Armenia

Currently, the energy sector of Armenia is one of the fully operational and cost-effective branches of the country’s economy. Armenia adequately covers its internal energy demand, exports electricity to Georgia, and successfully performs an electricity exchange with the Islamic Republic of Iran on a mutually beneficial basis.

A number of reforms have been implemented and more are ongoing in the energy sector, ensuring the operation of an efficient and uninterrupted energy system. Reforms include the formulation of market relations, the development of legislation and tariff policy regulation, and the implementation of privatization procedures.

The power sector of Armenia has passed through a difficult reformation and reconstruction over the last few years, though Armenia has made considerable progress in the transition to a market economy. As a result of power sector restructuring, five generation plants and the transmission and distribution systems have been separated. Dispatching and settlement centres have also been established.

Armenian law required the privatization of the electricity distribution network in October 2002. Under the “property as a debt payment” scheme, a decision was made to give the Hrazdan thermal power plant to the Russian Federation, and the process of drawing up the necessary documents is under way.

The Sevan-Hrazdan cascade hydroelectric power system was privatized in 2003. Between 1990 and 2000, almost all small hydropower plants and a number of energy infrastructure companies (construction, repairing, assembling, etc.) were privatized. The projects on rehabilitation and modernization of electricity transmission and distribution networks were successfully implemented and continue with the financial assistance of international organizations.

There are a number of other completed projects that should be noted. These include the rehabilitation of the 220kV Vanadzor-2 and Kamo substations, the construction of Shinuhayr-Agarak, which is part of the Syunik-Center 220kV overhead power transmission line, and the Agarak switch Country / Area information gearing unit for the Iran-Armenia 220kV transmission line. The rehabilitation of the transmission and high voltage networks is also planned.

The technical losses of the High Voltage Network CJSC have decreased by 0.56 per cent from 4.73 per cent for 2001-2002 to 4.17 per cent for 2002-2003.

Losses from the low voltage network were around 21 per cent for 2001-2002, comprising 10 per cent technical losses and 11 per cent commercial losses. For 2002-2003, losses were around 18 per cent, incorporating approximately 9 per cent each for technical and commercial losses. The total reduction in losses over this period has been 2.57 per cent. A further reduction in losses has been noted for 2003.

Major challenges to the power sector

Electricity in Armenia is produced by three thermal power stations, one nuclear, and two major hydroelectric plants, together with a number of small hydroelectric units.

The thermal power plants have an established capacity of 1,756 MW. The nuclear power plant, constructed in 1979, has an installed capacity of 815 MW, though only one unit of 407.5 MW is currently in operation. Hydropower plants have an established capacity of 1,038 MW.

National Energy Plan

Objectives

The Government pays special attention to energy security and energy independence, which are necessary for the sustainable development of the country. The concept of ensuring a reasonable level of energy security for the country was taken as a basis for the energy sector’s development programme as well as several special programmes, specifically: maximum utilization of domestic energy resources for power generation; diversification policy; development of regional cooperation; and integrated electricity and gas transmission systems.

On the basis of this, a strategic programme has been developed.

Renewable Energy Development

Hydro energy

The hydro potential of Armenia has been evaluated to be about 21.8 billion kWh/year, including 18.6 billion kWh from large and medium rivers and 3.2 billion kWh from small rivers. The economically feasible potential is about 3.3 to 3.5 billion kWh, with 1.5 billion kWh already utilized.

Considering that the electricity production has been about 6 billion kWh during the last few years, utilization of hydro potential would satisfy 50 per cent of the current demand and not only avoid an energy crisis but also contribute to the development of the economy and increase the stability of improvements.

Wind energy

Armenia has considerable resources for wind energy. Theoretically the potential is estimated at 10.7 GWh and at least 1.1 GWh is economically proven according to existing data.

Currently, a 2.6-MW wind farm project funded by a grant from the Government of the Islamic Republic of Iran (US$ 3.5 million) is being developed at the Pushkin pass. It is foreseen to develop the total capacity up to 20 MW.

Solar energy

Armenia is rich in solar energy resources, the utilization of which will reduce the need for imports of other energy sources. The average annual solar radiation is approximately 1,720 kWh/m2 (average annual European solar radiation is 1,000 kWh/m2). Over a quarter of the territory of the country has solar resources with the intensity of 1,850 kWh/m2. Solar radiation in the Sevan basin is substantial at 2,800 hours.

Biomass

Biomass is not currently utilized as a modern energy resource in Armenia. However, an attempt has been made to attract foreign investment for the construction of a large biomass plant. If funding were available, it would be possible to construct a biomass plant within 12 to 15 years with a daily methane production of up to 100,000 m3.

Efficiency measures

As part of the Strategic Plan for the energy sector, an energy efficiency policy is to be developed. This is likely to incorporate the state programme for restoring heat to the residential sector and the construction of new small combined cycle units.

Environmental impact of electricity generation

The ecological aspects of the impact of thermal power plants will be considered, though hydropower plants and nuclear power plants are considered ecologically better sources of power generation by the Government of Armenia.

During the period 2001-2002, the thermal power plants used only gas fuel. Therefore, the emissions of nitrogen dioxide were approximately 3,750 and 2,136 tons in 2001 and 2002, respectively.

Financial aspects

Projects for the rehabilitation and modernization of electricity transmission and distribution networks as well as gas system rehabilitation and renovation have been successfully implemented and are being continued with the financial assistance of international organizations. The total investment during 2003 was 9.4 billion Armenian dram.