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Sohigian: Listening to the Wind of Change: Renewable Energy in Armenia

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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).

6 Comments on Sohigian: Listening to the Wind of Change: Renewable Energy in Armenia

  1. avatar Krikor Soghikian // January 30, 2010 at 4:27 pm // Reply

    I would like to congratulate Jason Sohigian on this detailed, factual, and timely report. It will hopefully raise further interest in the development of renewable energy in Armenia.

  2. Good article but the beginning to be updated because the natural gas pipeline coming from Iran has already been completed and we currently, since last April, recieve gas from Iran as well.  Maybe the author was thinking of the oil pipeline which is being built.

  3. avatar Cynthia Soghikian Wolfe // January 31, 2010 at 3:14 am // Reply

    With all the sun and wind of open spaces in Armenia, solar and wind power would seem to be good sources of energy.   It is wonderful that Armenia is blessed to have so many highly trained and educated people working with dedication to help the country into the future.  It would be great not to be dependent on foreign oil or gas!

  4. avatar georgeodjungle // January 31, 2010 at 2:28 pm // Reply

    yes Good article but solar PVs are not green or smart

  5. avatar Arsen ARSHIK // January 31, 2010 at 6:21 pm // Reply

    FROM:Uncle garagett’s note book
    Lo! The Prophet

    We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature’s inexhaustible sources of energy—sun, wind, and tide. … I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.
    —Thomas Edison in conversation with Henry Ford and Harvey Firestone (1931)

  6. Nice work, Jason. Good article overall, worthy of the Weekly.
    I was just wondering: in your introduction, you mention many types of alternative energy, including geothermal for which you mention a recent grant, but there’s no mention of it on the rest of the text. Knowing that Armenia has a fairly thin crust (earthquakes and the like), one has to ask why the underlaying heat has not been tapped until now. I once heard from someone who had worked in the major geological survey of Armenia that was done in the 1970’s and 1980’s, that some 10 or twelve sites had been identified as potential emplacements for geothermal stations, with a combined output of more that 5000MW. Any news on that front?

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