Armenia does not have its own gas and oil products.

In the field of energy, its own product is electricity. The country is highly dependent on Russia for energy. The government is trying to develop the solar energy market. The new nuclear power plant, the expansion of energy trade with neighboring Iran and Georgia are being discussed. Some of the programs are moving forward slowly. However, energy dependence on the Russian market has not decreased.

Armenia is self-sufficient in terms of electricity only at first glance

In Armenia, electricity is mainly produced in three types of plants: nuclear, hydro, and thermal. It fully meets domestic demand. It is also exported to neighboring Iran and Georgia.

According to the data of Armenia’s Statistical Committee (SC), a total of 8.9 billion kWh (billion kilowatt hours) of electricity was produced in Armenia in 2022. The largest part of it was provided by thermal power plants (CHP) - 43.5%. Armenian nuclear power plant (NAPP) produced 32%, hydroelectric power plants (HPP) - 21.8%.

Solar plants still only have a small impact, only 2.7%. This field is developing. Wind farms have zero impact.

This infographic shows the electricity production in Armenia in the last ten years, according to the stations. In the mentioned years, the annual volume of electricity production in Armenia did not exceed 8.9 billion kWh. The highest is the indicator of 2022.

To see the timeline, click the ⏯ button on the infographic.

Ara Marjanyan, an expert on energy issues, remarks that Armenia is self-sufficient in terms of electricity only at first glance.

Self-sufficiency can be understood as the sufficiency of produced electricity. From that point of view, yes, Armenia is self-sufficient. Moreover, it has the potential to export.

"But if we look at it from the point of view of our dependence on imported fuel (thermals are "fed" by gas, the nuclear power plant by uranium), then it is not completely self-sufficient. On the contrary, we are highly dependent on Russia in that respect. So, self-sufficiency sounds a little deceptive," says Marjanyan.

In 2021, 77.1% of Armenia's energy demand was provided by imported resources

According to official data, in 2017-2021 Armenia was able to meet a maximum of 33.7% of its energy demand (primary energy resources: gas, electricity, oil, oil products) with domestic energy production. When we say internal resources, we mean hydropower, nuclear energy and to a lesser extent renewable (solar) energy. Gas and oil products are completely imported.

"Besides the fact that we are 100% dependent on gas and oil products, the power plants that provide electricity are also fed with gas. That is, the products of power plants are not considered our own resource," explains Marjanyan.

According to the latest calculations of the Statistical Committee, as of 2021, Armenia provided only 22.9% of its energy demand with domestic resources.

Marjanyan notes that even this indicator is exaggerated, because it includes nuclear energy, which is provided by the nuclear power plant in Armenia. However, the nuclear power plant is powered by imported uranium. "In other words, we consider the products of the nuclear power plant to be our own resource with reservations," he says.

Thus, in 2021, imported oil and gas provided 77.1% of Armenia's energy demand. Therefore, even if we consider the nuclear power plant as our own resource, it turns out that the total energy system of Armenia is at least 77.1% dependent on foreign energy.

"Hydropower is the main domestic energy resource in Armenia. That is why the development of hydropower is of vital and strategic importance for Armenia. Its development really improves Armenia's energy security," Marjanyan emphasizes.

At the same time, he says it’s a sad fact that mostly small hydropower plants operate in Armenia, which is why the impact of hydropower plants on produced electricity does not even reach a third. Meanwhile, it is the most valuable energy sector. The electricity it produces is some of the cheapest.

The indicator of Armenia's energy self-sufficiency in the last five years was the highest in 2017: 33.7%. This directly shows that Armenia's energy dependence on the foreign market has not eased in any way.

Natural gas has the largest share among energy products imported to Armenia (76.2% in 2021), followed by oil products (21.9%).

Armenia is highly dependent on Russia for energy

In 2022, Armenia imported about 2.971 billion cubic meters of natural gas.

According to the reports of Armenia’s Public Services Regulatory Commission, 87.5% of gas imported to Armenia is from Russia, 12.5% from Iran. Data from previous years also prove that this proportion of imported gas is almost the same. In 2018, the amount from Iran exceeded 20%.

Since Armenia does not have gas, it will depend on the outside world in this field, one way or another. In this case, Armenia is largely dependent on Russia, to a lesser extent on Iran.

Gazprom Armenia CJSC, with Russian roots, ensures the supply and sale of natural gas in the domestic market of Armenia. It has an absolute monopoly in this field.

"It is considered a natural gift, because a small country like Armenia cannot afford to have different gas supplying companies. It will not be beneficial for any other company to enter the market and create new gas pipelines and infrastructures," notes energy expert Artur Avetisyan.

Every time Gazprom Armenia submits an offer to increase the price of gas for residents, discussions intensify in Armenia regarding increasing the volumes of gas imported from Iran and eliminating dependence on Russia. However, it is a fact that for years Armenia-Iran energy trade has not registered a visible increase.

Since 2009, Armenia and Iran have been cooperating in the energy sector within the framework of the "Gas for Electricity" program. Armenia cooperates with Iran according to the logic of electricity exchange: Armenia gives electricity and gets gas in return. Armenia gives Iran 3 kWh of electricity for one cubic meter of gas. The terms of the project are regularly extended.

"With the completed gas pipeline, Armenia could receive 1 billion cubic meters of gas. We should have received one billion cubic meters of gas and exported 3 billion kWh of electricity. Unfortunately, Armenia was not able to use the gas pipeline with its intended capacity. Today, not even a third of it is used. In other words, we have the potential to triple the volumes here," says Marjanyan.

According to the expert, the first reason that does not allow an increase in the amount of gas imported from Iran to Armenia are the Western sanctions against Iran. They are a serious obstacle to the implementation of these programs, both directly and indirectly. Even if the Armenian authorities try to increase the energy trade with Iran, these obstacles will "do their job".

"Let's assume that 30 million dollars is needed to implement this project. Banks do not finance the Iran-Armenia project. This or that equipment is needed for that project, but European countries, the USA and others do not sell it. They say that you are on the banned list. There are ways to bypass it, but they are risky," says Marjanyan.

Parallel to this project, an Iran-Armenia 400 kV power transmission line is being built, which is planned to increase the amount of electricity delivered from Armenia to Iran. In the Armenian government's report, we read that almost 80% of the work has been completed. The construction of the power transmission line is planned to be completed by the end of 2023.

As for oil products imported to Armenia, which are also a part of the energy sector, consumption in Armenia is 100% fulfilled at the expense of imports.

According to the latest data published by Armenia’s Customs Service, in the first half of 2022, 234,000 tons of oil and oil products (petroleum, gasoline, diesel fuel, oil, etc.) were imported by Armenia.

77% was imported from Russia, about 12% from Iran, 5% from Greece, the rest in smaller quantities from Egypt and other countries. Usually, Armenia also imports oil products from Bulgaria, Germany, UAE, Belarus, and other countries. However, here too, as we see, the main supplier is Russia.

Armenia also imports the nuclear fuel needed for its nuclear power plant, uranium, from Russia. Armenia and Russia are in a single customs union, EAEU.

 According to energy expert Artur Avetisyan, the Russian-Ukrainian conflict has no direct impact on Armenia's energy sector. This is also evidenced by the indicators of the energy sector: import of gas, gasoline, electricity production, export, etc. In 2022, there was no significant variation in any of these indicators.

"We collaborate with our partner countries under agreements, and these agreements continued to operate in 2022 as well. The war did not have a negative impact on us," says Avetisyan.

Marjanyan also remarks that the Russian-Ukrainian war has not impacted Armenia's energy sector. However, there are risks. They should not be overestimated, but not excluded.

"There are risks related to the fact that the Russian-Ukrainian conflict is actually one of the elements of the West-Russia conflict. Following Western pressure, the Turkish-Azerbaijani tandem may start riots in Transcaucasia or South Caucasus or take certain steps against Russia. It will drastically worsen the situation in the South Caucasus and will directly affect the energy sector of Armenia," says Marjanyan.

Armenia has started exporting electricity to Georgia

In 2022, Armenia exported electricity not only to Iran, but also to Georgia. From the reports of Armenia’s Public Services Regulatory Commission, we see that in 2022, Armenia exported 1.5 billion kilowatt hours of electricity, excluding deliveries to Artsakh.

76% of the exported electricity was delivered to Iran within the framework of the "Gas for Electricity" program, and 24% to Georgia.

According to Armenian Deputy Minister of Territorial Administration and Infrastructure Hakob Vardanyan, in 2022, Armenia exported more electricity to Georgia than in the previous 10 years.

"In the mentioned year, Armenia exported 365 million kWh to Georgia, and from 2012 to 2021 inclusive - 242 million. It is mainly connected with the liberalization of the market, which started last year. Previously, the permit procedure was lengthy, now it has been simplified," says Vardanyan.

Currently, there are three power transmission lines between Armenia and Georgia. It is planned to start the construction of another one this year.

Marjanyan believes that, of course, the amount exported to Georgia is not excessively big, but this can be considered a step forward in energy trade between Armenia and Georgia.

"Georgia is under Turkish-Azerbaijani pressure and avoids cooperation with Armenia. There are encouraging factors. There is a deficit of electricity in Georgia. We can sell about one billion kilowatt hours of electricity to Georgia. Certain positive changes have been observed in Georgia's attitude over the past year," the expert notes.

In general, up to 20% of electricity produced in Armenia is exported. A small amount is also imported from Georgia to ensure the energy balance. There is a need for additional electricity in Armenia on certain days of the year, which is supplemented by the electricity received from Georgia.

The lifespan of the Armenian nuclear power plant is being extended. A new nuclear power plant is being discussed

The Armenian Nuclear Power Plant (NPP), located in the city of Metzamor, is a legacy from Soviet times.

The first power unit of the nuclear power plant was commissioned in 1976, the second in 1980. Now, there is only one power unit in operation. Its period of operation was supposed to end in 2016. However, after technical re-equipment, the period of operation of the nuclear power plant was extended by ten years. For the modernization of the Armenian nuclear power plant, according to the loan agreement signed between Armenia and Russia in 2015, Moscow allocated a loan of 270 million dollars and a grant of thirty million dollars.

Armenian Nuclear Power Plant CJSC, which operates the nuclear power plant, is a company with 100% state participation.

The Armenian government intends to extend the lifespan of the nuclear power plant until 2036, and then build a new nuclear power plant or a new block on the site of the existing nuclear power plant. According to different estimates, it takes 6-10 years to build a new nuclear power plant or a new block of a nuclear power plant. In other words, to have a nuclear power plant in 2036, it is necessary to start the works 6-10 years in advance.

In January 2021, the Armenian government approved the strategic plan for the development of the energy sector. of the Republic.

 "Extending the period of operation of the second power unit of the NPP after 2026 is one of the main priorities of the government of the Republic of Armenia, and the construction of a new nuclear power plant after the end of that period is the main goal,’ the plan reads.

According to the government, the presence of a nuclear power plant in the energy system will allow Armenia to further diversify energy resources and not increase its dependence on imported natural gas.

According to Armenian Minister of Territorial Administration and Infrastructures Gnel Sanosyan, the work and decisions related to the new nuclear power plant will be quite complicated. They haven't started yet.

"What is the difficulty? It’s that new nuclear power plants are being built for a period of sixty plus forty, that is, at least a hundred years of life, and we need to make the right decisions now. When we build a new power unit, let’s assume, in 2035-36, it will have such a capacity that it will fit into our energy system in the coming years," Sanosyan announced in the National Assembly on April 20, 2023.

Energy expert Artur Avetisyan also believes that Armenia needs a nuclear power plant.

It is necessary not to undermine the work of the new nuclear block, to find solutions for the export or storage of spent fuel.

In the energy sector, the question of the capacity of the new nuclear power plant and the construction of it in general is being discussed. Some experts are strongly opposed to it having a high capacity like modern nuclear power plants.

The current Armenian government has not expressed a clear position regarding the capacity of the nuclear power plant to be built. "Now, the main capacities that we need, and we use, are 1,200 megawatts of the whole country. Now, most of the nuclear power plants have such a capacity: 1,000, 1,200, 1,400. And at first glance, if we build a nuclear power plant with that capacity, it will turn out that one plant can satisfy our entire one hundred percent demand. But it’s not a good situation and structure, when the country’s energy system depends on one plant," says Sanosyan.

"According to the international atomic energy requirements, a nuclear power plant should not exceed 45-50% of the peak capacity of the given energy system. The peak power in the power system of Armenia is 1,200-1,210 megawatts. So, the capacity of that new nuclear unit can be 600 megawatts, not more. Currently, talking about the 1,200-megawatt capacity of the new atomic block in Armenia is nonsensical from an energy point of view, which can lead to a new Chernobyl," says energy expert Edward Arzumanyan.

He emphasizes that when discussing the issue for the need of a new nuclear power plant, low or high capacity, it is necessary to make realistic predictions about how much population Armenia will have in 2036, when the lifespan of the current nuclear power plant is interrupted, what volumes of consumption will industrial organizations have, whether neighboring countries will need to buy electricity from Armenia, etc.?

"Both Iran and Georgia are making serious investments in the field of electricity generation. Georgia, for example, does not have a nuclear power plant and is rapidly developing hydropower. These rates show that in a few years our neighbors will not have a demand to buy electricity from us. And for our domestic market, a nuclear power plant with a large capacity will be redundant," Arzumanyan argues.

The professional community also disagrees about having a new nuclear power plant. While it will diversify Armenia's energy sector, it also contains risks, especially in the case of high capacity.

Arzumanyan says the construction of a high-capacity nuclear power plant or a new power unit in Armenia is impermissible and fraught with dangers.

Despite those opposing the plan, the current Armenian government has not only officially confirmed the intention to build a new nuclear power plant, but also regularly announces it. Since it is still not clear what capacity the new nuclear power plant will have, it is also not clear what finances will be required for it and from where.

The final feasibility study of the nuclear power plant project should be ready in 2025. In 2036, the new power unit of the Armenian NPP should be fully ready for operation.

"If there is no new nuclear power plant in Armenia by 2036, then we have done a bad job," Armenian Deputy Minister of Territorial Administration and Infrastructure Hakob Vardanyan stated in November 2022.

The deputy minister reminded that the Russians are ready to offer financing plans, considering both the involvement of the Russian Rosatom company in the project and the friendly relations between the two countries.

The vision of solar energy

 Two years ago, the Armenian government promised to invest US$1.5 billion in the field of electricity production in the next seven years.

This includes the construction and operation of the Armenia-Iran and Armenia-Georgia 400 kW overhead power lines, the finalization of work related to the Armenia-Iran-Georgia-Russia quadrilateral initiative, which is considered the North-South electricity corridor, etc.

The construction of solar plants with a capacity of up to 1000 MW is also part of those plans.

The liberalization of the electricity market in Armenia, which began in February 2022, is also part of the plan.

Armenian energy consumers have been given the right to choose from which producer or source to buy electricity. The goal is to buy cheaper electricity. Moreover, consumers have the right to buy directly from producers rather than from the suppliers.

Now, for example, consumers can order the amount of electricity they need one day in advance and pay for that volume. For now, this benefits large electricity consumers. When resident/subscribers will benefit remains unclear. It is assumed that it will take several years.

After the liberalization of the market, the operators of solar plants became more active in electricity trading.

Solar plants are considered “green” sources of energy.  Damage to the environment is relatively small.

Energy experts stress that, from an environmental point of view, maybe thermal power plants, nuclear power plants and hydropower plants are not the best option, but Armenia cannot rely only on solar energy, because nature is unpredictable. Solar energy is not sustainable energy.

The Armenian government aims to increase the share of solar energy production    to at least 15% of total energy production by 2030 (currently it does not reach 5%). This amount is considered the maximum that solar energy can provide in Armenia’s total electricity production.

 "The government of Armenia also considers energy saving as a means of increasing the country's energy security, economic competitiveness, and reducing the negative impact of global warming on the environment," the Armenian government’s energy strategy prospectus reads.

Energy-efficient modernization of buildings and other programs are being implemented in Yerevan and regions. Armenia is taking the first steps in this field.