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Renewable Energy in Armenia
Renewable Energy in Armenia
By: Tamara Babayan1, Areg Gharabegian2, Artak Hambarian3,
Morten Søndergaard4, Kenell Touryan5
Danish Energy Management in close consultations with main stakeholder and local experts in Armenia has
prepared the Renewable Energy Roadmap for Armenia and its related technical studies which were funded
by the Renewable Resources and Energy Efficiency Fund (R2E2) of Armenia under World Bank GEF Grant.
This paper is a summary of the findings and conclusions of the studies and the roadmap.
Renewable energy development has been slow in the past but its application throughout the world
is accelerating. Policies to stimulate a faster deployment of clean energy technologies are
necessary which in turn will create a level playing field by addressing market barriers, creating
transparent pricing structures, and facilitating access to infrastructure financing. Because the
renewable energy industry is not yet at the same level of development as the more traditional
energy industries, it needs a more favorable regulatory environment in the near-term for its
development, survival, and transformation to a mainstream energy resource.
Some renewable energy technologies are close to
becoming commercial such as hydro, biomass, and wind
and should be the first to be deployed on a massive
scale. While other renewable energy technologies exhibit
promising potential, they are less mature and require
long-term vision, government encouragement, and
favorable regulations to flourish.
To date, several countries including United States and all
27 member states of European Union have implemented
effective support policies for renewable energy
development which have resulted in the acceleration of
renewable energy technology deployments in recent
years. Various regulations and incentives are used by
different countries such as U.S. and European countries
to promote the investment and use of energy from
renewable sources. Some of these incentives and tools for promoting renewable energy are Tax
Incentives, favorable Feed-in Tariffs, Rebate Programs, Net Metering, Renewable Portfolio
Standards, and Time-of-Use Rates.
However, there still exists a large potential for improvement of policy design in most countries and
considerable realizable potential across all renewable energy technologies. If effective policies
were adopted in many more countries, this potential could be exploited more rapidly and to a much
larger extent.
Current Energy Status in Armenia
Armenia does not have any fossil fuel or coal reserves; therefore, it is entirely dependent on the
imported fuel for transportation, electricity generation, and heat production. While surrounded by
countries that possess significant hydrocarbon reserves, Armenia’s fossil fuel reserves are limited
to a small number of lignite or brown coal mines located in the vicinity of Gumri and Spitak. Oil
drilling results have shown that while some oil reserves exist, they are located too deep to be
economically viable for extraction.
Armenia has overcome the energy crisis of the 90’s and has built a viable energy system.
However, compared to the year 1988, which was the peak of economic output of the Republic of
Armenia, energy consumption lags far behind 1988. The generation capacity in 1988 was over 3.5
GW (gigawatts), but the energy use in 2010 was on average below 1.2 GW. This can be explained
by the fact that industry in Armenia has yet to recover fully from the economic decline that started
with the collapse of the USSR.
A number of thermal power plants have been closed and one of the two reactors at the Metsamor
Nuclear Power Plant has been shut down. Today, power generated from the Hrazdan-Yerevan and
Vorotan Hydro Power Plant cascades remain as important a power sources as it was during the
energy crisis of the early 90s. At present, electricity generation depends mostly on imported
nuclear fuel and natural gas; however, hydropower is still responsible for approximately 1/3 of total
power generation. Almost half of the electricity generation capacity and all small hydro power
plants (100 MW installed, 9% of current operational capacity) are privately owned. The Armenian
government is planning to decommission Metsamor Nuclear Power Plant between 2017 and 2021.
There is a plan to build a replacement nuclear power plant with capacity of 1000 MW, which is
planned to become operational no later than 2021.
The current cost of the electricity generation is relatively low due to the utilization of fully
depreciated infrastructure, but the entire electric power generation and distribution system needs
modernization, upgrade, or replacement. Similarly, upgrading the power distribution systems in
terms of the power lines, controls, and management will be needed. One of the main requirements
in this process is consideration of the social aspect, which means the prices of power should
increase in proportion with the rise of the standard of living.
Thermal energy generation capacity has also changed substantially during the last two decades.
During the Soviet era, there were no air conditioning systems installed in most of the residential or
commercial buildings except for a very limited number of window units and the district heating
systems, powered by heavy oil (mazut) and natural gas were the main heating source. After the
collapse of the USSR most of the urban centralized heating systems were dismantled. Now a large
portion of the population, approximately 1/3, has installed individual natural gas powered heating
systems and the use of air conditioning has increased noticeably.
The major changes in transportation are related mostly to the slow but steady increase in living
standards in Armenia, which in turn has increased the number of privately owned cars. Increases
in the use of natural gas as an alternative to gasoline has increased the proportion of natural gas
powered vehicles to approximately 50% of the total vehicle fleet. This trend is continuing but it has
leveled off. Presently there are only few hybrid or electric vehicles in Armenia.
Currently Armenia can meet only 35% of the total current demand for energy with its domestic
resources. The following is 2010 energy fuel source mix in Armenia by end use application:
 Electricity — uranium for the nuclear power plant (44%), imported natural gas and mazut for
dual-fuelled thermal plants (29%), large hydro (24%), small hydro (3)
 Heating — imported natural gas (60%), electricity (20%), firewood and animal waste (20%)
 Transportation — imported gasoline (estimated 50%), imported compressed natural gas
(estimated 50%)
Energy Independence
Renewable energy resources offer benefits because not only can they reduce pollution, but they
also add an economically stable source of energy to the mix of electricity generation sources in
Armenia. Depending only on imported fuel for energy production makes the country vulnerable to
volatile prices and interruptions to the fuel supply. Since most renewable energy sources do not
depend on fuel markets, they are not subject to price fluctuations resulting from increased demand,
decreased supply, or manipulation of the market. Because fuel supplies are local, renewable
resources are not subject to control or supply interruptions from outside the region or country. The
nation's fossil fuel dependence also has serious implications for national security.
While there are compelling energy security arguments to increase the amount of renewable energy
in the Armenian energy mix, unfortunately significant barriers inhibit private sector driven growth in
the sector.
Any addition to the energy independence of Armenia has high direct social, industrial, and political
value in addition to the psychological benefits. Such benefits tend to be rather difficult to assess in
a monetary way. However, a potential approach could be based on the results of the analysis
which indicates that a 1% increase in use of renewable energy is equivalent to 3.65 days of
independent supply in the event of total energy blackout.
Governmental Agencies and Laws
The main body for all energy policy matters and issues in Armenia resides with the Ministry of
Energy and Natural Resources which is responsible for overseeing and managing all aspects of
the energy sector.
The main quasi-governmental organization that is heavily involved in renewable energy research
and financing is the Renewable Resources and Energy Efficiency Fund (R2E2) of Armenia. This
organization is mainly funded by the World Bank and Global Environmental Facility (GEF).
Development of various renewable energy sources and of industries associated with each of them
is slow. Most of the time, on a cost basis they cannot compete with traditional energy sources, with
the exception of small hydro power plants. Therefore, favorable laws and policies are necessary to
stimulate the deployment of clean energy technologies. In general, laws and regulations of the
Armenia are adequately addressing issues related to renewable energy. However, a more
favorable regulatory environment is needed for the large-scale development of renewable energy
resources in Armenia.
The two major laws related to the renewable energy are “Energy Law” of 1997 and “Law on Energy
Saving and Renewable Energy” or 2004. These two laws adequately address issues related to the
governing and developing of the renewable energy resources of Armenia. There are also several
other laws, decrees, and government resolutions that further clarify and provide guidance for
specific issues and situations.
The general energy-related issues in Armenia are regulated by the Energy Law and specific issues
related to renewable energy are regulated by the Law on Energy Saving and Renewable Energy.
The main purpose of the Law on Energy Saving and Renewable Energy is to define the principles
of the state policy on development of the energy saving and renewable energy. The idea is to
strengthen the economic situation and energy independence of Armenia by increasing the level of
indigenous renewable energy production. These laws define the main principles of state policy in
the energy sector, which are:
 Effective use of local energy reserves and alternative sources of energy as well as
application of economic and legal mechanisms for that purpose;
 Ensure the energy independence and security of Armenia;
 Create new industries and organize new services, implement targeted national programs
and apply new technologies in order to promote the development of renewable energy and
energy saving;
 Promote energy-efficient and energy-saving technologies;
 Reduce environmental impacts.
According to the law, private electricity developers must sell all electricity generated to the grid
operator and they are prohibited from selling directly to potential customers.
Electrical Cars – When the new nuclear power plant
is become operational, there will be more than 2000
GWhs electrical power excess, especially during night
time hours when internal demand is low and there will
be less possibility of exporting electricity to the
neighboring countries. However, if large numbers of
electrical vehicles are introduced in Armenia for private
and public use, the excess nighttime electricity can be
used for charging them. The excess night time electric
power would be sufficient for charging approximately
number of vehicles equaling to one third of the total
number of vehicles in use in 2010. Using electric
vehicle could also help reducing costly fuel imports,
leveling the electricity load of the new nuclear power
plant, and reducing greenhouse gas levels.
Renewable Energy Options
As a country possessing no fossil fuel resources, Armenia could utilize different sources of
renewable energy available in the country. These sources include large and small hydropower
plants, abundant sunshine, and a number of mountain passes with high average wind speeds.
Potential of renewable energy technologies in Armenia can be categorized under three groupings:
 Producing electric power: small hydro, wind farms, and photovoltaics (solar panels).
 Producing heat: solar thermal, biomass, biogas, and the use of heat pumps.
 Producing fuel for transportation: bio-ethanol and hydrogen.
The findings of a comprehensive
review of renewable energy potential in
Armenia have ranked small hydro
power plants and solar hot water
heaters as the most advanced
renewable energy and the most
economical for Armenia in the short to
medium-term, followed by grid
connected wind farms and the use of
heat pumps. Photovoltaics, geothermal
power, and bio-fuels, especially bioethanol
from cellulosic feedstocks, are
ranked as more costly in today’s prices
and are not expected to be
commercially viable in the short to
medium-term, but may play a more important role in the longer term. Biomass for both heat and
electricity production for the short term can be considered, under several conditions, including replanting
of harvested trees and bio-fuels using fractionation process. In addition, hydrogen could
be a possible fuel for transportation in the longer term. Finally, although not strictly a renewable
resource, municipal solid waste in landfills is a practical source for generating methane for power
Funding sources are readily available for the construction of new run-of-the river small hydro power
generation systems or renovating existing systems. The main limitation is the availability of
promising sites within reasonable proximity to good roads and transmission line access where
more small hydro power generation systems can be constructed. Cost of installing electric power
lines for renewable energy facilities at remote locations to get connected to the grid can be
prohibitive from the perspective of overall commercial reliability. It is estimated that in 2020 small
hydro power installed capacity will grow to be about 215 MW from the 100 MW level that existed in
According to a U.S. Department of Energy study, theoretically Armenia has 5,000 MW wind energy
capacity. However, this does not mean that if there is capacity then it is equal to economically
feasible electricity generation. Most of the areas with high wind are not easily accessible for heavy
machinery that is needed for the installation of the wind turbines.
Utility-scale wind farms are still not commercially viable under the existing government established
electricity purchasing tariff structure from the perspective of attracting private capital investment
without either additional fiscal incentives or subsidies. The attractiveness of these investments
would grow in all probability as lighter weight turbines exhibit increased efficiencies and the cost of
the turbines decreases over time. However, the main technical barrier is the difficulty in
transporting large turbines (1.5 to 3 MW) and composite blades (up to 52 meters in length) from a
port of entry to the selected site in a landlocked, mountainous country like Armenia. Therefore, not
more than 300 MW of wind-generated capacity in 2020 would be a realistic number, using turbines
that do not exceed 1.5 MW per unit. As of early 2011, only 2.6 MW of wind power was operative in
the Lori region.
The economic viability of using photovoltaic solar panels for power production in Armenia is more
complicated. The most cost-effective approach is currently to import solar cells and to assemble
them into modules in Armenia. The second alternative is the development of an industrial base in
Armenia for manufacturing silicon-based solar cells in the country, using its abundant quartzite
deposits. This alternative is expected to require an investment of approximately $300 million.
Presently there are only few small pilot type solar panel installations in Armenia.
Bio-ethanol production is essential for Armenia in order to move in the direction of greater energy
security of supply in the motor transport sector and to offset potential future increases in the cost of
imported gasoline and compressed natural gas. One hundred percent of motor transport fuels are
imported. Even a 5% blend of bio-ethanol with gasoline will replace approximately 14,000 tons of
expensive imported fuel per year. However, the cost of production of bio-ethanol using indigenous
non-food feedstocks, such as Jerusalem artichoke or animal corn feed, is presently above the
wholesale cost of gasoline, which means that voluntary blending of bio-ethanol and gasoline is
unfeasible unless mandated by the government.
Recent explorations and test drilling conducted in Armenia have identified a maximum geothermal
resource potential of only 75 MW. The economic viability for geothermal power in Armenia seems
marginal, from both the perspective of cost (mostly for drilling and field development) and the total
potential power output.
Although municipal waste is not strictly a renewable source, it is indigenous to the country and its
disposal is a monumental nuisance and very costly. The average annual generation of municipal
solid waste in Armenia today is estimated to be 1600 metric tons/day. The traditional disposal of
municipal waste is in engineered landfills or else in mass burn incineration both of which generate
serious environmental problems. Land for disposal is becoming increasingly scarce in urban areas
and incineration emits toxic gases unless expensive sorting techniques are employed. The more
recent and beneficial use has been to generate methane gas through anaerobic digestion, and
then using the biogas to generate electric power. Typically 30 tons of municipal waste could
generate 24 MW of electrical power.
The Lusakert Biogas plant in Northern Armenia is the first and only industrial sized, state-of-the-art
biogas facility in Armenia based on organic waste from poultry. T2-26 Several years ago USAID
had financed construction of approximately 40 small biogas units in the villages throughout
Armenia, but most of these units are not operational because villagers much prefer to use the old
style way of dried manure for heating and cooking, instead of using these units to generate biogas.
Environmental Benefits and Impacts
Renewable energy generation would have mainly positive, long-term environmental effects as it
reduces the need for power generation based on fossil fuels, thereby reducing Greenhouse Gas
(GHG) emissions. Renewable technologies can also reduce water consumption, thermal pollution,
waste, noise, and adverse land-use impacts. Of course, renewable energy also has environmental
impacts during construction and operation. Construction impacts are normally temporary and no
worse than other industrial projects.
Approximately 2/3 of current power generation in Armenia is based on nuclear and hydro power
which in turn lowers the per capita GHG emissions for Armenia. While still the reduction of the
GHG emissions are among targets to pursue, the energy independence and reducing the cost of
energy generation are of higher importance.
The main potential problems associated with small hydro power plant projects could be their
impact on migrating fish stock if proper fish bypasses are not installed or proper precautionary
measures are not implemented to avoid fish being sucked into the turbines. There is also the
possibility of an adverse impact to wildlife if the required minimum water flow is not maintained in
the river downstream of the plant.
The main impacts resulting from the operation of wind farms are low frequency noise and visual
pollution of the landscape. There is also a possibility of birds colliding with turbine blades;
therefore, avoiding bird migration paths for wind turbine farms would minimize this impact.
Bio-fuel production results in virtually no net carbon emissions during a complete life cycle if forests
are not destroyed to make land available for planting feedstock. Even though gasoline that is
mixed with bio-ethanol has less CO2, the blend produces higher nitrogen oxide than gasoline,
which is the main component of air pollution that causes smog. Depending on the feedstock, the
leftover by-products could be useful as fertilizer, fuel for operating processing plants, or become
Possible impacts from solar electrical panels and solar water heaters could be the visual impact of
reflected light. Burning fire wood crates air emissions and small particle matters that could be
harmful to human health and there could be an impact to the eco system due to the unsustainable
rates of harvesting biomass.
Entities in the Field of Renewable Energy
There are a handful of institutes, laboratories, and centers in Armenia that are involved in the field
of renewable energy research and development. These organizations are either part of a
government ministry, Armenian National Academy of Sciences, or a major university.
Several private companies are also involved in the field of hydro, solar, and wind power
generation. Majority of these companies are engineering and consulting firms that are mainly
providing engineering design and feasibility studies for small hydro power plants.
There are a few small companies that assemble stand alone solar water heaters or hybrid units
that work in conjunction with central heating units of apartment buildings or social and educational
institutions. There are several solar photovoltaic systems installed in Armenia, but they should be
considered as demonstration projects rather than commercial scale operations. One of the mobile
phone providers has started installing new cell tower units at remote locations that are powered by
a solar photovoltaic system.
Because the small hydro power industry is the most developed renewable energy source in
Armenia, presently a union of such small hydro power plant companies exists. As of early 2011
there were approximately 150 small hydro power plants in Armenia.
Job Creation
Use of renewable energy will not only keep hard currency in Armenia, but also create significant
benefits through economic development. Use of renewable energy technologies creates jobs using
local resources in the form of a new, "green," high-tech industry with an important export potential.
Banks and construction firms will also benefit from development of renewable energy industries.
Biomass production is relatively labor intensive, which is one of the reasons it is slightly more
expensive than fossil fuels. Growing, harvesting, and transporting biomass fuels all require local
labor, as does maintaining the equipment, which contribute to the high cost of bio fuel. However,
this means that jobs will be created in areas with a depressed agricultural economy.
The Renewable Energy Roadmap for Armenia has outlined the potential for the renewable energy
in Armenia based on available facts and scientific analyses. The Roadmap addresses solar, wind,
hydro, biomass, bio ethanol, and geothermal.
Even though Armenia has sufficient sunny days, residential and small scale solar electricity
generation is still not an economically viable choice for Armenia due to the cost. However, using
solar energy for water and space heating can be a viable option for Armenia. Theoretically Armenia
has large capacity for wind energy generation but most of these areas are not easily accessible
and they are not next to major roads and transmission lines; therefore, the capital costs can be
high and would require major investments for installing wind farms.
Results of recently conducted tests have determined that geothermal resources are limited to only
75 MW in Armenia. Using the entire agricultural residue for biomass combined with specially
planted trees, will make it possible to run only one of the five generators in Hrazdan thermal power
plant units for approximately 10 to 11 months a year. Armenia can produce bio-ethanol from home
grown plants equal to 5 to 8 percent of its gasoline usage. Armenian government is seriously
considering starting producing bio-ethanol from home grown plants.
Hydro power from Sevan-Hrazdan and Vorotan Hydro Power Plant cascades plus more than 150
small hydro power plants are only indigenous renewable energy generating sources of Armenia.
But use of that Sevan-Hrazdan system has been curtailed substantially to save Lake Sevan by
raising its water level. Electricity is produced only by the water that is needed to be released for the
agricultural use. Presently there is a large effort in Armenia to use mini hydro plants on the small
rivers and streams for generating electricity which are the only reasonable renewable energy
source for Armenia in the near future.
Armenia is surrounded by countries that have oil and natural gas resources (Azerbaijan and Iran);
therefore, Armenia needs to counter balance this situation because it has no sizable natural
resources. Considering that electricity is the oil of the future; Armenian government has decided to
become a major electricity exporter. Given the fact that Iran, Turkey, Georgia, and Azerbaijan have
large deficit of energy production (at least for now), such a decision is a prudent one. Exporting
electricity will generate resources that will help the country grow and invest in its infrastructure.
Becoming a major electricity exporter is the only way for Armenia to provide a geopolitical energy
counterbalance to Azerbaijan and protect itself from unexpected interruptions of energy supply
from neighboring countries.
Armenian government has embarked on an ambitious plan to build a new nuclear power plant to
assure that Armenia will have electrical supply that is needed for its development and prosperity as
well as enough electricity to become a major electricity exporter. After endless negotiations and
efforts, recently there have been some noticeable successes in ensuring partners and possible
financing for the project.
Renewable energy may not be the major source of energy development in Armenia but it should
be an important component of it. As a result of dropping prices of various renewable energy
technologies, in the near future renewable energy production cost could be competitive with more
traditional sources. Developing all feasible and economically viable renewable energy resources
will create a stable domestic power generation capabilities, which in turn could be a major
component of Armenia’s national security.
1 - Tamara Babayan is the director of the Renewable Resources and Energy Efficiency Fund (R2E2) in Yerevan,
2 - Areg Gharabegian is a principal project manager with Parsons, Pasadena, CA.
3 - Artak Hambarian is a professor in School of Engineering of American University of Armenia, Yerevan, Armenia.
4 - Morten Søndergaard is a project manager with Danish Energy Management, Denmark.
5 - Kenell Touryan is a visiting professor in School of Engineering of American University of Armenia, Yerevan, Armenia and retired researcher from NREL, Denver, CO.
Wind turbines in Lori Marz
Solar panels on roof of AUA
Bio gas plant in Lousagerd farm


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