Estimating the timeline for Azerbaijan to develop a long-term energy strategy is complex, as there still remains some uncertainty on the availability of demand-side data. This is a multi-year process for all countries, and really depends on where the government is starting from. If certain key elements are in place, such as survey data, this process can take significantly less time. However, planning is key, and governments can begin to develop strategic goals at the same time as they commence the statistical survey process.

As has been noted above, the availability of quality energy statistics is fundamental to policy planning and building energy models. The use of existing data should be maximised, including administrative data, which may be overlooked. Often, however additional data – specifically on end uses of energy – will need to be collected using statistical surveys. In the case of Azerbaijan, the results of the household energy consumption survey from 2018 should be very useful in aiding policymakers who want to make targets for the residential sector. However, reconducting the survey at regular intervals (every five years ideally) is necessary to provide a reliable baseline. Thus it is important to make sure that the time necessary to run those surveys is added to the overall long-term policy planning timeline. An outline of the steps is provided below. The timing is based on household surveys, but this could also apply to business surveys.

It is difficult to predict exactly how much time will be needed to run a survey, but it is likely to take roughly six months, or nine if a pilot survey is added (this is a recommended step in order to validate whether the survey design has been successful).

A single survey can be useful, but limited in its impact. Instead, policy makers and statisticians should plan for and put resources towards a series of surveys, ideally every two to three years. This way changes in energy use can be properly monitored. It will always be better to have two small surveys in separate years than one large one-off survey.

As discussed, using a 2050-type calculator is just one approach to looking at and building scenarios, but considering its use from a time perspective helps to better understand and assess the whole timeline for developing a long-term plan.

Building a calculator ready for launch generally takes around a year, but that will depend on the availability of data. Work can also begin while data are being collected, as these can be added later. Typically six months is needed for the design and discussion on sectors and levels, as well as the building of the Excel sheets. The rest of the time is spent on planning and communication. Best practice is to launch the calculator as soon as possible in beta mode in order to allow testing and feedback on the calculator. Typically a first version of the calculator does not include costs, given that data on costs can often be restricted or very hard to access, but costs are often built into later versions. Countries should aim to have a minimum viable model that can be adapted in later versions to suit specific needs and answer more complex questions.

A sensible part of developing a long-term energy strategy is to agree on some key performance indicators (KPIs) that can be used to track the overall development of the energy situation. These will likely be different from the specific goals of individual policies that are covered by monitoring, as KPIs will need to look at all the elements of energy supply and demand, but often at a headline level.

It can be challenging to choose which KPIs to use, but as a guide, key indicators should reflect:

• Overall policy needs and strategy (however, KPIs can differ internationally to nationally and nationally to regionally).
• Consistent data of known quality.
• A baseline to measure change.
• A time series to be most effective, so it is vital to plan data collection on a regular basis.
• International definitions for consistency.

There are many examples of indicator sets globally and a good place to start is the IEA Scoreboard, which was developed in 2009. However, it is worth noting that these indicators were developed before the significant growth in non-hydro renewable sources used for electricity generation and the general expansion of energy end-use data. This just emphasizes that any major changes in the national energy landscape may very well require developing new KPIs to correctly track progress.

In designing a set of indicators, thought needs to be applied to the choice of data for both the numerator (top) and denominator (bottom) and to ensure they provide a sensible and meaningful assessment. Following are a few examples.

Historically, a leading indicator of energy system diversity has been the share of each fuel as part of TES. While still a useful indicator, it is not the most reflective measure of the share of renewables, for example, due to the established international accounting rules of energy (as set out in the International Recommendations for Energy Statistics). Instead, for renewables it is likely to be more useful to look at their share in electricity generation, and here actual generation will be far more useful than share of capacity given the different capacity (or load) factors.

Another question is whether to use TES or TFC as a denominator. There can be good arguments made for choosing either, but it is important to understand why these numbers might change and what impact that might have on an indicator using them. One example is to think of a country which imports electricity from a neighbouring country, which is produced by hydropower, but has fossil fuel generation backup for years when hydro generation is low and thus its imports are limited. If everything else is the same, TES will be higher in years when electricity has to be generated in the country, but TFC will be unchanged, as the demand for energy is independent of how it is produced. So often using TFC and focusing on energy demand in the country will provide more informative and stable indicators.

A final example is to look at energy efficiency. Often, in the absence of anything else, this is measured via an economy-level intensity index e.g. GDP/energy consumption. However, this is only at best a proxy, as the value of this indicator will change for a number of reasons, including as a result of changes in the scope of industries in a country. A country growing its service sector but seeing declines in its manufacturing sector is very likely to see its energy intensity indicator fall, even if there has been no effective improvement in energy efficiency, as the service sector on average uses less energy per unit of GDP produced.

Therefore for energy efficiency it is more representative to link sectoral energy consumption with the activity that energy is used for, so a generic sectoral indicator (intensity) will look like:

More information on energy efficiency indicators can be found in the IEA’s energy efficiency indicator manual, which provides guidance on how to collect the data needed for indicators and includes a compilation of over 170 existing practices from across the world (IEA, 2014).

This report set out a path for a country to develop a long-term energy strategy to help understand and plan in order to meet the energy priorities. Should Azerbaijan choose to develop a long-term approach to energy, then following this broad outline is likely to be advantageous. Many other countries have embarked on long-term planning, knowing that to create change a form of government action is needed. This needs to be understood by people and businesses, so that they in turn can take the actions required.

Across the world, countries are developing longer-term strategies to accelerate clean energy transitions, to ensure energy security and -- for some -- to maximise the potential of their natural assets. Should Azerbaijan wish to do the same, then ensuring it has comprehensive energy statistics covering the entirety of its energy supply and use will be a vital step. However, those data need to be made available to all and that may require stronger co‑operation across government ministries.

Expanding energy statistics, especially on the demand side, will allow Azerbaijan, like other countries, to embark on energy modelling to better understand how best to achieve its long-term aims.

Ultimately the choice to follow this pathway, as outlined here, is a choice for Azerbaijan. The country has natural assets, both fossil and renewable, that are available to be harnessed and used effectively to support broader goals of energy security, transition and prosperity. A long-term, strategic approach to doing so will ultimately prove beneficial.