The Asian Infrastructure Investment Bank (AIIB) has signed two grant agreements totaling USD 1.1 million with the Republic of Azerbaijan, financed through the Multilateral Cooperation Center for Development Finance (MCDF) Finance Facility, to support early-stage preparation of the Caspian Green Energy Corridor and associated offshore wind infrastructure. The agreements mark AIIB’s first grant partnerships with Azerbaijan under the MCDF framework and directly implicate Uzbekistan’s power sector through planned onshore transmission connections.
The larger of the two grants — USD 1 million — will finance the first phase of a feasibility study for the Caspian Green Energy Corridor. At its core is a proposed 400-kilometre submarine electricity cable that would run beneath the Caspian Sea to connect Azerbaijan and Kazakhstan. Uzbekistan would be integrated into the corridor through onshore transmission networks rather than the submarine link itself. The study will assess the project’s technical, economic, financial, environmental and social feasibility, including transmission options and the potential for cross-border electricity trade across the region.
The feasibility work will be a joint undertaking between AIIB and the Asian Development Bank (ADB), which is contributing a parallel USD 1 million in technical assistance. Total preparation support for the study therefore reaches USD 2 million, with both multilateral lenders coordinating on project preparation. This collaborative structure is intended to ensure the study meets the standards required to attract future large-scale investment in the corridor’s construction.
A second, smaller grant of USD 100,000 will support concept development for coastal infrastructure in Azerbaijan needed to enable large-scale offshore wind development in the Caspian Sea. This covers port facilities, specialised vessels, substations and grid connections that would be required before any offshore wind farm could be built and connected to the regional grid.
Regional Energy Integration and European Ambitions
The grants are designed to support early-stage technical and feasibility work aimed at enabling Azerbaijan to develop its offshore wind potential while facilitating greater cross-border electricity connectivity between Central Asia, the South Caucasus and, potentially, European markets. AIIB has described the initiatives as aligned with its thematic priorities of green infrastructure and regional cooperation.
Azerbaijan’s Minister of Energy, Parviz Shahbazov, described the agreements as demonstrating international support for the country’s strategic objectives of developing large-scale offshore wind energy in the Caspian Sea and advancing regional and intercontinental green energy transmission. He characterised both projects as strategically important for translating Azerbaijan’s renewable energy potential into economic value and facilitating the export of green energy from the Caspian region and Central Asia.
Konstantin Limitovskiy, AIIB’s Chief Investment Officer for Public Sector (Region 2) and Project and Corporate Finance Clients (Global), said the support was an important step toward translating the Caspian region’s renewable energy potential into investable infrastructure, and that early-stage preparation of cross-border electricity connections and offshore wind infrastructure would help lay the groundwork for greater regional energy integration, energy diversification and sustainable growth.
Uzbekistan’s Role and Broader Context
For Uzbekistan, the corridor represents a potential pathway to integrate its domestic power grid into a wider regional electricity market. The country’s connection would rely on existing and upgraded onshore transmission networks rather than the submarine cable itself, meaning the feasibility study’s assessment of onshore transmission options will be directly relevant to the scope and cost of Uzbekistan’s participation. The study’s findings on cross-border electricity trade opportunities could also inform Uzbekistan’s longer-term energy export strategy.
The AIIB’s broader relationship with Azerbaijan is expanding in parallel. The bank and Azerbaijan have signed a Joint Declaration aimed at deepening engagement in priority sectors, and Azerbaijan is scheduled to host AIIB’s 12th Annual Meeting in Baku on 14–15 July 2027. The grant agreements for the Caspian corridor are described by AIIB as part of its broader efforts to prepare high-quality, cross-border infrastructure and mobilise resources for projects that strengthen regional connectivity and support the green transition.
No timeline has been published for the completion of the feasibility study, and projected costs for full construction of the corridor beyond the current study phase have not been disclosed. The study’s findings will determine whether the project advances to investment preparation and, ultimately, financing.
