Azerbaijan is positioning itself at the forefront of artificial intelligence (AI) driven energy innovation, strongly focusing on integrating AI into its energy sector to improve efficiency, sustainability and grid optimization.
Amid global climate goals and commitments made at the 2024 UN Climate Conference (COP29), the country is exploring key AI applications to enhance renewable energy adoption, optimize energy consumption and promote decarbonization. As well as opportunities, however, key challenges remain.
Azerbaijan’s energy innovation potential
Azerbaijan’s energy sector holds significant potential for innovation, driven by the strategic opportunities identified in a local stakeholder assessment run by the World Economic Forum’s Centre for the Fourth Industrial Revolution (C4IR) Azerbaijan.
One of the key opportunities includes leveraging AI to optimize energy production and distribution, improving data management and infrastructure, and enhancing energy efficiency through smart grid technologies.
Collaboration between public and private sectors and partnerships with research institutions can accelerate AI integration, fostering a more sustainable and efficient energy future for Azerbaijan. Additionally, the country’s growing focus on renewable energy sources presents further avenues for AI-driven advancement.
Azerbaijan could position itself as a regional leader in green energy export to Europe through cables under the Black Sea. For instance, the renewable energy company Masdar has developed the 230-megawatt-capacity Garadagh solar power plant in Azerbaijan. It has signed agreements to build a further 1 gigawatt of clean energy projects in the country.
Azerbaijan benefits from favourable wind and sunlight conditions, offering significant potential for developing and deploying wind and solar energy solutions.
Global innovations, local applications
The AI in Energy project, an initiative with C4IR Azerbaijan, has identified several promising use cases for AI technologies within Azerbaijan’s energy sector. These include:
- Optimizing energy consumption through AI models
- Enhancing predictive maintenance for infrastructure
- Improving energy efficiency via AI-driven demand forecasting
COP29 and subsequent climate summits are pivotal in driving this process forward.
To effectively localize global solutions, these platforms allow Azerbaijan to showcase its AI-driven energy solutions, align with international sustainability goals and attract investment to accelerate green technology adoption and energy sector practices.
During COP29, C4IR Azerbaijan hosted two side events on energy and sustainability. Through the centre’s work, these events showcased the potential of globally applied solutions for local impact and offered valuable insights into the initiative and its implications for sustainable energy solutions.
Plans are in place to pilot and test these innovations through multistakeholder collaboration, engaging public and private sector entities, universities and research institutions. The goal is to create scalable, locally applicable solutions that can serve as regional and global adoption models.
Addressing challenges to AI adoption
The Azerbaijani energy industry is aware of barriers to realizing AI’s full potential. Addressing the following shortcomings could help transform the energy landscape.
- Cloud solutions and effective data sharing
- Data availability and quality, hinging on strong data governance, regulation for cloud usage and accessibility
- Robust legislation and infrastructure to support AI development
Within this context, with the World Economic Forum’s global AI Energy Impact Initiative, C4IR Azerbaijan has shortlisted several global solutions, which could be adapted as pilot projects and localized to the country context with scalability potential.
One shortlisted project involves an AI-powered energy efficiency pilot for buildings in collaboration with BrainBox, which was found to reduce energy consumption by 30%, improve carbon emissions by 25-30% and deliver a 30% return on investment.
Another planned initiative is a renewable energy pilot leveraging the use case of Vestas’ predictive maintenance solution for wind turbines, aiming to replicate its proven benefits, which include reliability, optimized maintenance processes and significantly enhancing the efficiency of renewable energy infrastructure.
The selected pilots will feed into broader national and global ambitions on energy sustainability, several of which were identified during COP29:
Realistically, meeting these pledges will require leveraging existing and emerging technologies, including AI.
For instance, Fatih Birol, executive director of the International Energy Agency, said that energy and climate goals – including tripling global renewable power capacity this decade while strengthening energy security – require countries to rapidly increase energy storage and expand and upgrade their electricity grids.
Achieving this goal requires scaling up generation and overcoming the challenges associated with integrating renewables into the grids, said Francesco La Camera, director general of the International Renewable Energy Agency.
Net-zero carbon cities
In addition to the AI in Energy project, C4IR Azerbaijan has joined the Net Zero Carbon Cities programme of the World Economic Forum, focusing on urban development, sustainability and energy efficiency.
These initiatives are now integrated into a cohesive strategy to advance energy innovation and sustainable urban transformation, leveraging AI technologies to help decarbonize urban energy systems, optimize energy usage and enhance sustainability across city infrastructure.
Interviews with key local stakeholders from the public and private sectors have been conducted to identify existing challenges, potential opportunities and actionable pathways for implementation.
These insights, plus outcomes from the Net Zero Carbon Cities initiative, will guide pilot implementations, with testing already underway through workshops. The Baku City Sprints, for instance, held in October 2024, brought key stakeholders from the public and private sectors together toward workably solving the urban challenges for Baku City, exploring innovative solutions and showing ways in which energy efficiency and sustainability could be advanced.
The key workshop phases included:
- Opportunity assessment
- Solution prioritization
- Actions to take
By the end, stakeholders validated city profiles, prioritized solutions and developed actionable plans tailored to the city’s context.
Once executed, the AI-powered solutions developed through the Net Zero Carbon Cities initiative will be added to the Net Zero Carbon Cities Solution Toolbox.
The initiative can provide valuable lessons for other countries to use AI for sustainability. It has enhanced Azerbaijan’s local expertise in AI applications for energy and urban sustainability, filling knowledge gaps, fostering collaboration between diverse stakeholders and creating new opportunities for innovation.
Azerbaijan is making strides in navigating the challenges and opportunities of AI-driven energy innovation to meet critical sustainability goals. Through national and global cross-sector collaboration and localized knowledge, it has created impactful solutions that advance energy transformation and decarbonization.
The authors are Fariz Jafarov, Executive Director, Center for Analysis and Coordination of the Fourth Industrial Revolution/C4IR Azerbaijan and Ruslan Zeynalzade, AI Project Lead, Centre for the Fourth Industrial Revolution, Azerbaijan.
The following individuals also contributed to this article: Soltan Bayramov, Deputy Executive Director, C4IR Azerbaijan; Gulmina Malikzade, Head of the Project Management Department, C4IR Azerbaijan; and Malakkhanim Rustamova, IoT Project Lead, C4IR Azerbaijan.
This article was first published in the World Economic Forum. It is part of the World Economic Forum Annual Meeting. Read the original piece here.