Overview Country overview The Republic of Armenia (Armenia) is a landlocked country in the southern Caucasus region between the Black and Caspian seas, bordered by the Republic of Türkiye (Türkiye) on the west, Georgia to the north, Azerbaijan on the east and Iran to the south. The country is approximately 29 800 km2 with a population of 2.969 million. Yerevan, the capital, is the largest city with 1.092 million inhabitants. Armenia’s economy has undergone numerous reforms since the economic crisis of the early to mid-1990s. It has evolved from having a Soviet-era centralised structure to a partially market-oriented economy, with privatisation of most enterprises. An influx of foreign capital and funding from donors since the early 2000s has contributed to healthy economic growth, and Armenia’s real GDP increased 5.72% per year from 2002 to 2021 (measured in US dollars at 2017 PPP prices). Real GDP per capita was USD 4 670 in 2021, roughly six times what it was in 2002. Armenia’s reliance on export-oriented industries and high remittances from the Armenian diaspora (which accounted for 10.5% of GDP in 2021) expose the economy to price and demand fluctuation risks. During the latest global financial crisis, the country’s real GDP fell 15% and poverty rose from 27% in 2008 to 35% in 2011. However, targeted social expenditures and pension increases have induced economic growth, and the poverty level had fallen to 27.0% in 2020.

Energy sector governance Executive The Ministry of Territorial Administration and Infrastructure (MTAI) is responsible for developing and implementing energy policy. It develops relevant primary and secondary legislation, as well as investment plans for state-owned enterprises. The regulator for nuclear energy is the State Nuclear Safety Regulatory Committee. The Ministry of Nature Protection oversees the protection and conservation of natural resources and is responsible for environmental impact assessments. It is the designated national authority for projects under the Kyoto Protocol’s Clean Development Mechanism. The Public Services Regulatory Commission (PSRC) is an independent body responsible primarily for tariff methodology and review, licensing procedures and import/export regulation. The PSRC also regulates water, waste, telecommunications and rail transport. Armenia does not have a dedicated agency for renewable energy policies, so the Renewable Resources and Energy Efficiency (R2E2) Fund is responsible for implementing renewable energy and energy efficiency projects.

Consumer gas tariffs in Armenia

Electricity rates have a time-of-day element for metered consumption. The introduction of an automated metering and data acquisition system and computerised customer billing have significantly improved collection rates since the mid-2000s. In 2021, collection rates were 100.0% for electricity and 100.6% for gas.

Energy security and diversification Armenia’s energy security has greatly improved since the gas and power supply crisis in the early to mid-1990s. During the crisis, energy sector management was dysfunctional, losses were extremely high, and the collection rate was below 50%. This resulted in acute supply shortages, with households receiving only a few hours of power per day. Since then, increased natural gas heating, investment in new generation capacity and the network, and improved operational management have restored consistent and uninterrupted supplies of electricity and gas. Electricity and gas demand are expected to continue growing as living standards rise and poverty is reduced. Significant investment will be needed to meet these rising energy needs, as large portions of the electricity and gas networks date to the Soviet era, and infrastructure modernisation is needed to maintain and improve supply reliability. In its Energy Security Concept, the government estimates approximately 1 000 MW will be retired by 2026, so new investments will be required to satisfy growing demand if the country does not want to become even more reliant on imports. The proposed new 1 000-MW nuclear plant accounts for planned new capacity, but financing has not been secured.

Electricity Electricity generation Installed generation capacity is 4 147.2 MW, but available capacity is lower (2 878.7 MW) due to the age and condition of plants: approximately 50% of Armenia’s capacity is more than 40 years old. The Yerevan thermal power plant was retired in 2010, and the government plans to retire the oldest units of the Hrazdan plant in 2023. Significant investment will therefore be needed to modernise power system assets over the next 10 to 20 years. Baseload electricity is produced from the 407-MW Armenian Nuclear Power Plant (ANPP). The plant was scheduled for retirement by 2016, but its service life has been extended by ten years because of insufficient replacement capacity. Approximately USD 300 million was invested to keep the reactor operating until 2026, and rehabilitation has been completed. Securing financing for the new 1 000-MW replacement plant remains a challenge, so the government intends to continue operating the existing plant until at least 2036, which will require an additional investment of USD 150 million according to forecasts. Output from thermal power plants covers demand at peak periods and baseload power generation when the nuclear plant is offline for maintenance. Part of the electricity generated by the Hrazdan-5 Unit, and all the electricity generated by the Yerevan combined-cycle gas turbine plant, is exported under the gas-for-electricity barter agreement with Iran.

Technology research, development and deployment Research and development (R&D) in energy technology and innovation in Armenia is not significant, though it is becoming more important. The government’s plan to develop new renewable energy technologies will increase the need for technology and innovation funding, and for skilled human resources. Greater R&D activity will benefit from the country’s highly skilled labour force, particularly in the fields of science and information technology. Approximately 65 research institutes and universities were involved in statefinanced programmes and projects in Armenia in 2020. According to the government, its R&D priorities are in the social sciences and humanities, life sciences, renewable and new energy sources, information technologies, space and earth sciences, and applied research.

Source:http://IEA