Azerbaijan’s SOFAZ Invests in Italy’s Solar Energy Future

The State Oil Fund of the Republic of Azerbaijan (SOFAZ) has made a significant investment in Italy’s solar energy sector by acquiring a 49% stake in a portfolio of solar power plants. This move marks a pivotal shift in the energy relationship between Azerbaijan and Italy, transitioning from traditional hydrocarbon-based cooperation to a focus on renewable energy sources. The agreement, formalized on July 18, 2025, reflects a growing commitment to sustainable energy initiatives in Europe.

Historically, the partnership between Azerbaijan and Italy has revolved around oil and gas pipelines. Observers note that this new deal signifies a transition “from molecules to electrons.” Italy stands to benefit from alternative energy sources that will be sold under long-term power purchase agreements. These agreements promise stable tariffs for consumers and predictable income streams adjusted for inflation for investors.

The solar portfolio, managed by Enfinity Global, consists of 14 solar plants located in the Lazio and Emilia Romagna regions. Once operational, these facilities are expected to generate approximately 685 million kilowatt hours of clean electricity annually. This output is projected to meet the energy needs of nearly 250,000 Italian households and will help offset around 184,950 tons of CO2-equivalent emissions each year.

A Milestone in Azerbaijan-Italy Relations

The agreement was celebrated in Rome with the presence of Italian government officials, diplomats, and industry leaders. Israfil Mammadov, Executive Director of SOFAZ, highlighted the importance of this collaboration, stating that it “supports the delivery of competitive clean energy to meet Italy’s growing energy needs while contributing to local economic development and energy access.” Mammadov emphasized SOFAZ’s commitment to strategic investments in Italy and across Europe.

Carlos Domenech, CEO of Enfinity Global, expressed pride in the partnership, calling it “a proud moment to add new energies to a historic relationship built on gas and oil supply.” This sentiment reflects a broader shift in how energy partnerships are evolving in response to global climate objectives.

As SOFAZ celebrates its 25th anniversary, it manages over €66 billion in assets, which constitute more than 90% of Azerbaijan’s GDP. The fund reported a 6% investment return in 2024 and has diversified its portfolio across more than 50 countries, including investments in infrastructure, real estate, private equity, and fixed income. This latest solar venture enhances SOFAZ’s position as a long-term global investor.

Supporting Europe’s Energy Transition

This investment aligns with Italy’s national decarbonization efforts and the European Union’s REPowerEU initiative, which aims to reduce reliance on imported fossil fuels while accelerating the transition to renewable energy sources. By backing a 402 MW solar portfolio in Italy, SOFAZ is not only diversifying its investment returns but also contributing to Europe’s goal of building a more resilient and low-carbon energy system.

For Azerbaijan’s sovereign wealth fund, which has been historically reliant on oil and gas revenues, this partnership underscores a clear message: its future investments are increasingly linked to the clean energy sector. As Europe continues to shift towards sustainable energy solutions, Azerbaijan is positioning itself as an active participant in this transformative journey.