In a significant move signaling a strategic pivot towards renewable energy, Azerbaijan’s State Oil Fund (SOFAZ) has acquired a 49% stake in a major solar power portfolio from Masdar, the UAE’s prominent clean energy company. This investment underscores Azerbaijan’s commitment to leveraging its substantial oil and gas revenues to fuel a sustainable and diversified energy future.
The Landmark SOFAZ solar investment Agreement
The deal, finalized on December 24, 2025, sees SOFAZ taking a 49% equity stake in a Masdar-led 2 GW solar PV portfolio, with Masdar retaining the majority 51% share. This partnership represents a substantial investment of approximately $500-600 million from SOFAZ, highlighting the scale of Azerbaijan’s green ambitions.
This strategic acquisition is a cornerstone of the nation’s plan to diversify its energy sector. By channeling funds from its oil wealth, which exceeds $40 billion in assets, into green energy, SOFAZ is actively hedging against the global transition away from fossil fuels and securing long-term economic stability.
A Closer Look at the SOFAZ solar investment Portfolio
While the agreement encompasses a broad 2 GW portfolio of utility-scale plants, a key project within this initiative is the Garadagh solar power plant. Located near Baku, the 240 MW Garadagh plant is one of the first major projects in this portfolio, which also includes a 240 MW plant in Samukh among others.
Bringing a 2 GW portfolio to life is a massive undertaking. It requires a sophisticated supply chain and a deep understanding of the solar panel manufacturing process to ensure the timely delivery of millions of high-quality modules. These projects are set to come online in stages, with the first units expected to connect to the grid by 2026-2027.
Strategic Implications for Azerbaijan’s SOFAZ solar investment
SOFAZ’s investment is a critical step towards achieving Azerbaijan’s ambitious renewable energy goals. The country aims for renewables to constitute 30% of its total energy consumption by 2030. This move also aligns perfectly with its international climate commitments, reinforcing the pledges made as the host of COP29.
The financial rationale behind such a large-scale deployment is complex. A detailed solar panel manufacturing plant cost breakdown reveals the significant capital required for both equipment and construction. SOFAZ’s investment provides the necessary capital to propel these projects forward, transforming national policy into tangible clean energy infrastructure.
A Win-Win SOFAZ solar investment Partnership
This agreement creates a powerful synergy between SOFAZ’s financial strength and Masdar’s extensive expertise in developing and operating renewable energy projects. For SOFAZ, the deal provides direct exposure to stable, long-term returns, with a projected IRR of 8-10%, backed by power purchase agreements (PPAs) with the state-owned utility, Azerenerji.
For Masdar, this partnership reduces its capital expenditure burden, allowing the company to accelerate the development of this 2 GW portfolio while pursuing other global opportunities. The success of these plants relies on mastering the basics of solar panel manufacturing and securing a reliable supply of essential solar panel raw materials to ensure efficiency and durability.
As Azerbaijan continues its journey toward a sustainable future, this partnership with Masdar will serve as a powerful model. It demonstrates how oil-rich nations can strategically reinvest their wealth to lead the global energy transition, ensuring both environmental stewardship and economic resilience for generations to come.
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