The World Bank’s Board of Executive Directors has approved $40 million in support of the Enabling the Energy Transition project for Armenia. This initiative aims to assist the implementation of Armenia's Energy Sector Development Strategy to 2040, focusing on rehabilitating power transmission substations, adopting reforms to enable private financing for the transmission company, and promoting energy sector modernization and regional cooperation among emerging economies in Europe and Central Asia.
Armenia's power sector is significantly dependent on imported fuels, particularly natural gas, which poses substantial energy security risks amid the global energy crisis. In 2021, natural gas accounted for 62 percent of Armenia’s total energy supply, followed by oil (16 percent), nuclear (14 percent), and hydro (5 percent). Nontraditional renewable energy sources such as wind and solar contributed only about 1 percent.
“To ensure affordable, reliable, and clean electricity supply for consumers, Armenia needs continued investments in modernizing the power transmission network and improving the commercial viability of the High-voltage Electric Networks of Armenia JSC, the transmission company. Moreover, we expect this project to help reduce greenhouse gas emissions – crucial for mitigating climate change,” said Carolin Geginat, World Bank Country Manager for Armenia.
The project aims to integrate an estimated 1.1 GW of renewable energy generation capacity into the transmission grid by 2032. This capacity is sufficient to power over 690,000 households and will reduce annual net greenhouse gas emissions by 540,000 tons. Additionally, it seeks to attract $550 million in private investment, upgrade all transmission substations with automated control and digital protection systems, and increase their total capacity from 2,711 megavolt-amperes (MVA) to 3,109 MVA. These efforts are part of a broader strategy to enhance renewable energy adoption while minimizing environmental impact.
This initiative is part of the Europe and Central Asia Renewable Energy Scale-Up Multiphase Programmatic Approach (ECARES MPA) Program. The program has an overall financing envelope equivalent to $2 billion and was approved by the World Bank’s Board on March 28, 2024. ECARES MPA aims to increase renewable energy capacity in participating countries within Europe and Central Asia while fostering regional knowledge sharing.