are helping to diversify the country’s electricity supply, reduce reliance on fossil fuels, and reorient Azerbaijan’s energy sector toward long‑term sustainability.

Baku’s hosting of the 2024 UN Climate Change Conference (COP29) represented another important milestone in its international energy diplomacy. As the first post‑Soviet fossil fuel‑producing country to convene a COP, Azerbaijan demonstrated its evolving energy identity—moving from a hydrocarbons‑based model toward integrated renewable energy and climate cooperation. COP29 elevated Azerbaijan’s visibility as both a renewable energy producer and a neutral platform for global dialogue, bridging the gap between developed and developing economies, fossil fuel exporters, and climate‑vulnerable nations. The event underscored Azerbaijan’s ambition to contribute to international climate action while reinforcing its role as a regional convenor and enabler of multilateral energy solutions.

 COP29 elevated Azerbaijan’s visibility as both a renewable energy producer and a neutral platform for global dialogue, reinforcing its role as a regional convenor and enabler of multilateral energy solutions.

As part of this transformation, Azerbaijan aims to become a vital bridge between Central Asia’s green energy potential and the EU’s decarbonizing electricity markets. In parallel with domestic reforms and green energy investments, Baku is expanding cross‑border grid infrastructure and exploring next‑generation technologies such as hydrogen and carbon capture. These efforts reflect a coordinated strategy to align internal energy transition with regional cooperation and global climate objectives. The Caspian–Black Sea Energy Corridor embodies this vision by positioning Baku not only as a renewable energy exporter but also as a key architect of cross‑regional green energy connectivity.

Nut and Bolts

At the core of the Caspian– Black Sea Green Energy Corridor is a high‑voltage direct current (HVDC) submarine cable to be laid across the Black Sea, complemented by a fiber‑optic internet line to enhance digital connectivity between the participating nations. This ambitious infrastructure will transmit electricity produced from renewable sources (i.e., wind, solar, and hydro) from the South Caucasus to Central and Eastern Europe, forming the backbone of a broader effort to integrate regional electricity markets.

The planned transmission system will run approximately 1,200 kilometers from Anaklia, on Georgia’s Black Sea coast, to Constanța, Romania, crossing seabed depths exceeding 2,000 meters—making it one of the longest and deepest HVDC cables in the world. Once operational, the system will interconnect with Hungary and other countries in Europe, channeling renewable electricity into Europe’s grid while supporting parallel goals in digital transformation and resilience.

According to the Italian engineering firm CESI, which conducted a feasibility study for the initial phase of the project—a 1,100‑kilometer HVDC submarine cable linking Georgia and Romania—the proposed infrastructure has been deemed both technically and economically viable. The study assessed that, given the sea depth and cable length, the transmission system could operate at a capacity of between 1,300 and 1,500 megawatts (MW), depending on the insulation technology used. 

A 1,300 MW capacity is achievable using mass‑insulated (MI) cables, which are currently considered the more proven and reliable option for such demanding subsea conditions. Reaching 1,500 MW would require the use of XLPE insulation, a higher‑capacity technology with limited operational experience at 525 kilovolts in similar environments, necessitating further risk assessment before deployment. This system would be sufficient to supply up to 2 million households on the European continent with green electricity. (Earlier proposals envisioned a capacity of 1 GW and estimated costs of around €2.3 billion.) More recent estimates project total investment costs at approximately €3.5–4 billion for a 1.3 GW transmission system.

While Tbilisi plans to export around 1.3 GW, Baku envisages supplying up to 4 GW of renewable electricity through the corridor, which will likely be delivered in three separate stages of approximately 1.3 GW each. Each phase will require laying a separate cable system with dedicated converter stations, as current technology does not permit higher transmission volumes through a single subsea link due to limitations in insulation, thermal dissipation, and cable weight at extreme depths. This modular approach reflects both engineering constraints and a phased investment strategy. 

In parallel, CESI is finalizing a second feasibility study evaluating the broader 4 GW Caspian–Black Sea–Europe electricity corridor, extending from Azerbaijan to Hungary via Georgia and Romania. The launch of the corridor is scheduled for 2032. While currently structured as distinct tracks— Azerbaijan’s 4 GW plan and Georgia’s 1.3 GW plan—they share considerable technical similarities and overlapping participants, and may eventually converge into a unified regional corridor.

Power feeding into the corridor will be sourced from a diverse portfolio of renewable energy assets across Azerbaijan and Georgia. In Azerbaijan, the strategy centers on expanding solar and wind capacity, including the potential for future offshore wind development in the Caspian Sea. The UAE‑based developer Masdar launched its operations with the 230 MW Garadagh solar power plant, the first utility‑scale solar project in the country. In October 2023, the company signed investment and operational agreements for three additional projects: the 445 MW Bilasuvar Solar PV Project, the 315 MW Neftchala Solar PV Project, and the 240 MW Absheron‑Garadagh Onshore Wind Project. Together, these projects bring Masdar’s total managed portfolio in Azerbaijan to over 1.2 GW, with an expected commissioning date of 2027. As Masdar has recently noted, “With this rollout of 1 GW in wind and solar projects, in partnership with SOCAR, we take a significant step forward in realizing our ambitious plan to develop up to 10 GW of renewable energy by 2030 in Azerbaijan.”

Meanwhile, ACWA Power is constructing a 240 MW solar facility in the Absheron and Khizi districts and has reached agreements to develop up to 2.5 GW of wind capacity, including offshore projects. These developments—driven by international investment—form the backbone of Azerbaijan’s strategy to build export‑oriented renewable generation capacity. With these developments, the country is well on track not only to reach its 2030 target of 30 percent renewable electricity, but also to supply electricity for up to 4 GW of exports through the Caspian–Black Sea–Europe Green Energy Corridor.

Georgia is a net importer of energy. Currently, the country covers only about one‑fifth of its total energy demand, making it heavily reliant on imports of oil products and natural gas (primarily from Azerbaijan). Georgia is also a net importer of electricity. In 2024, the country purchased 1.2 billion kilowatt‑hours (kWh) of electricity while exporting 1.04 billion kWh.

Nevertheless, the country has significant potential to become a net exporter of green electricity, particularly due to its renewable‑heavy power mix. According to OMNIA and the International Energy Agency (IEA), hydropower accounted for 80 percent of Georgia’s electricity generation in 2024—equivalent to 14.2 billion kWh, of which only 2.8 billion kWh came from thermal power plants. To capitalize on this advantage, the state‑owned Georgian State Electrosystem (GSE) aims to more than double the country’s national generation capacity to 9.8 GW by 2033, mainly through new hydropower investments. Achieving this goal would position Georgia to transition from a periodic importer to a stable exporter of green electricity via the Caspian–Black Sea corridor.

To formalize cooperation, Azerbaijan, Georgia, Romania, and Hungary signed a quadrilateral agreement in December 2022 and subsequently established a joint venture to oversee project development and coordination. In June 2023, Bulgaria expressed its intention to join the project, reflecting the corridor’s growing regional relevance.

In September 2024, the transmission system operators of Romania (Transelectrica), Georgia (Georgian State Electrosystem), Azerbaijan (AzerEnerji), and Hungary (MVM Electrical Works) signed the articles of incorporation for the Green Energy Corridor Power Company (GECO), a joint project company headquartered in Bucharest, Romania. The initiative has been submitted for designation as an EU Project of Mutual Interest (PMI). This status would make it eligible for grant financing through the European Union’s Connecting Europe Facility. The EU Commission has already expressed strong support, aligning the project with its Global Gateway infrastructure strategy. The project also supports Georgia’s long‑term goal of integrating into the EU’s electricity market and synchronizing with the ENTSO‑E grid system—a strategic milestone for deepening its energy ties with the Brusselsbased entity. EU enlargement officials have projected that Brussels could contribute up to €2.3 billion ($2.5 billion) toward the cable’s construction.

The long‑term profitability of the corridor will depend heavily on electricity prices in destination markets and the ability of participating countries to build sufficient export‑oriented renewable capacity at competitive costs, while leveraging economies of scale. A study by the German Economic Team estimates that under optimistic conditions—assuming levelized costs of electricity (LCOE) at €50/MWh in Georgia and Azerbaijan, and offtake prices of €65/MWh in Romania and Hungary—the system could generate net revenues of around €160 million annually. 

At this rate, and with total investment costs estimated between €3.5 and €4 billion, the simple payback period would slightly exceed 20 years. This demonstrates that the subsea cable could, in principle, be profitable in the long term. While some forecasts suggest that rising demand in the EU could keep prices quite high, a recent study conducted by the EU Commission has put forward the proposition, contested by skeptics, that average wholesale prices could fall by 57 percent by 2030 as renewables increase market share. This uncertainty underscores the importance of long‑term power purchase agreements (PPAs) in providing revenue stability and mitigating market risk.

A Broader Corridor 

The Caspian‑Black Sea‑Europe Green Energy project began as a regional endeavor. Still, it may have the potential to serve as the backbone of a broader transcontinental corridor linking Central Asia via Azerbaijan with the European Union. While the current framework centers on cooperation among Azerbaijan, Georgia, Romania, and Hungary (and potentially Bulgaria), the project’s long‑term vision may extend well beyond the South Caucasus as the initial base for green electricity generation and export. Over the past several years, Azerbaijan and Central Asian states have taken concrete steps—through bilateral agreements and multilateral initiatives—to lay the groundwork for a future expansion of the corridor.

Azerbaijan plays a pivotal role in this emerging strategic electricity corridor as the only viable land and sea transit route connecting Central Asia to Europe while bypassing both Russia and Iran. With its strategic location along the Caspian Sea and established energy and transport infrastructure, Azerbaijan provides the indispensable link that enables the movement of electricity from Central Asia through the South Caucasus to the Black Sea and onward to the EU. This unique positioning elevates Baku’s importance not only as an energy producer but also as a regional enabler of secure and diversified transcontinental energy flows.  

Azerbaijan’s unique positioning elevates the country’s importance not only as an energy producer but also as a regional enabler of secure and diversified transcontinental energy flows.

This growing alignment is reinforced by Azerbaijan’s increasingly active foreign policy in Central Asia. Over the past few years, Baku has intensified its political outreach across the region, hosting high‑level summits, deepening bilateral ties, and aligning its energy and infrastructure priorities with those of its Central Asian partners. For Kazakhstan and Uzbekistan, Azerbaijan offers a vital connection to European energy markets via the Caspian and Black Sea corridors. Turkmenistan, too, seems to be interested in joining a potential green energy interconnection project linking Central Asia to Azerbaijan and the European continent, signaling a broader regional alignment around renewable energy exports.

One of the most evident signs of this momentum came in 2024 with the formal establishment of the Green Energy Corridor Alliance (also referred to as the Green Corridor Alliance) among Azerbaijan, Kazakhstan, and Uzbekistan. The joint venture, headquartered in Baku, provides a long‑term institutional foundation for collaboration on technical, regulatory, and financing issues. On 13 November 2024, during COP29, the presidents of the three countries signed a strategic partnership agreement on the development and transmission of green electricity, further anchoring their shared commitment to the corridor’s expansion.

Uzbekistan has emerged as a key driver of this initiative. The country aims to generate an additional 20 gigawatts (GW) of renewable energy by 2030, bringing total renewable capacity to 27 GW. As of April 2024, the government had signed agreements for 12 GW of wind and solar capacity, with another 6 GW secured in May. These investments position Uzbekistan to become a leading supplier of renewable electricity via the trans‑Caspian green energy corridor. 

Kazakhstan, while managing its domestic energy needs and addressing its fossil fuel legacy, has also signaled a growing interest in renewable energy development. The country currently generates about 2.9 GW from renewable sources and aims to add at least 5 GW more by 2030. In 2023, Kazakhstan became a net importer of electricity due to domestic shortfalls, but longer‑term plans suggest that future renewable capacity could be directed toward exports. The government has also set a goal of attracting at least $150 billion in foreign direct investment by 2029, with a substantial share expected to support green energy initiatives. Additionally, a tightly controlled referendum in October 2024—with over 70 percent voter approval—cleared the way for building a new nuclear power plant, which could reduce internal demand for renewables and enable greater export capacity.

The inclusion of Central Asian countries in the broader corridor would not only expand the project’s geographic scope but also enhance its strategic value. For the EU, it offers access to one of the world’s most potentially abundant regions in solar and wind, while boosting energy diversification and system resilience. For Azerbaijan and Georgia, it would consolidate their roles as indispensable transit hubs. And for landlocked Central Asian states, it provides a longawaited route into global electricity markets—advancing their energy transition goals and increasing their participation in cross‑border green trade.

The inclusion of Central Asian countries in the broader corridor would not only expand the project’s geographic scope but also enhance its strategic value.

Risks and Challenges  

The Caspian–Black Sea– Europe Green Energy Corridor represents a transformative vision for transcontinental electricity trade, connecting renewable energy producers in Central Asia, Azerbaijan, and Georgia to end users in the European Union.

While the project has gained political momentum and established an institutional structure, its implementation faces a set of five interrelated challenges that must be addressed through coordinated action, long‑term investment, and robust governance.

First, technical and logistical constraints. The corridor’s core infrastructure—a series of HVDC submarine cables across the Black Sea—faces significant logistical and technological hurdles. Only a few global manufacturers currently possess the capacity to produce long‑distance HVDC submarine cables, with annual output ranging between 1,000 and 1,200 kilometers. Each 1.3 GW stage of the project requires its own cable and converter station pair, making procurement and sequencing critical.

Additionally, specialized vessels for cable‑laying are limited and often booked years in advance. Delays seen in past projects, such as the North‑Connect interconnector (between the UK and Norway) and Viking Link (between the UK and Denmark), illustrate the importance of early contracting and proactive supply chain management. Countries participating in the corridor could mitigate these risks by securing multiple manufacturers and chartering vessels through long‑term agreements and collaborative procurement strategies.

Second, regulatory and institutional fragmentation. The corridor spans both EU and non‑EU jurisdictions, with diverse technical standards, regulatory frameworks, and levels of grid synchronization. While Romania, Hungary, and Bulgaria operate entirely within the ENTSO‑E system, Georgia and Azerbaijan currently function outside the synchronized pan‑European grid. Central Asian countries such as Kazakhstan and Uzbekistan also operate under different rules and lack market integration with the EU.

These discrepancies pose significant obstacles to the seamless trade of electricity and system stability. Advancing regional convergence—through synchronized grid upgrades, technical assistance, and alignment with EU market protocols—will be essential. Empowering the newly created Green Energy Corridor Power Company (GECO) with regulatory coordination authority could enhance consistency across jurisdictions and ensure efficient cross‑border flows.

Third, financing and investment uncertainty. The estimated €3.5‑4 billion cost of the Black Sea transmission infrastructure—excluding generation assets and domestic grid upgrades—demands a complex financing mix. While the European Union and development partners have expressed willingness to provide grants or concessional loans, heavy reliance on public funds introduces exposure to shifting policy priorities and administrative delays.

Moreover, private investors may remain hesitant in the absence of clear offtake agreements, competitive and stable pricing structures, or de‑risking mechanisms. To bridge this gap, project stakeholders should consider blended finance strategies, long‑term power purchase agreements (PPAs), and partial risk guarantees supported by international financial institutions. Recent market analysis suggests that the corridor could be profitable under optimistic price assumptions—€65/ MWh in destination markets—but the aspirational prospect of falling European electricity prices due to rapid renewable expansion, which tends to underestimate the rate of consumer demand growth and overestimate efficiency, may reduce margins. Robust PPA frameworks will therefore be crucial to bankability and long‑term viability.

Fourth, geopolitical and cybersecurity risks. Spanning multiple regions with diverse political contexts, the corridor faces a range of geopolitical and security threats. These include tensions in the Black Sea, disputes over maritime boundaries, and risks of sabotage or cyberattacks. The reliance on digital infrastructure, remote monitoring, and cross‑border interdependence further amplifies the system’s vulnerability to disruptions.

Regional cooperation will be essential to mitigating these threats. This may include joint security protocols, shared monitoring of cable routes, coordinated emergency response plans, and formal inclusion of the project under the EU’s critical infrastructure protection regime. Establishing unified cybersecurity standards and conducting regular system vulnerability assessments could further enhance resilience.

Fifth, environmental and social concerns. The construction of submarine cables and converter stations, as well as upstream renewable generation facilities, might pose ecological and social risks. Marine ecosystems may be affected during underwater installation, and land‑based infrastructure could disrupt local communities, agricultural land, and sensitive habitats.

In Georgia, for example, the suspension of the Namakhvani hydropower project highlights the risks of proceeding without proper community engagement or environmental due diligence. Additionally, seasonal variability in hydropower output raises concerns about the reliability of exports from this source during dry periods.

To manage such risks, governments and project developers should prioritize early and transparent stakeholder consultations, robust environmental impact assessments, and transboundary coordination. Diversifying renewable sources with solar and wind (which is inherent to the project) and deploying technologically sound energy storage solutions can help stabilize seasonal fluctuations. Clear benefit‑sharing mechanisms and local involvement will be key to securing public support and maintaining project development.

Unique Vision  

The Caspian–Black Sea– Europe Green Energy Corridor represents a unique blend of infrastructure development, international diplomacy, and climate strategy. Driven by Azerbaijan’s shift from a traditional oil and gas exporter to a proactive player in the renewable energy space, the corridor offers a new vision for connecting electricity markets across regions.

Its growing network of partner countries and ambitious technical design highlight how cross‑border energy projects can advance economic integration, support climate goals, and enhance regional cooperation. Azerbaijan’s geographic position, renewable energy potential, and diplomatic engagement place it at the heart of this evolving green energy landscape—serving as a vital bridge between Central Asia and the EU.

Despite its potential, the corridor faces a complex set of implementation challenges. High capital costs, supply chain constraints, regulatory misalignment, and geopolitical uncertainty could delay progress or increase risks. Effective coordination— both within national governments and across borders—will be critical to managing these hurdles and aligning technical standards, grid operations, and investment timelines. 

Securing long‑term financing and power purchase agreements will also be key to ensuring the project’s commercial viability, particularly amid uncertain electricity price trends in the EU. Addressing these issues early on and decisively will determine whether the corridor can move from political vision to operational reality.

If realized, the Caspian–Black Sea–Europe Green Energy Corridor could become a cornerstone of regional energy diplomacy and a driver of what its proponents call the “global clean energy transition.” For the EU, it provides access to new, diversified sources of renewable electricity. For Azerbaijan and Georgia, it strengthens their positions as both renewable electricity suppliers and strategic transit countries, as well as trusted partners in the decarbonization of European markets. And for Central Asian states, it opens a long‑awaited route to global electricity trade, unlocking their vast renewable energy potential.

If realized, the Caspian–Black Sea–Europe Green Energy Corridor could become a cornerstone of regional energy diplomacy. 

In an era marked by geopolitical uncertainty and deepening climate commitments, the corridor stands out as a bold example of how infrastructure, policy, and transregional cooperation can come together to advance shared energy and sustainability goals across Europe, the South Caucasus, and Central Asia.