Armenia has faced significant challenges in its energy sector since the early 1990s, following the collapse of the Soviet Union. Political tensions and disrupted supplies led to widespread blackouts, particularly after the shutdown of the Metsamor nuclear power plant in 1989. Although operations at Metsamor resumed in 1996, underinvestment left Armenia’s electricity transmission system vulnerable to disruptions.
Transmission lines are essential for delivering power across Armenia, but much of this infrastructure was outdated and poorly maintained for decades. By the early 2010s, deteriorating equipment resulted in frequent outages that affected industrial production and investment decisions.
To address these issues, the Government of Armenia and High Voltage Electric Networks (HVEN) partnered with the World Bank in 2011 to launch the Electricity Supply Reliability Project. This initiative rehabilitated 230 kilometers of high-voltage transmission lines and upgraded three key substations. In 2015, a follow-up project expanded improvements to additional substations serving both residential and industrial users.
According to the World Bank, "Supported by the World Bank and other partners, HVEN has continued rehabilitating and modernizing substations. Almost 75% of Armenia’s substations have now been upgraded, strengthening the grid’s reliability, safety, and operational performance."
Despite progress at the transmission level, further investments are needed in regional interconnectivity and distribution networks to ensure all consumers benefit from efficiency gains. The modernization effort is seen as vital as Armenia transitions toward a more liberalized electricity market.
In 2024, as part of its efforts to help Armenia shift toward renewable energy sources like solar and wind, the World Bank approved the Armenia Enabling the Energy Transition Program under its Europe and Central Asia Renewable Energy Scale-up initiative. Over five years, this program will support HVEN in completing substation upgrades and implementing new technologies such as digital platforms for real-time grid monitoring, automated protection systems, and smart metering.
The World Bank stated: "New investments will introduce a digital platform that allows operators to monitor and control the grid in real time, along with automated protection and smart metering. Together, these technologies will reduce losses, cut outages, and enable more renewable energy to flow reliably into the system. This means more stable power for homes and businesses and a smoother transition to cleaner energy sources."
In addition to infrastructure upgrades, reforms are underway to modernize regulatory frameworks for renewables, liberalize electricity markets further, and improve HVEN's governance. These changes aim to make Armenia’s power sector more commercially viable while reducing reliance on government guarantees.