Over the past three decades, Armenia has made great strides in providing electricity to its almost 3 million inhabitants. The landlocked, Caucasus country is now 100% electrified, a huge feat considering how unstable its energy sector was in the 1990s.
However, most of its Soviet-era power infrastructure is in poor condition, leading to blackouts and technical and financial losses for its energy sector. The country also remains heavily reliant on imports of oil and gas to meet its energy demands.
The Asian Development Bank (ADB) has been playing a key role in strengthening Armenia’s power sector — from generation to transmission and distribution — since the country joined the bank in 2005. In line with their current country partnership strategy, ADB has been helping foster diversified growth and inclusiveness in the country through both sovereign and private sector financing.
“ADB is proud to be part of Armenia’s journey to sustainable energy,” says Paolo Spantigati, ADB Country Director for Armenia. “Under ADB’s country partnership strategy (CPS) for Armenia, 2019–2023, our sovereign and nonsovereign operations focus on investments in priority energy projects that will diversify the country’s energy mix and improve energy security.”
Giving new life to old infrastructure
Through a $25 million private sector loan, ADB helped to rehabilitate and modernize four hydropower plants of the Sevan–Hrazdan Cascade Hydropower System – one of Armenia’s most important energy sources. This improved the safety and reliability of the system which was built in the 1930s-1960s. It helped restore 45 megawatts of generation capacity, increasing the share of renewable energy in Armenia’s energy mix.
“ADB provided long-term financing that was a must for the successful implementation and was unavailable in the local market at that time,” says Sergey Mokroussov, Senior Investment Specialist with ADB’s Private Sector Operations Department. “ADB’s involvement in the project fostered confidence among potential investors and lenders as Armenia’s hydropower sector attracted additional investments in the subsequent years.”
Boosting connectivity and efficiency
While it’s important to develop low-carbon energy sources, it is also critical to modernize the transmission and distribution network that route electricity to households and businesses across the country.
Through an $80 million loan to Electric Networks of Armenia (ENA) Closed Joint-Stock Company (CJSC), the country’s sole electricity distribution company, ADB financing helped to rehabilitate almost 900 kilometers (km) of distribution lines, 1300 transformers and substations, and install more than 380,000 automatic metering devices. This reduced electricity losses by 2% from 2016 to 2021.
“The new automated smart metering system provided by Electric Networks of Armenia is very efficient as it gives us visibility to understand how much electricity we are consuming in real time and plan the usage throughout a day, as well as what it's costing us,” says Diana, a beneficiary of the automatic metering device. “These new devices eliminate the manual component and interaction with the electricity metering technicians. In other words, with a smart meter, you exclude the estimated billing, which is also of great importance.”
The project enabled ENA to improve the services it provides to customers through improved infrastructure and management aligned with international standards.
Fossil fuels account for 75% of Asia's energy and the region accounts for more than half of global consumption.
The adverse impact of climate change requires an urgent just transition to clean energy.
A helping hand during the pandemic
When the COVID-19 pandemic hit Armenia, temporary restrictions in movement meant that many people were not able to pay their electricity bills as they couldn’t go to their bank branches or other points of payment.
These delayed payments generated enormous and unforeseen financial stress for ENA, which faced an unprecedented backlog in late payments.
ADB was the first partner to support ENA by providing critical working capital through an emergency loan, ensuring that electricity services were uninterrupted throughout the pandemic. This also improved local financial institutions’ confidence in the company during the crisis.
“We faced the greatest challenge of our time. The COVID-19 pandemic has been much more than a health crisis, it has been also a devastating social and economic problem,” says Karen Harutyunyan, CEO of ENA. “We are so grateful to ADB for their commitment and great assistance in the difficult period not only from a financial standpoint, but also in sense of advising on many issues connected with the work and wellbeing of our staff.”
Reforms in Armenia’s energy sector are continuing. Last year, the government put in place a new long-term energy development plan that includes boosting energy security and improving energy efficiency through 2040. Under the strategy, the government aims to maximize the utilization of domestic energy resources, replace aged, obsolete power infrastructure, and diversify the country’s energy sources.
As Asia and the Pacific’s climate bank, ADB will continue working closely with Armenia to help develop its renewable energy capabilities and help Armenia expand access to reliable, affordable, and sustainable energy.