As part of a plan to transition to a fully competitive system in the wholesale and retail electricity markets, Azerbaijan will introduce the Single Buyer model (SBM) in the fourth quarter of 2024, media reports.
The World Bank report on "Support for the development of transitional mechanisms for the liberalization of the electricity market of Azerbaijan" states that the government developed the basic principles of liberalizing the energy market in 2018-2019 based on a three-stage plan that takes into account the current conditions and challenges associated with the legal, economic, institutional and structural characteristics of the energy sector of Azerbaijan.
SBM has proven effective as an intermediate stage to establishing bilateral contracts and a balancing market in many countries, and in Azerbaijan, it will help unlock the potential of more efficient generation management and more accurate reflection of capacity costs before achieving a more flexible market structure.
The report emphasizes that the existing components of the energy market in Azerbaijan will be preserved, and the "destruction" of current forms of competition should be avoided.
The importance of competition for achieving more efficient results in the energy sector has been confirmed by the experience of recent years.
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