Armenia, a mountainous and land locked country with no oil or gas reserves of its own, set up a number of prioritises in the energy sector: the rehabilitation of run-down existing power plants, increasing interconnection with Georgia and Iran, promoting the use of renewable energy and improving energy efficiency.
The Armenian power sector is somewhat unbundled, with generation open to private sector participation and privately owned “Energy Networks of Armenia” acting as a single buyer and distributer of electricity. The “Public Services Regulatory Commission” is the regulator.
In 2016, 7.3GWh was generated of which 35% came from natural gas (imported from Russia and Iran), 32% nuclear, 19% large hydro resources and the rest from small hydro. With the exception of the country’s nuclear power plant (408 MW) and the Yerevan combined cycle gas turbine (220 MW), power generation in Armenia is in the hands of foreign and local private generators. In 2016 two foreign utilities, Russia’s RusHydro and ContourGlobal from the U.S., generated 1.4GWh, a fifth of all the total for the country.
Regulation on the further liberalisation and development of the Armenian power market is being drafted and expected to be legislated in 2018. The new rules should establish a day and month ahead wholesale power market, a balancing market, unbundle transmission from distribution, and open electricity retailing to competition.
Armenia has committed to reach 21% of renewables in generation by 2020 and 26% by 2025. The Scaling Up Renewable Energy Program (SREP), launched in 2014 and financed through the Climate Investment Funds, targets 397MW of small hydro, 100MW of wind, 80MW of solar and 100MW of geothermal to be installed by 2025.
Armenia plans to follow the renewables support policy standards of the European Union to meet its renewables targets. Utility scale projects will be supported through auctions starting in 2017, with 55MW solar PV capacity and 28MW of geothermal capacity to be awarded contracts. Small scale PV (under 1MW) is supported through a feed-in tariff since 2016, as well as net metering if the project is smaller than 150kW. Finally all renewables projects in the county benefit from a three year VAT payment holiday and a seven year freeze on tax levels from the time of investment.
On September 22, 2015 Government of Republic of Armenia submitted its Intended Nationally Determined Contribution (INDC) to the United Nations, committing to cap emissions at 633 million tons of carbon dioxide equivalent for the 2015-2050, and at 5.4 tons per capita annually. The INDC records points out that in 2010, Armenia’s GHG emissions comprised 2.14 tons per capita, and that the country would aim to limit emissions to 2.07 tons per capita by 2050 provided it receives adequate international financial and technical assistance.
Armenia’s score of 0.81 in Climatescope 2017 placed it 56th out of the 71 countries assessed worldwide, and 11th among the 17 Asian nations. The country is reliant on fuel imports, having no oil or gas reserves of its own, and its energy sector is partially unbundled and open to private participants. This is the first year in which the country has been included in the project.
Armenia was strongest on Enabling Framework Parameter I, taking 39th position. Its score of 1.16 was supported by the presence of a renewable energy target, a feed-in tariff programme, a net metering scheme and tax relief incentives. It was also bolstered by the presence of private players and its partially unbundled generation, transmission and distribution operations.
In contrast, it took 59th place on Clean Energy Investment and Climate Financing Parameter II, putting it within the bottom quartile of the countries assessed. This reflects the absence of investment in clean energy in 2016, and just $9.4m since 2010. A small volume of loans and grants has been made available to the sector in recent years.
The country took 46th place on Low-Carbon Business & Clean Energy Value Chains Parameter III. Its score was supported by the presence of banks, funds and impact funds, but weakened by the dearth of clean energy value chains and service providers.
On Greenhouse Gas Management Activities Parameter IV, Armenia ranked 55th. This reflected a lack of a domestic climate change policy and corporate awareness. Its Intended Nationally Determined Contribution submitted to the UN in 2015 outlines a target to reduce carbon emissions.