Armenia Renewable Resources and Energy Efficiency Fund
Renewable energy law
The Law of Armenia on Energy Saving and Renewable Energy, 2004[3]
The electricity sector of Armenia includes several companies engaged in electricity generation and distribution.[4][5][6] Generation is carried out by multiple companies both state-owned and private. In 2020 less than a quarter of energy in Armenia was electricity.[7]
As of 2016, the majority of the electricity sector is privatized and foreign-owned (by Russian and American companies), which is the result of a law passed in 1998 allowing for the privatization of electricity generation and distribution in the country. Administration, government legislation, and policy of the sector is conducted by the Ministry of Energy Infrastructures and Natural Resources of Armenia. Regulation of the sector is performed by the Public Services Regulatory Commission of Armenia.[8][9][10]
Armenia does not have any fossil-fuel reserves, so it relies on gas imports from Russia and Iran, and nuclear fuel imports from Russia, which, together, result in approximately 66% of electricity production.[10][11][12][13] Armenia is a net-producer of electricity and has exported in excess of 1.3 billion kWh per year since 2014[14][15][16] to Iran, Georgia, and Artsakh.[14][17][18]
Large investments have been made in the electricity sector in Armenia in the 2000s. These include the construction of the $247M combined-cycleYerevan Thermal Power Plant completed in 2010,[19][20] a $52M loan from the World Bank in 2015 to improve the reliability of electricity distribution across Armenia,[21][22][23] and a $42M investment in 2016 by Electric Networks of Armenia to repair distribution networks.[24]
In June 2016, the Armenian Parliament updated the law “On Energy Saving and Renewable Energy” which encourages the use of solar power in the country and allows users of solar installations of 150 kW or less to sell their excess energy back to the electrical grid.[25][26]
The voltage in Armenia is 220 V AC at a frequency of 50 Hz. Armenia uses the European 2-pin C-socket and F-socket plugs.[27][28][29]
Installed capacity for electricity generation
Armenia electricity production by source
According to International Energy Agency in 2015 electricity generation in Armenia increased since 2009 to nearly 8000 GWh, but still remains below 1990 levels. Also, in 2015 Armenia consumed more than twice as much natural gas than in 2009.[30]
Out of 3213.2 MW of installed capacity in Armenia, the largest portion of electricity generation comes from Metsamor Nuclear Power Plant at 38%, 33% from hydro power plants, 22% from gas-fired power plants, and the remaining 7% from other renewable sources.[1] Similar figures are derived from reports published by Electric Networks of Armenia[31] - during the period of 01.01.2012 - 30.06.2017 breakdown of aggregated electricity supply was: nuclear - 35.8%, hydro - 35.6%, fossil gas - 28.5%.
Nuclear power provides 38% of the electricity in Armenia through one operating nuclear reactor, Unit 2 of Metsamor Nuclear Power Plant, which is a WWER-440 reactor with extra seismic reinforcement.[33] It was created in 1976 and is the only nuclear power plant in the South Caucasus. However, after the Spitak earthquake in 1988, the nuclear power plant's operation was forced to stop,[34] becoming one of the causes of the Armenian energy crisis of 1990's. The second unit of the NPP was restarted in October 1995, putting an end to the 'dark and cold years'.
While Armenia is the sole owner of the plant, the Russian company United Energy Systems (UES) manages the Metsamor NPP. Nuclear fuel must be flown in from Russia.
A modernization of NPP is scheduled for 2018, which will enhance the safety and increase installed capacity by 40-50 MW.[35]
Armenia also explores the possibilities of small modular reactor that would give flexibility and the opportunity to build a new nuclear power plant in a short time.[35]
Earlier it was reported that Armenia is looking for a new reactor with 1060 MW capacity in 2026.[36]
Armenia operates one Soviet-designed VVER-440 nuclear unit at Metsamor, which supplies over 40% of the country's energy needs. The EU and Turkey have expressed concern about the continuing operation of the plant. The Armenian energy minister has announced that a US$2 billion feasibility study of a new 1,000 MWe nuclear power plant is to be carried out in cooperation with Russia, the United States and the IAEA. Russia has agreed to build the plant in return for minority ownership of it. Furthermore, the USA has signalled its commitment to help Armenia with preliminary studies.[needs update]
Armenia's Metsamor Nuclear Power Plant has an installed capacity of 815 MW, though only one unit of 407.5 MW is currently in operation.[37]
Because Turkey, despite its WTO obligation, blockades Armenian borders, nuclear fuel is flown in from Russia.[38][clarification needed]Used fuel is sent back to Russia.[citation needed]
Metsamor nuclear power plant provides more than 40 percent of power in Armenia; however, it is aging and will need to be replaced soon. It has received much financing for modernizing its systems and safety features.[41] Russia has extended a loan of $270 million and a $30 million grant for extending the lifetime of Metsamor NPP in 2015, which will be coming to an end in 2016. The funds are to be provided for 15 years with a 5-year grace period and an interest rate of annually 3%.[42]
Plans for building a new nuclear power plant have been discussed. In July 2014, the energy minister of Russian Federation announced that Russia is willing to provide US$4.5 billion out of US$5 billion needed for construction of a new nuclear power plant.[43] In 2014, the construction of a new power plant was approved by the Armenian government, which was to be started in 2018.
Fossil gas power
The Hrazdan Thermal Power Plant in central Armenia
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During 2010–2017 thermal power plants (running on imported natural gas from Russia and Iran) provided about one-third of Armenia's electricity.[44]
Thermal power plants (running on natural gas) in Armenia have an established capacity of 1,756 MW.[37]
The following table lists thermal power plants which together account for 24% of Armenia's domestic electricity generation.[45]
In April 2010, a new natural gas-fired thermal power plant was inaugurated in Yerevan, making it the first major energy facility built in the country since independence.[44] The plant will reportedly allow Armenia to considerably cut back on use of natural gas for electricity production, because officials say it will also be twice as efficient as the plant's decommissioned unit and four other Soviet-era facilities of its kind functioning in the central Armenian town of Hrazdan.[44] With a capacity of 242 megawatts, its gas-powered turbine will be able to generate approximately one-quarter of Armenia's current (as of 2010) electricity output.[44] The state-of-the-art plant was built in Yerevan in place of an obsolete facility with a $247 million loan provided by the Japanese government through the Japan Bank of International Cooperation (JBIC). The long-term loan was disbursed to the Armenian government on concessional terms in 2007.[44]
Armenia's energy sector will expand further after the ongoing construction of the Hrazdan thermal plant's new and even more powerful Fifth Unit.[44] Russia's Gazprom monopoly acquired the incomplete facility in 2006 as part of a complex agreement with the Armenian government that raised its controlling stake in the Armenian gas distribution network to a commanding 80 percent. The Russian giant pledged to spend more than $200 million on finishing its protracted construction by 2011.[44]
The new Yerevan and Hrazdan TPP facilities will pave the way for large-scale Armenian imports of natural gas from neighboring Iran through a pipeline constructed in late 2008. Armenia began receiving modest amounts of Iranian gas in May 2009. With Russian gas essentially meeting its domestic needs, it is expected that the bulk of that gas will be converted into electricity and exported to the Islamic Republic.[48]
In late December 2010, the Armenian Energy Ministry announced that the fifth block of the Hrazdan thermal power plant will go online by April 2011.[48] Although construction on the fifth block began in the late 1980s, the Armenian government tried to unsuccessfully finish it in the late 1990s. The current project is part of a 2006 deal between Gazprom and the Armenian government, in which Gazprom acquired the incomplete facility and increased its stake in Armenia's gas distribution network, in turn pledging to spend $200 million in completing the project by 2011.[48]
History
From the 1960s, the USSR carried out an electricity generation plan with the intention of constructing thermal power plants in the southern regions of Armenia where fossil fuel energy resources were restricted. Construction of thermal power plants started in the energy-intensive regions of Armenia. The first power plant was constructed in Yerevan in 1960, which was followed by Vanadzor Thermal Power Plant in 1961, and Hrazdan Thermal Power Plant in 1963.[49]
The main source of energy for these power plants was natural gas which was delivered through pipelines running from Turkmenistan through Azerbaijan. Until the late 1980s, Armenia was heavily dependent on thermal and nuclear energy production. During the years of the first Nagorno-Karabakh War, the energy production of the thermal power plants was also stopped because of a border blockade, and Armenia had a severe energy crisis until the mid-1990s. However, Armenia managed to overcome this crisis.[50] Although most of the technology of some of the thermal power plants is outdated as of December 2016, a lot of upgrades and maintenance have been undertaken on the power plants. The Vanadzor Thermal Power Plant is not operational as of December 2016.[1][34]
By 2016 upgrades made to the Yerevan Thermal Power Plant had increased its efficiency to almost 70% by reducing the consumption of fuel, sulfuric acid, and caustic soda, and by reducing emission levels.[53] For its power production, it uses natural gas supplied from Iran and exchanges it with the electricity produced by the plant, while using the surplus energy for domestic consumption.[54] On November 29, 2021 a new combined heat and gas power plant with installed capacity of 250 MW was launched in Yerevan.[55]
Armenia does not possess large fossil energy resources like coal, gas, or oil. However, according to a report by the Danish Management Group, Armenia has a large potential for renewable energy.[56]
Armenia has set a target to generate 26% of its domestic power from renewable resources by 2025.[57]
As of the 1 January 2018, electricity was generated by 184 small HPPs, with total installed capacity of 353 MW. In 2017 the generation of the electricity from small HPPs was around 862 million kW*h, which is about 11% of the total generated electricity in Armenia (7762 million kW*h). As of 1 January 2018, and according to the provided licenses, 36 additional SHPPs are under construction, with about total projected 69 MW capacity and 250 million kW*h electricity annual supply.[61][62]
The economically justified hydropower potential of Armenia is around 3.600 GWh/year.[citation needed]From this amount, 1.500 GWh/year (or about 42% of economically justified hydropower potential) has been developed already.[63]Six of the plants are in the enclave of Nagorno-Karabakh.[64]
Solar energy is widely available in Armenia due to its geographical position and is considered a developing industry. In 2022 less than 2% of Armenia’s electricity was generated by solar power.[65]
The use of solar energy in Armenia is gradually increasing.[66] In 2019, the European Union announced plans to assist Armenia towards developing its solar power capacity. The initiative has supported the construction of a power plant with 4,000 solar panels located in Gladzor.[67]
Solar power potential in Armenia is 8 GW according to the Eurasian Development Bank.[68] The reason for this is that average solar radiation in Armenia is almost 1700 kWh/m2 annually.[69] One of the well-known utilization examples is the American University of Armenia (AUA) which uses it not only for electricity generation, but also for water heating. The Government of Armenia is promoting utilization of solar energy.[70][71]
In 2018 the amount of solar power produced in Armenia increased by nearly 50 per cent. Government figures show that Armenia's solar power average is 60 per cent better than the European average.[1]
In March 2018 an international consortium consisting of the Dutch and Spanish companies won the tender for the construction of a 55 MW solar power plant Masrik-1. The solar power station is planned to be built in the community of Mets Masrik of the Gegharkunik region entirely at the expense of foreign investments. The expected volume of investments in this generation facility will be about $50 million. Construction of the plant was expected to be completed by 2020.[72] In May 2019 the deadline for start of financing the Masrik-1 solar power plant construction project has been extended by 198 days.[73]
Wind power
Wind power generates less than 1% of Armenia's electricity annually,[74] as there were only four wind farms in 2023[75] and less than 10 MW is installed.[76]
According to a study sponsored by the United States Department of Energy (DOE) and the United States Agency for International Development (USAID) in 2002–2003, the theoretical wind power potential of Armenia is 4,900 MWe in four zones with a total area of 979 km2.[77] According to this research, the wind energy potential in Armenia is close to 450 MW.[78] The most promising areas for wind power plants are Zod pass, Bazum Mountain, Jajur pass, the territory of Geghama Mountains, Sevan Pass, Aparan, the highlands between Sisian and Goris, and the region of Meghri.[79]
This section needs to be updated. Please help update this article to reflect recent events or newly available information. (May 2023)
According to Armstat total final consumption of electric energy in 2016 amounted to 458.2 ktoe and was broken down as presented on the graph to the right.[81]
In 2014, Armenia consumed 5352 GWh of the total 7956 GWh of electricity production (7750 GWh domestic production and 206 GWh imports). This is approximately 67.3% of the total. The biggest consumer was the residential sector (1924 GWh, ~24.2%).[2]
World Bank data referring to International Energy Agency demonstrates that in per capita terms electricity consumption in Armenia remains below world average and in 2014 only matched 1992 figure.[82]
Electricity transmission and distribution
Distribution is controlled by Electric Networks of Armenia (ENA),[83][84] High Voltage Electrical Networks,[85][86] and Electro Power System Operator.[87] There are over 36,000 km of distribution lines across Armenia.[84]
In 2002, Electric Networks of Armenia (ENA) was privatized by Midland Resources Holding.[88] 100% of ENA shares were sold to Midland Resources Holding company.[89] Revenues of Electric Networks of Armenia amounted to 181 billion AMD in 2018, less from 191 billion in 2017.[90]
Transmission and distribution losses remain high in Armenia, even compared to Russia.[91][obsolete source]
A World Bank survey from 2013 reveals companies would experience a power outage only about 4 times a year (at par with countries like Hungary and Latvia).[92]
International interconnectors
There are interconnectors to Georgia and Iran.[93] It has been suggested that if the Black Sea Energy submarine cable is built there could be exports to the EU too. [94]
Solar installations of 150 kW or less are allowed to sell their excess energy back to the electrical grid.[25][26]
In February 2018 Armenian parliament adopted a set of amendments and additions to the Law on Energy and a number of related laws, designed to liberalize the national energy
Solar stations
or a class thereof
Yearly production
Location
Owner
Supply price
<0.5 MW
divers,360 stations with 10MW in total, no license required[104]
market, specify the functions of responsible government agencies and those of the regulator and protect the interests of consumers.[105]
In the reports[106] published by Electricity Networks of Armenia can be seen, that Yerevan Thermal Power Plant, which is modernized with a funding from Japan and European technologies,[107] is much more energy-efficient than old Thermal Power Plant in Hrazdan[108] and sells electricity to the grid at twice as lower price (15.5 AMD vs. 25 / 31 AMD) is not utilized to its full capacity. Rather, more electricity is acquired from less efficient TPPs in Hrazdan, owned by Gazprom and Tashir Group, and selling electricity at higher prices, which leads to overall higher prices and increased consumer prices. Here shall be noted that Electricity Networks of Armenia are also owned by Tashir Group.
Supplier tariffs are more favorable for producers of electricity from renewable sources. At the beginning of 2019 rates (excluding VAT) are:[109]
Electricity tariff for power supplied from SHPP that are built on natural water streams is 23.805 AMD / kW·h
Electricity tariff for power supplied from SHPP that are built on irrigation systems is 15.867 AMD / kW·h
Electricity tariff for power supplied from SHPP that are built on natural drinking sources is 10.579 AMD / kW·h
Electricity tariff for power supplied from wind farm is 42.739 AMD / kW·h
Electricity tariff for power generated from biomass is 42.739 AMD / kW·h
Electricity tariff for power generated from solar photovoltanic installation is 42.739 AMD / kW·h
Electricity tariffs are dependent on the time of day (night/day), and the voltage supplied to the customer. Tariffs are determined by the Public Services Regulatory Commission of Armenia while wholesale prices are determined by the Settlement Centre CJSC and submitted to Electric Networks of Armenia.[113][114][115]
There were protests (Electric Yerevan) from June to September 2015 over a price increase for electricity, which was increased by 6.93 AMD per kilowatt-hour (AMD/kWh) (~US$0.015/kWh) to 39.78 AMD/kWh (~US$0.0830).[116][117][118] After protests prices were decreased from August 1, 2016, by 2.58 AMD/kWh (~US$0.0054) from 48.78 AMD/kWh (~US$0.1018) to 46.2 AMD/kWh (~US$0.0964).[113][119][120]
By the end of December 2018 further decrease of tariffs by 10.01 AMD per kWh for socially insecure population was announced.[110]
Large consumers (not households) can switch suppliers.[121]
Subsidies
Depending on the amount of electricity consumed, the Government of Armenia subsidizes electricity bills of consumers who utilize less than 500 kWh of electricity per month.[116][122][123]
Billing
Customers are billed monthly in kWh.[113] Bills can be paid at physical locations such as Haypost[124] (the Armenian post office), banks,[125][126] payment terminals,[127][128] and electronically via mobile apps, SMS,[129][130] and via the Internet.[131]
Funding
ENA's benefit (Electric Networks of Armenia) from low-rate state-loans amounted to 3.77 billion AMD in 2018 and 4.0 billion AMD in 2019.[132]
Armenia also has a large solar energy potential.[139] Compared with other countries, the average annual energy flow is higher; therefore, there is large interest in this energy sector.[140]
In May 2018 deputy minister of energy infrastructure and natural resources mentioned that the electricity market liberalization process began and a local production of solar panels kicked off. He said that it is planned to make the solar energy share reach at least 10% in the energy sector by 2022. 314 solar power stations with up to 500 kW capacity are connected to the electricity network in Armenia, while 85 other solar power stations are in the stage of connection with a total capacity of 5.2 MW. 4 systemic solar stations are connected to the network, 7 are in the construction phase with completion planned within this year with the total capacity is 10 MW. Nearly 600 families are already using solar energy in non-gasified communities under state funded projects alone.[141]
In July 2015, a US$58 million investment project was launched, which was designed to help the renewable energy sector. This project included plans for solar power stations of 40-50 MW capacity.[142][unreliable source?]
In April 2019 it was announced that German company Das Enteria Solarkraftwerk will build a 2 MW strong solar station near Shorzha at lake Sevan by end of 2020.[citation needed]
Energy efficiency
In 2012, US$1.82 million was invested by International Bank of Reconstruction and Development in an energy saving program. The program planned to upgrade the insulation of public buildings and heating systems, which included replacing traditional lamps with LEDs, and installing solar water heating panels. On 30 June 2016 the project's grant component had been completed.[143]
^"Hydro Energy". Ministry of Energy Infrastructures and Natural Resources of the Republic of Armenia. Archived from the original on 20 December 2015. Retrieved 25 November 2016.
^"Սակագներ". Electric Networks of Armenia (in Armenian). Retrieved 2019-01-07.
^ abc"Սակագներ" [Tariffs]. Public Services Regulatory Commission of the Republic of Armenia (in Armenian). Retrieved 26 November 2016.
^"Էլեկտրական էներգիա (հաճախակի տրվող հարցեր)" [Electricity (Frequently Asked Questions)]. Public Services Regulatory Commission of the Republic of Armenia (in Armenian). Retrieved 26 November 2016.
^"Settlement Center". Ministry Of Energy Infrastructures and Natural Resources Of The Republic Of Armenia. Retrieved 26 November 2016.
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