Abstract

This paper explores the legal and institutional framework governing Azerbaijan's renewable energy strategy within the context of the Caspian Sea energy transition. It examines the current investment climate, highlighting both the strengths and limitations of Azerbaijan's regulatory regime in attracting and protecting foreign investments in the renewable energy sector. The analysis demonstrates that while Azerbaijan has made significant strides by enacting progressive legislation such as the 2021 Law on the Use of Renewable Energy Sources and ensuring investor guarantees through offtake mechanisms, tariff incentives, and property rights protection, practical challenges such as judicial inefficiency and regulatory gaps persist. A comparative analysis with Kazakhstan, Turkey, and EU jurisdictions reveals strategic lessons for refining Azerbaijan's legal model. The study concludes with targeted policy recommendations, including enhancing legal stability through contract-based safeguards, reforming judicial and arbitration mechanisms, improving auction transparency, developing Guarantees of Origin certification, and fostering ESG and community engagement frameworks. Ultimately, the paper argues that strengthening rule of law and regulatory consistency will be critical in positioning Azerbaijan as a leading green energy hub in the Caspian region.