Legislation Update on the use of energy resources 

Under the decree of the President of Azerbaijan Republic dated 20 August 2021, Law on “Alternative Use of Energy Resources and Energy Efficiency” is adopted. As a result, the previous law named Law on “Use of Energy Resources” were being invalidated.

The main purpose of the newly adopted law is to regulate relations in the field of production, storage, transmission, distribution, sale, and consumption of energy. This law applies to government agencies, individuals and legal entities operating in the energy sector, as well as consumers. A number of fundamental changes have been made under the new law.

1. Firstly, the previous law provided the mechanism of state energy expertise for the examination of energy use. But the regulation of this mechanism was mixed. The reason is that the scope of the persons carrying out the examination and the duration of the examination were not fully regulated by the previous law.  The newly adopted law defines an energy audit, energy management system, and energy manager that meet international standards for a more effective examination of energy use and efficiency.

An energy audit is conducted to examine non-residential areas and farms in order to obtain information on energy consumption and identify cost-effective energy consumption opportunities. Except for the cases indicated in the law, an energy audit is conducted voluntarily. A mandatory energy audit will be conducted every 3 years in cases specified by law.

An energy management system is a permanent energy regulative system that is established to implement energy measures for energy efficiency. The rules of establishing an energy management system are regulated by the Cabinet of Ministers of Azerbaijan Republic.

At the same time, an energy manager responsible for energy efficiency is appointed who is meeting the established requirements, having higher education in energy and technical fields and at least 3 (three) years of work experience in the relevant specialty.

2. Another amendment is that the Energy Efficiency Fund is established to stimulate and promote measures on energy use and energy efficiency.

3. Under the previous law, mechanisms such as certification, standardization and the establishment of a regulatory framework were used to ensure energy efficiency. However, these mechanisms were no longer regulated by the new law since they did not meet international standards and did not increase efficiency. Thus, according to the new law, these definitions have been removed and the rules of labeling and certification of products for energy consumption have been envisaged. In short, according to the new rules, products do not need to be certified after labeling.

4. The law also stipulates that energy suppliers are already required to provide consumers with smart meters to calculate the energy consumed. Through these meters, consumers will be able to get accurate information about the amount of energy consumption, as well as easily identify differences in energy consumption.

This law will come into force on July 1, 2022.