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Sohigian: Listening to the Wind of Change: Renewable Energy in Armenia
By Jason Sohigian
January 30, 2010
The Armenian Weekly
January 2010 Magazine
A 2 kW photovoltaic station assembled and laminated by specialists at
the State Engineering University of Armenia was installed on the roof
of St. Sarkis Church in Yerevan (Photo source: EU-Armenia Web Portal
on Renewable Energy)
Armenia relies on a diverse mix of energy resources, and renewables
present a range of challenges, strategic advantages, and market
opportunities. In 2009 alone, the World Bank announced an investment
of $1.5 million to assess sites with geothermal potential and
Armenbrok OJSC announced an initial public offering to raise $9
million to construct three hydropower plants in Nagorno-Karabagh.
Nuclear power, natural gas, and hydropower have been analyzed to a
large extent, so this analysis is focused on the market opportunities
and strategic advantages of solar and wind in the context of Armenia's
overall energy situation. Domestic fuel resources are hydropower,
nuclear power, wind power, fuelwood, and solar and geothermal power,
while natural gas consumed in the energy and other sectors is imported
from Russia. In 2005, 42 percent of the energy consumed was generated
by the Medzamor Nuclear Power Plant, 30 percent was produced by
hydropower and wind, and 28 percent was generated by thermal power
plants fueled by imported natural gas and coal. Armenia does not have
any significant domestic fossil fuel reserves, so the natural gas for
the thermal power plants and Armenia's gas-powered vehicles is
imported via pipeline through Georgia. The supply has been disrupted
for political and economic reasons over the past 15 years, but there
is a new pipeline under construction in the south which is expected to
open up an alternative source of gas from Iran.
Medzamor NPP is an important part of the country's energy system,
although the plant is scheduled to shut down in 2016. The European
Union and United States have pressured Armenia to close the plant, but
the government has refused over energy security concerns. In fact, the
government issued a tender in 2009 for a new plant that would likely
be a safer third generation design. In the meantime, Armenia imports
nuclear fuel from Russia, so energy is dependent on the cost of
uranium and natural gas which may fluctuate according to economic and
geopolitical factors in the region. The basic principles of the Energy
Sector Development Strategy adopted by the government in 2005 are
achieving sustainable economic development, enhancing energy
independence, and ensuring efficient use of domestic and alternative
sources of energy. Overall the energy security plan is based on
renewables and conservation, nuclear energy, and diversification of
supplies.
The capacity of the Pushkin Pass wind farm is 2.64 MW and it comprises
four 660 kW Vestas wind turbines (Photo source: Implementation of the
Kyoto Protocol's Clean Development Mechanism in Armenia)
The analysis of Armenia's energy situation is done at the national
level and accounts for power plant production, but it rarely factors
the use of fuelwood for heating and cooking among the population,
which is quite common. A national survey conducted by the Turpanjian
Center for Policy Analysis in 2007 revealed that 30 percent of the
population uses fuelwood for heating or cooking. This is significant
since a study published in International Forestry Review reported only
eight percent forest cover, so a comprehensive energy strategy should
address sustainable forestry.
In addition to the absence of domestic fossil fuel supplies and
subsequent reliance on imported fuel that fluctuates in price and
availability, the driving factor behind Armenia's energy policy is an
understanding that as economic development advances there will be
increasing demand for energy. Armenia's GDP has grown at an average of
10 percent over the last several years, and energy demand will
increase as the population becomes more affluent and urbanized.
Therefore, a proactive policy is a positive step to ensure that
efficiency and renewable technologies are an integral part of the
energy mix.
Solar Market Potential
Armenia began thinking about energy independence after the 1988
earthquake, when Kenell Touryan was approached at the U.S. National
Renewable Energy Laboratory in Colorado about the potential for
bringing renewable energy to Armenia.
Yerevan State University and the State Engineering University of
Armenia have been working on photovoltaic (PV) cells for 25 years, a
Solar Institute was working on wind and solar hot water, and Armenia
had experience with wind turbine assembly, according to Dr. Kenell
Touryan who is now vice president of research and development at the
American University of Armenia. As part of a nonproliferation program,
the U.S.
A significant percentage of Armenia's vehicle fleet are powered by
natural gas, which burns cleaner than petroleum fuel. (Photo by Jason
Sohigian)
Department of Energy funded research by former Soviet weapons
specialists in the 1990's to do research and development in renewable
energy that could be commercialized.
Currently, SunEnergy LLC and SolarEn LLC are selling solar thermal
units for buildings, the Viasphere Technopark is working on a PV
tracking system, the State Engineering University of Armenia is
working on a PV cell coating technology, and a California-based
company is funding research to manufacture its PV system in Armenia,
according to Touryan.
Dr. Artak Hambarian, who is associate director of the Engineering
Research Center, began working on a rooftop solar monitoring station
at AUA in 1995, and a Solar Driven Desiccant Cooling Demonstration
System (DESODEC) was designed and installed soon after. The project
involved the collaboration of scientists from Portugal, Germany,
Russia, and Armenia.
The 40 kW solar hot water project got SolarEn LLC started building its
own panels, and it uses a desiccant cooling system to cool a 154-seat
auditorium in the summer. Desiccant cooling has been in use since the
1960's, but the unique thing about this installation is that a 5 kW PV
system provides the necessary electricity. In this system, the air is
pumped through a chamber of several desiccant wheels which use a gel
to remove humidity and have the capacity to lower air temperature from
100 degrees to 60 degrees F. `It is more efficient and comparable in
cost to a chiller system,' emphasizes Hambarian.
The two-wing PV array relies on eight batteries that are each six
volts to store power, and the roof support structure spans across
three rooftops using a structure that is flexible for earthquake
protection. Currently the largest array in Armenia, the PV system was
installed in 2004 and it produces just over 5 kW of power from 72
80-watt panels. The panels were manufactured by experts from the State
Engineering University and American University of Armenia.
A 2009 market study by Danish Energy Management indicates that Armenia
has proven experience in PV technologies and significant deposits of
raw materials for developing a local technological chain. This
extensive study co-authored by SolarEn LLC points out that the
existence of a wide variety of siliceous raw material of various types
and morphology, local experience in PV technologies, and a highly
competitive research and development potential give Armenia a
comparative advantage in this sector.
`From the various PV technologies analyzed, [a] few can be considered
ready and some of those can be applicable for PV industry development
in Armenia. Technological chains based on local raw materials and
existing infrastructure can offer a certain degree of competitive
advantage for investors. Today in Armenia a number of companies and
organization exist that can help jump-start the PV industry
development,' notes the report optimistically.
Wind Market Potential
The National Renewable Energy Laboratory developed a map of wind power
resources for Armenia in 2003, in collaboration with SolarEn LLC. This
analysis assesses a wind power potential of 4,900 MW from seven sites
that cover an area of 979 sq. km. This corresponds to an area of three
percent of the territory of Armenia that is limited to remote
mountainous passes at an elevation of 2,000 m. or higher. Armenia's
Energy Sector Development Strategy of 2005 includes a series of
renewable targets to reach by 2025 that include 595 MW of hydropower,
500 MW of wind, and 25 MW of geothermal. The Energy Law of the
Republic of Armenia also guarantees the purchase of 100 percent of
electricity generated from renewable energy sources including wind
from licensed entities for 15 years.An analysis by Ara Marjanyan
estimates that the addition of 500 MW of grid-connected wind power to
achieve the national goal by 2025 would require an investment of
US$870 million to $1 billion.
According to Dr. Vardan Sargsyan of the State University of Economics,
the economically viable capacity for wind energy is comparable with
nuclear in Armenia. During a 2006 NATO conference in Istanbul on
energy, sustainable development, and environmental security, Sargsyan
indicated that the government is planning to generate 10 percent of
its electricity from wind power by 2025, and that several prospective
sites have been identified.
In 2005, the first in wind farm in the South Caucasus was put into
operation at Pushkin Pass in northern Armenia. The total installed
capacity of the farm is 2.64 MW and the `Lori 1' project comprises
four 660 kW Vestas wind turbines. The wind farm was funded by a $3.1
million grant from the government of Iran, which is also working on a
natural gas pipeline and hydropower station along the border of the
two countries.
Negotiations are underway with international investors to expand the
`Lori 1' wind farm at Pushkin Pass. The project was initiated in 2002
with the support of the Ministry of Economy of the Netherlands and the
total installed capacity was intended to be 19.5 MW, using 23 turbines
with 850 kW of rated power and a total anticipated cost of $37
million.
Dr. Ara Marjanyan, who is the Renewable Energy Project coordinator of
the Armenia Renewable Resources and Energy Efficiency Fund, outlined a
series of outstanding financial and policy issues that are necessary
for Armenia to achieve its renewable energy targets for wind. First,
consistent with the tariff procedure for small hydropower, wind
tariffs should be fixed so developers can perform project feasibility
analyses for a typical project life span of 20-25 years.
Second, the initial costs of wind power projects may be reduced by
lowering the burden of the value added tax (VAT) on imported equipment
for renewable energy projects, since there is no local manufacturing
of modern wind turbines in Armenia. Currently the cost of wind
turbines are approximately 60-80 percent of the total initial cost of
a wind project, and the VAT in Armenia would subject this to a 20
percent tax.
According to Touryan, there is a high level of international interest
in investing in wind power projects in Armenia, and he cites proposals
from Germany, England, Sweden, Italy, and Greece who are investigating
claims to the top rated sites for wind power potential. `The
government is interested, and there are trained engineers that can
work on it,' states Touryan, who added that they are discussing
incentive programs with the government to finance wind and other
renewable energy programs.
Conclusions
Given Armenia's lack of fossil fuel reserves and its economic and
geopolitical circumstances, its national leadership seems to
appreciate the importance of the renewable energy sector and has
adopted an `Energy Sector Development Strategy in the Context of
Economic Development in Armenia.'
The underlying principle is the understanding that as the country
develops and the standard of living improves, the economy will become
more energy intensive even while pursuing energy efficiency measures.
As studies in solar and wind power demonstrate, there is a high level
of scientific expertise in the country that has already been working
on renewable energy technologies. Currently organizations such as the
Armenia Renewable Resources and Energy Efficiency Fund (R2E2) are
developing feasibility studies and offering preferential financing in
a revolving loan fund to attract investors in this sector, according
to R2E2 director Tamara Babayan.
At the same time, experts are working to improve the regulatory and
economic conditions to nurture the development of the renewable energy
sector through tax incentives, reviews of tariff structures and
methods, and legislation that demonstrates a commitment on the part of
the government to incorporate clean technology into the energy system.
Already, Armenia uses renewables to a large extent, primarily with
hydropower that meets 30 percent of the country's electricity needs.
While wind is competitive in the U.S. with power from traditional
sources of fuel, in Armenia hydropower is competitive because it
benefits from existing tax and tariff incentives.
Solar and wind power are at an earlier stage of development than
hydropower, and it is likely that similar incentives will be made
available to project developers in these sectors. Research and
development in solar technology is at an advanced stage and the
current goal is to create a manufacturing infrastructure for domestic
consumption and an export industry for PV panels.
Wind is at an earlier stage of development since there is not much
local experience operating or building large wind farms, although the
NREL wind resource assessment indicates the availability of adequate
wind resources that could make a project profitable if the government
responds to industry recommendations on tax and tariff barriers.
Since Armenia is a landlocked country facing difficult geopolitical
circumstances, there are challenges for transportation and market
access. However, the Armenian Diaspora has been proactive in its
leadership in the high tech field, and industry leaders in the
renewable energy field are attempting to introduce their products in
Armenia and nurture new industry development.
This has been welcome because it will create jobs in a country where
there is still widespread poverty and underemployment.
Ultimately the renewable energy sector can help Armenia achieve its
energy independence and sustainable development goals, while at the
same time emerging as a global leader in the clean energy sector.
Acknowledgements
The author would like to thank the following individuals for their
assistance during the research for this article: Tamara Babayan
(Armenia Renewable Resources and Energy Efficiency Fund), Artak
Hambarian (American University of Armenia), Diana Harutyunyan (United
Nations Development Program), Ara Marjanyan (Armenia Renewable
Resources and Energy Efficiency Fund), Tatevik Mnatsakanyan (World
Bank), and Kenell Touryan (American University of Armenia).
By Jason Sohigian
January 30, 2010
The Armenian Weekly
January 2010 Magazine
A 2 kW photovoltaic station assembled and laminated by specialists at
the State Engineering University of Armenia was installed on the roof
of St. Sarkis Church in Yerevan (Photo source: EU-Armenia Web Portal
on Renewable Energy)
Armenia relies on a diverse mix of energy resources, and renewables
present a range of challenges, strategic advantages, and market
opportunities. In 2009 alone, the World Bank announced an investment
of $1.5 million to assess sites with geothermal potential and
Armenbrok OJSC announced an initial public offering to raise $9
million to construct three hydropower plants in Nagorno-Karabagh.
Nuclear power, natural gas, and hydropower have been analyzed to a
large extent, so this analysis is focused on the market opportunities
and strategic advantages of solar and wind in the context of Armenia's
overall energy situation. Domestic fuel resources are hydropower,
nuclear power, wind power, fuelwood, and solar and geothermal power,
while natural gas consumed in the energy and other sectors is imported
from Russia. In 2005, 42 percent of the energy consumed was generated
by the Medzamor Nuclear Power Plant, 30 percent was produced by
hydropower and wind, and 28 percent was generated by thermal power
plants fueled by imported natural gas and coal. Armenia does not have
any significant domestic fossil fuel reserves, so the natural gas for
the thermal power plants and Armenia's gas-powered vehicles is
imported via pipeline through Georgia. The supply has been disrupted
for political and economic reasons over the past 15 years, but there
is a new pipeline under construction in the south which is expected to
open up an alternative source of gas from Iran.
Medzamor NPP is an important part of the country's energy system,
although the plant is scheduled to shut down in 2016. The European
Union and United States have pressured Armenia to close the plant, but
the government has refused over energy security concerns. In fact, the
government issued a tender in 2009 for a new plant that would likely
be a safer third generation design. In the meantime, Armenia imports
nuclear fuel from Russia, so energy is dependent on the cost of
uranium and natural gas which may fluctuate according to economic and
geopolitical factors in the region. The basic principles of the Energy
Sector Development Strategy adopted by the government in 2005 are
achieving sustainable economic development, enhancing energy
independence, and ensuring efficient use of domestic and alternative
sources of energy. Overall the energy security plan is based on
renewables and conservation, nuclear energy, and diversification of
supplies.
The capacity of the Pushkin Pass wind farm is 2.64 MW and it comprises
four 660 kW Vestas wind turbines (Photo source: Implementation of the
Kyoto Protocol's Clean Development Mechanism in Armenia)
The analysis of Armenia's energy situation is done at the national
level and accounts for power plant production, but it rarely factors
the use of fuelwood for heating and cooking among the population,
which is quite common. A national survey conducted by the Turpanjian
Center for Policy Analysis in 2007 revealed that 30 percent of the
population uses fuelwood for heating or cooking. This is significant
since a study published in International Forestry Review reported only
eight percent forest cover, so a comprehensive energy strategy should
address sustainable forestry.
In addition to the absence of domestic fossil fuel supplies and
subsequent reliance on imported fuel that fluctuates in price and
availability, the driving factor behind Armenia's energy policy is an
understanding that as economic development advances there will be
increasing demand for energy. Armenia's GDP has grown at an average of
10 percent over the last several years, and energy demand will
increase as the population becomes more affluent and urbanized.
Therefore, a proactive policy is a positive step to ensure that
efficiency and renewable technologies are an integral part of the
energy mix.
Solar Market Potential
Armenia began thinking about energy independence after the 1988
earthquake, when Kenell Touryan was approached at the U.S. National
Renewable Energy Laboratory in Colorado about the potential for
bringing renewable energy to Armenia.
Yerevan State University and the State Engineering University of
Armenia have been working on photovoltaic (PV) cells for 25 years, a
Solar Institute was working on wind and solar hot water, and Armenia
had experience with wind turbine assembly, according to Dr. Kenell
Touryan who is now vice president of research and development at the
American University of Armenia. As part of a nonproliferation program,
the U.S.
A significant percentage of Armenia's vehicle fleet are powered by
natural gas, which burns cleaner than petroleum fuel. (Photo by Jason
Sohigian)
Department of Energy funded research by former Soviet weapons
specialists in the 1990's to do research and development in renewable
energy that could be commercialized.
Currently, SunEnergy LLC and SolarEn LLC are selling solar thermal
units for buildings, the Viasphere Technopark is working on a PV
tracking system, the State Engineering University of Armenia is
working on a PV cell coating technology, and a California-based
company is funding research to manufacture its PV system in Armenia,
according to Touryan.
Dr. Artak Hambarian, who is associate director of the Engineering
Research Center, began working on a rooftop solar monitoring station
at AUA in 1995, and a Solar Driven Desiccant Cooling Demonstration
System (DESODEC) was designed and installed soon after. The project
involved the collaboration of scientists from Portugal, Germany,
Russia, and Armenia.
The 40 kW solar hot water project got SolarEn LLC started building its
own panels, and it uses a desiccant cooling system to cool a 154-seat
auditorium in the summer. Desiccant cooling has been in use since the
1960's, but the unique thing about this installation is that a 5 kW PV
system provides the necessary electricity. In this system, the air is
pumped through a chamber of several desiccant wheels which use a gel
to remove humidity and have the capacity to lower air temperature from
100 degrees to 60 degrees F. `It is more efficient and comparable in
cost to a chiller system,' emphasizes Hambarian.
The two-wing PV array relies on eight batteries that are each six
volts to store power, and the roof support structure spans across
three rooftops using a structure that is flexible for earthquake
protection. Currently the largest array in Armenia, the PV system was
installed in 2004 and it produces just over 5 kW of power from 72
80-watt panels. The panels were manufactured by experts from the State
Engineering University and American University of Armenia.
A 2009 market study by Danish Energy Management indicates that Armenia
has proven experience in PV technologies and significant deposits of
raw materials for developing a local technological chain. This
extensive study co-authored by SolarEn LLC points out that the
existence of a wide variety of siliceous raw material of various types
and morphology, local experience in PV technologies, and a highly
competitive research and development potential give Armenia a
comparative advantage in this sector.
`From the various PV technologies analyzed, [a] few can be considered
ready and some of those can be applicable for PV industry development
in Armenia. Technological chains based on local raw materials and
existing infrastructure can offer a certain degree of competitive
advantage for investors. Today in Armenia a number of companies and
organization exist that can help jump-start the PV industry
development,' notes the report optimistically.
Wind Market Potential
The National Renewable Energy Laboratory developed a map of wind power
resources for Armenia in 2003, in collaboration with SolarEn LLC. This
analysis assesses a wind power potential of 4,900 MW from seven sites
that cover an area of 979 sq. km. This corresponds to an area of three
percent of the territory of Armenia that is limited to remote
mountainous passes at an elevation of 2,000 m. or higher. Armenia's
Energy Sector Development Strategy of 2005 includes a series of
renewable targets to reach by 2025 that include 595 MW of hydropower,
500 MW of wind, and 25 MW of geothermal. The Energy Law of the
Republic of Armenia also guarantees the purchase of 100 percent of
electricity generated from renewable energy sources including wind
from licensed entities for 15 years.An analysis by Ara Marjanyan
estimates that the addition of 500 MW of grid-connected wind power to
achieve the national goal by 2025 would require an investment of
US$870 million to $1 billion.
According to Dr. Vardan Sargsyan of the State University of Economics,
the economically viable capacity for wind energy is comparable with
nuclear in Armenia. During a 2006 NATO conference in Istanbul on
energy, sustainable development, and environmental security, Sargsyan
indicated that the government is planning to generate 10 percent of
its electricity from wind power by 2025, and that several prospective
sites have been identified.
In 2005, the first in wind farm in the South Caucasus was put into
operation at Pushkin Pass in northern Armenia. The total installed
capacity of the farm is 2.64 MW and the `Lori 1' project comprises
four 660 kW Vestas wind turbines. The wind farm was funded by a $3.1
million grant from the government of Iran, which is also working on a
natural gas pipeline and hydropower station along the border of the
two countries.
Negotiations are underway with international investors to expand the
`Lori 1' wind farm at Pushkin Pass. The project was initiated in 2002
with the support of the Ministry of Economy of the Netherlands and the
total installed capacity was intended to be 19.5 MW, using 23 turbines
with 850 kW of rated power and a total anticipated cost of $37
million.
Dr. Ara Marjanyan, who is the Renewable Energy Project coordinator of
the Armenia Renewable Resources and Energy Efficiency Fund, outlined a
series of outstanding financial and policy issues that are necessary
for Armenia to achieve its renewable energy targets for wind. First,
consistent with the tariff procedure for small hydropower, wind
tariffs should be fixed so developers can perform project feasibility
analyses for a typical project life span of 20-25 years.
Second, the initial costs of wind power projects may be reduced by
lowering the burden of the value added tax (VAT) on imported equipment
for renewable energy projects, since there is no local manufacturing
of modern wind turbines in Armenia. Currently the cost of wind
turbines are approximately 60-80 percent of the total initial cost of
a wind project, and the VAT in Armenia would subject this to a 20
percent tax.
According to Touryan, there is a high level of international interest
in investing in wind power projects in Armenia, and he cites proposals
from Germany, England, Sweden, Italy, and Greece who are investigating
claims to the top rated sites for wind power potential. `The
government is interested, and there are trained engineers that can
work on it,' states Touryan, who added that they are discussing
incentive programs with the government to finance wind and other
renewable energy programs.
Conclusions
Given Armenia's lack of fossil fuel reserves and its economic and
geopolitical circumstances, its national leadership seems to
appreciate the importance of the renewable energy sector and has
adopted an `Energy Sector Development Strategy in the Context of
Economic Development in Armenia.'
The underlying principle is the understanding that as the country
develops and the standard of living improves, the economy will become
more energy intensive even while pursuing energy efficiency measures.
As studies in solar and wind power demonstrate, there is a high level
of scientific expertise in the country that has already been working
on renewable energy technologies. Currently organizations such as the
Armenia Renewable Resources and Energy Efficiency Fund (R2E2) are
developing feasibility studies and offering preferential financing in
a revolving loan fund to attract investors in this sector, according
to R2E2 director Tamara Babayan.
At the same time, experts are working to improve the regulatory and
economic conditions to nurture the development of the renewable energy
sector through tax incentives, reviews of tariff structures and
methods, and legislation that demonstrates a commitment on the part of
the government to incorporate clean technology into the energy system.
Already, Armenia uses renewables to a large extent, primarily with
hydropower that meets 30 percent of the country's electricity needs.
While wind is competitive in the U.S. with power from traditional
sources of fuel, in Armenia hydropower is competitive because it
benefits from existing tax and tariff incentives.
Solar and wind power are at an earlier stage of development than
hydropower, and it is likely that similar incentives will be made
available to project developers in these sectors. Research and
development in solar technology is at an advanced stage and the
current goal is to create a manufacturing infrastructure for domestic
consumption and an export industry for PV panels.
Wind is at an earlier stage of development since there is not much
local experience operating or building large wind farms, although the
NREL wind resource assessment indicates the availability of adequate
wind resources that could make a project profitable if the government
responds to industry recommendations on tax and tariff barriers.
Since Armenia is a landlocked country facing difficult geopolitical
circumstances, there are challenges for transportation and market
access. However, the Armenian Diaspora has been proactive in its
leadership in the high tech field, and industry leaders in the
renewable energy field are attempting to introduce their products in
Armenia and nurture new industry development.
This has been welcome because it will create jobs in a country where
there is still widespread poverty and underemployment.
Ultimately the renewable energy sector can help Armenia achieve its
energy independence and sustainable development goals, while at the
same time emerging as a global leader in the clean energy sector.
Acknowledgements
The author would like to thank the following individuals for their
assistance during the research for this article: Tamara Babayan
(Armenia Renewable Resources and Energy Efficiency Fund), Artak
Hambarian (American University of Armenia), Diana Harutyunyan (United
Nations Development Program), Ara Marjanyan (Armenia Renewable
Resources and Energy Efficiency Fund), Tatevik Mnatsakanyan (World
Bank), and Kenell Touryan (American University of Armenia).