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April 28, 2011 Thursday 11:25 AM EST
ENERGY REFORMS IN ARMENIA: ON THE WAY TO ENERGY SECURITY
WASHINGTON, April 28 -- The World Bank issued the following feature story:
Entrepreneurs like Marcos Gharibyan are fueling the growth in
renewable energy in Armenia by investing in small hydro-power plants.
Gharibyan took a risk and got a loan to invest in two small hydro
power stations. "We have a small gardening firm. We thought that since
we were bringing in irrigation water, we could just as well build a
hydropower station on that water flow," Gharibyan explains.
After he built the station, Gharibyan took another leap of faith and
built a 10 kilometer long high voltage power line to connect his
stations so they can feed into the national power grid and he can
recoup some of his investment. Built on a stream of the Azat River,
the stations operate for only 4 months a year. However, regulations
and incentives help to insure a profit.
The market for small hydropower stations is well developed in Armenia
and the government has created incentives for investment. Energy law
mandates that the power distribution grid buy electricity generated by
small hydro power stations for 15 years after they become operational.
The Public Services Regulatory Commission has established feed-in
tariffs for the electricity they produce.
"The feed-in tariffs enable developers to assess, based on technical
parameters, whether it makes business sense to invest without having
to rely on any state official, and the guarantee of 15 years of
purchase meant that the developers could confidently invest in this
area," says Robert Nazaryan, Chairman of the Public Services
Regulatory Commission.
The end of the energy crisis in the 90's was the beginning of a new
era for Armenia. One of the lessons learned was to use local resources
efficiently to ensure the country's energy independence and security.
And as its energy resources are limited, renewable energy is of great
importance.
"The development of renewable energy in Armenia is of triple
importance. First, it uses local energy sources, second it uses
renewable energy sources and third, it uses clean sources of energy,"
says Arayik Marjanyan, Renewable Energy Program Coordinator, Renewable
Resources and Energy Efficiency Fund.
The World Bank provided a $5 million dollar credit to ensure
investments in the sector. The co-financer, the European Bank for
Reconstruction and Development, invested $7 million dollars; the
Cascade Universal Credit Organization owned by the Cafesjian family
foundation invested $3 million dollars. Many commercial banks are now
providing loans for the construction of small hydropower stations.
Thus, a favorable legal framework is coupled with the opportunity to
get financing.
Ninety four small hydropower stations are operational in Armenia,
providing about 3 percent of Armenia's domestic demand for
electricity. Of those, 27 were built under the World Bank's Renewable
Energy Project. An additional 65 hydropower stations are under
construction. Once they start operating, small hydro power stations
will meet 6 percent of the internal demand for electricity.
Besides providing electricity, small hydropower stations provide jobs.
"There is a lot of construction of small hydropower stations going on
in Vayots Dzor now and it is very efficient; first of all, even the
smallest hydropower station creates 7 new jobs," says Gagik Avetisyan,
operator of the Yeghegnadzor hydrostation.
The "Artavan-1" small hydropower station is under construction now.
Armen Mikayelyan from Artavan village has been working on it for a
year.
"We are employed now, which is good. If I did not have this job, I
would have to go and cultivate my land and breed the cattle, barely
managing. It isn't good going abroad for seasonal work, either: you
leave your family behind and your children unattended. It's better to
work here than abroad," Mikayelyan says.
The World Bank's Renewable Resources and Energy Efficiency Fund works
towards securing investments in clean energy. Armenia got a $3 million
dollar grant from the Global Environment Facility (GEF) to identify
its renewable energy potential and attract private investments. The
project designed the scheme for small hydropower stations, and
developed model business plans and guidelines for the renewable energy
sector. This information is available at www.r2e2.am.
Despite remarkable achievements, Armenia's energy sector faces new
challenges. A main electricity generator- the Metzamor nuclear power
plant - is set to close, as are several thermal power stations.
Depending on demand, Armenia will need an additional 850 to 1350
megawatts of electricity generation capacity.
Its state-owned high-voltage transmission network desperately needs
investments, which are being supported by the the World Bank through a
transmission line rehabilitation project.
Also, the energy sector is vulnerable to interruptions in imported
fuel supply. And the price of imported natural gas is constantly
rising, leading to higher heating and electricity supply tariffs.
Affording energy is a growing concern, especially for the poor.
In order to ensure a reliable and affordable energy supply system,
energy efficiency is key for Armenia.
"We should not produce as much as we want, but rather as much as we
need, and this difference between how much we want and how much we
need is the energy efficiency that we must achieve" explains Armen
Movsisyan, Minister of Energy and Natural Resources. "Otherwise, this
will lead to increase in tariffs, and decrease in reliability and in
the level of energy security. This approach must be applied
country-wide, so that we can have a more reliable and secure system."
The International Energy Agency says it is 3 times more expensive to
produce one kilowatt/hour of electricity than to conserve it. Thus
energy conservation, too, is a source of energy. A 2008 World Bank
study concluded that energy efficiency improvements could save the
country more than $360 million dollars annually, equivalent to almost
4.5 percent of its 2009 GDP.
"Armenia has a well established energy sector, the institutional
reforms that were implemented have created solid basis for future
development and yielded tangible results," says Gevorg Sargsyan, World
Bank project leader for the Renewable Energy Project. "However, the
sector faces serious challenges, which may jeopardize its
sustainability. If no measures are taken today, Armenia will face
electricity deficit again. The energy sector needs serious investments
to reinforce the implemented reforms and secure the country's bright
and warm future."
From: A. Papazian
April 28, 2011 Thursday 11:25 AM EST
ENERGY REFORMS IN ARMENIA: ON THE WAY TO ENERGY SECURITY
WASHINGTON, April 28 -- The World Bank issued the following feature story:
Entrepreneurs like Marcos Gharibyan are fueling the growth in
renewable energy in Armenia by investing in small hydro-power plants.
Gharibyan took a risk and got a loan to invest in two small hydro
power stations. "We have a small gardening firm. We thought that since
we were bringing in irrigation water, we could just as well build a
hydropower station on that water flow," Gharibyan explains.
After he built the station, Gharibyan took another leap of faith and
built a 10 kilometer long high voltage power line to connect his
stations so they can feed into the national power grid and he can
recoup some of his investment. Built on a stream of the Azat River,
the stations operate for only 4 months a year. However, regulations
and incentives help to insure a profit.
The market for small hydropower stations is well developed in Armenia
and the government has created incentives for investment. Energy law
mandates that the power distribution grid buy electricity generated by
small hydro power stations for 15 years after they become operational.
The Public Services Regulatory Commission has established feed-in
tariffs for the electricity they produce.
"The feed-in tariffs enable developers to assess, based on technical
parameters, whether it makes business sense to invest without having
to rely on any state official, and the guarantee of 15 years of
purchase meant that the developers could confidently invest in this
area," says Robert Nazaryan, Chairman of the Public Services
Regulatory Commission.
The end of the energy crisis in the 90's was the beginning of a new
era for Armenia. One of the lessons learned was to use local resources
efficiently to ensure the country's energy independence and security.
And as its energy resources are limited, renewable energy is of great
importance.
"The development of renewable energy in Armenia is of triple
importance. First, it uses local energy sources, second it uses
renewable energy sources and third, it uses clean sources of energy,"
says Arayik Marjanyan, Renewable Energy Program Coordinator, Renewable
Resources and Energy Efficiency Fund.
The World Bank provided a $5 million dollar credit to ensure
investments in the sector. The co-financer, the European Bank for
Reconstruction and Development, invested $7 million dollars; the
Cascade Universal Credit Organization owned by the Cafesjian family
foundation invested $3 million dollars. Many commercial banks are now
providing loans for the construction of small hydropower stations.
Thus, a favorable legal framework is coupled with the opportunity to
get financing.
Ninety four small hydropower stations are operational in Armenia,
providing about 3 percent of Armenia's domestic demand for
electricity. Of those, 27 were built under the World Bank's Renewable
Energy Project. An additional 65 hydropower stations are under
construction. Once they start operating, small hydro power stations
will meet 6 percent of the internal demand for electricity.
Besides providing electricity, small hydropower stations provide jobs.
"There is a lot of construction of small hydropower stations going on
in Vayots Dzor now and it is very efficient; first of all, even the
smallest hydropower station creates 7 new jobs," says Gagik Avetisyan,
operator of the Yeghegnadzor hydrostation.
The "Artavan-1" small hydropower station is under construction now.
Armen Mikayelyan from Artavan village has been working on it for a
year.
"We are employed now, which is good. If I did not have this job, I
would have to go and cultivate my land and breed the cattle, barely
managing. It isn't good going abroad for seasonal work, either: you
leave your family behind and your children unattended. It's better to
work here than abroad," Mikayelyan says.
The World Bank's Renewable Resources and Energy Efficiency Fund works
towards securing investments in clean energy. Armenia got a $3 million
dollar grant from the Global Environment Facility (GEF) to identify
its renewable energy potential and attract private investments. The
project designed the scheme for small hydropower stations, and
developed model business plans and guidelines for the renewable energy
sector. This information is available at www.r2e2.am.
Despite remarkable achievements, Armenia's energy sector faces new
challenges. A main electricity generator- the Metzamor nuclear power
plant - is set to close, as are several thermal power stations.
Depending on demand, Armenia will need an additional 850 to 1350
megawatts of electricity generation capacity.
Its state-owned high-voltage transmission network desperately needs
investments, which are being supported by the the World Bank through a
transmission line rehabilitation project.
Also, the energy sector is vulnerable to interruptions in imported
fuel supply. And the price of imported natural gas is constantly
rising, leading to higher heating and electricity supply tariffs.
Affording energy is a growing concern, especially for the poor.
In order to ensure a reliable and affordable energy supply system,
energy efficiency is key for Armenia.
"We should not produce as much as we want, but rather as much as we
need, and this difference between how much we want and how much we
need is the energy efficiency that we must achieve" explains Armen
Movsisyan, Minister of Energy and Natural Resources. "Otherwise, this
will lead to increase in tariffs, and decrease in reliability and in
the level of energy security. This approach must be applied
country-wide, so that we can have a more reliable and secure system."
The International Energy Agency says it is 3 times more expensive to
produce one kilowatt/hour of electricity than to conserve it. Thus
energy conservation, too, is a source of energy. A 2008 World Bank
study concluded that energy efficiency improvements could save the
country more than $360 million dollars annually, equivalent to almost
4.5 percent of its 2009 GDP.
"Armenia has a well established energy sector, the institutional
reforms that were implemented have created solid basis for future
development and yielded tangible results," says Gevorg Sargsyan, World
Bank project leader for the Renewable Energy Project. "However, the
sector faces serious challenges, which may jeopardize its
sustainability. If no measures are taken today, Armenia will face
electricity deficit again. The energy sector needs serious investments
to reinforce the implemented reforms and secure the country's bright
and warm future."
From: A. Papazian