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Akbar Novruz

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Azerbaijan is preparing legal changes that could transform large areas of agricultural land into sites for renewable energy while keeping those lands’ existing category and primary use. The amendment, highlighted in the newly published Nationally Determined Contribution 3.0 report, would enable the deployment of utility-scale solar and onshore wind on farmland without requiring land reclassification or restricting farming activities. This measure is part of a wider package that the government sees as essential for modernizing the power system and meeting growing electrification needs.

The planned amendments to the Land Code and the Law on the Use of Renewable Energy Sources in Electricity Generation remove a legal barrier that has limited large renewable installations on agricultural parcels. By permitting renewable facilities to co-exist with the land’s agricultural designation, policymakers expect to accelerate permitting, reduce land use conflicts, and unlock new private investment in distributed and utility-scale projects. The official update is presented as part of NDC 3.0, which frames these changes as necessary to avoid a growing emissions gap as electrification of transport, buildings, and industry increases electricity demand.

The NDC 3.0 report makes clear why this matters. The energy sector remains Azerbaijan’s largest source of greenhouse gas emissions at around 21 percent of the national total. While the country benefited from switching from fuel oil to gas and from having no coal power generation, the report stresses that efficiency improvements, network modernization, and expansion of solar and wind capacity are central to avoiding increases in emissions as the economy electrifies. Key measures through 2035 include smart grid rollouts, strengthening overhead lines and substations, wide deployment of solar and onshore wind, and introduction of long-duration energy storage systems for large-scale renewables.

What similar policies look like in exemplary countries?

Across Europe and in Türkiye, policy makers and utilities have encouraged a mix of rooftop, agrivoltaic and utility scale solar to boost energy independence and encourage household-level self-generation.

SolarPower Europe reported that residential rooftop systems accounted for a substantial share of the market in recent years, although that share showed signs of shifting in 2024. In the EU market outlook for 2024-2028, residential rooftop solar represented about 20 percent of installations in the previous year, down from higher shares in earlier years, reflecting shifting subsidy regimes and market dynamics.

Türkiye has experienced rapid growth in solar capacity and retains a very large rooftop potential. Ember and other analysts estimate that rooftop PV potential in Türkiye could expand by roughly 120 gigawatts, potentially covering as much as 45 percent of the country’s electricity consumption if fully deployed.

Türkiye’s solar capacity nearly doubled in a short period and reached roughly 19.6 gigawatts by the end of 2024, showing how fast deployment can progress when policy and market conditions align. Those examples highlight both the opportunity and policy choices facing Azerbaijan as it seeks to expand renewables while maintaining agricultural production.

Where aggressive support for residential solar and small-scale renewables has been offered, many households achieved meaningful electricity self-supply and reduced bills. For example, in parts of southern Europe, a large share of homeowners have adopted rooftop panels, and in Spain, over one-fifth of household owners either have solar panels or are in the process of installation, according to industry group UNEF. At the same time, the EU is experiencing changing dynamics in 2025 as subsidy reductions and policy shifts slowed the expansion of rooftop installations in some markets. These international lessons suggest that policy design matters: incentives, grid rules and compensation schemes shape how many households can meaningfully reduce dependence on the central grid.

How the amendments fit into Azerbaijan’s energy strategy?

The amendments are timed to support the NDC 3.0 vision of a modernized electricity system capable of integrating large volumes of intermittent renewables. The report explicitly identifies several priority interventions through 2035:

• modernize transmission and distribution networks and build new substations to reduce technical losses and improve resilience;
• digitalize grid management and introduce smart grid features to better integrate distributed generation;
• expand solar and onshore wind capacity as primary renewable sources;
• deploy long-duration energy storage systems to stabilize supply as renewable shares rise;
• replace older open-cycle gas turbines with more efficient steam gas plants to reduce emissions intensity while maintaining supply security

If adopted, the legal changes on agricultural lands would help both utility developers and farmers. Agrivoltaic approaches that combine crops with elevated solar panels are already attracting attention globally because they allow dual land use, provide farmers with additional income streams, and can improve microclimates for certain crops. Allowing renewables without recategorizing land may also reduce administrative costs and speed the deployment timeline for larger farms and cooperative projects.

There are practical benefits for rural households and local economies. Wider access to on-site generation may reduce household electricity bills, support local employment through construction and maintenance, and enable community energy models where cooperatives or local authorities manage shared assets. Schemes in Europe and Türkiye also show that when households and farmers can become prosumers, they often gain financial resilience and a degree of independence from central supply shocks.

However, careful regulation is required. Potential risks include loss of productive land if projects are poorly sited, visual and environmental impacts, and inequitable distribution of benefits if project tenders favour large investors over local farmers. The NDC emphasizes that expansion of renewables must be accompanied by network upgrades, storage, and social safeguards to ensure the transition is just and resilient.

Scaling photovoltaics and wind at meaningful levels will require capital, improved permitting and new business models. The NDC anticipates both public investment in grids and incentives to mobilize private finance for generation and storage. Integrating large-scale renewables without adding instability will also require long-duration energy storage solutions that remain commercially viable at scale. Azerbaijan’s existing gas-fired plants can provide short-term balancing, but to realize deep decarbonization and allow for mass electrification of transport and industry, long-duration storage and flexible generation systems are essential.

Experience from other countries shows that the same technology yields very different social outcomes depending on policy. Spain and parts of the EU saw rapid household adoption when incentives and favourable net metering were present. Türkiye’s rooftop potential remains huge but is underexploited in some segments because of subsidy structures and payback period concerns. Azerbaijan can capture the benefits by designing incentives for agrivoltaic pilots, clear land use rules, streamlined permitting and supportive grid investment. These steps will determine whether renewables on agricultural lands become a tool for rural development or simply another source of large-scale generation.

The proposed amendments to the Land Code and renewables law are pragmatic and potentially high-impact. By allowing agricultural land to host renewable energy without recategorization, Azerbaijan lowers a legal hurdle that has constrained large-scale deployment. When paired with network modernization, storage deployment and social safeguards outlined in NDC 3.0, the move could accelerate clean energy growth, reduce emissions, and provide new income streams for farmers.

International examples show both the upside and the pitfalls. If Azerbaijan aligns incentives, protects farming interests and invests in grids and storage, the policy could help the country meet its NDC goals and provide households with greater energy security. The success of the reform will depend on regulatory clarity, quality of implementation and careful integration of local communities into the new energy economy.