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Tigran MELKONYAN Head of Foreign Relations Department Ministry of Energy and Natural Resources of RA 26-28 November, 2014 Bangkok, THAILAND
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Page 1: Tigran MELKONYAN Head of Foreign Relations Department ...

Tigran MELKONYANHead of Foreign Relations Department

Ministry of Energy and Natural Resources of RA26-28 November, 2014Bangkok, THAILAND

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CONTENT¢Overview of the energy sector of Armenia, energy

strategy and its implementation

¢Development of competitive energy markets inArmenia

¢Development of renewable energy sources inArmenia

¢Promotion of energy efficiency in Armenia

¢Development of Nuclear Energy

¢District Heating

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ENERGY STRATEGY

The Energy Sector Development strategy ofArmenia was adopted by the government ofArmenia in June 2005, which was updated in2007. The primary objective of the mentionedstrategy is to formulate strategic goals for thedevelopment of the energy system in Armeniauntil 2025. It aims to identify the avenues toachieve those goals, based on the principlesadopted by the international community forsustainable development.

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The following four Pillars are identified in all official document

ó nuclear energy development

ó full and sound utilization of renewable energy

sources, improving of energy efficiency

ó diversification of primary energy resources and

import/export routs

ó regional integration and cooperation.

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In an effort to ensure an appropriate level of energysecurity of the RoA we have developed incooperation with the Armenian National SecurityCouncil a Concept of the Energy Security of theRepublic of Armenia that was approved by the RoAPresident’s decree in October 2013.

The RoA government has adopted a program-schedule of the events to be held in 2014-2020providing for the implementation of the conceptprovisions in July 2014.

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ENERGY SECURITY

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Energy security

ØRegional integration:

ó Construction of 400 kV transmission third line Iran-Armenia is startedó In January 2014 the Feasibility Study of 400 kV TL on

the Armenian side and 500 kV TL on the Georgianside has been approved by the Armenian andGeorgian Parties.It is envisaged to start with the existing 220 kV line,then to construct 400 kV two-circuit line and asubstation with B2B converter at total capacity of1050 MW. The first stage will be completed in 2018, inwhich the 220 kV line will be connected to the 350MW substation with B2B station.

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ENERGY SECURITY

In 2013-2014 packages of two new loan programs were developed withinthe framework of financing by the WB ($100 million) and the ADB ($80million). The packages of these loan programs shall include allsubstations that were partially refurbished under financing of previousloan programs; works of the third stage of SCADA system installationand modernization of a number of high-voltage transmission lines.

In the list of issues and to-do activities for the year 2014 there are twoimportant large projects of regional cooperation: construction of Iran-Armenia transmission third line and construction of Meghri HPP.These two projects shall be financed by Export Development Bank ofIran (EDBI).

It is planned to construct a new thermal unit with 250-400 MWcapacity in Yerevan TPP in 2021 and Loriberd and Shnogh HPPs by2025.

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Energy market

Presently the Power Market of Armenia represents, ingeneral, a close system, where economic relationsbetween the power sector entities are formed on ascheme “single buyer-seller”, the role of which isperformed by the “Armenian Electric Networks” CJSC. Asystem direct sale-purchase contracts between generatorsand the distribution company is being applied in theRoA. Currently is under discussion the possibility ofimplementing partial of phase-by-phase power marketliberalization.

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Development of renewable energy sources in Armenia:

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Summary of RE PotentialTechnology Capacity (MW) Generation

(GWh/yr or GWht/yr)

Wind 200 450

Solar PV 835 – 1,169a 1,735 – 2,118a

Concentrating solar power 1,169 2,358

Distributed solar PV 93 128

Geothermal power 31 – 54 244 – 436

Landfill gas 2.5 19

Small hydropower 91 334

Pumped storage hydropower 150 1,161 - 1,362b

Biogas 3.3 26

Biomass 29 228

Solar thermal hot water 200 254

Geothermal heat pumps 3,500 4,423

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a) Depends on which solar PV technology is assumed to be deployed: fixed-tilt polycrystalline PV, single-axis tracking polycrystalline PV, dual-axis tracking monocrystalline concentrating PVb) Pumped storage projects do not “generate” new renewable energy, but store energy that has been generated elsewhere. So, the pumped storage number is excluded from the totalc )Solar PV or CSP can be built in the solar “zones.” Therefore, the total includes only the generating potential for one of these technologies, so as not to double count

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Development of renewable energy sources in Armenia

Armenia has significant achievement in realization of hydro potential.

• In 2005-2013, more than US$150 million was invested in SHPP, which added

around 210 MW of new SHPP capacity.

• All generation facilities are owned and operated by private companies.

• The renewable energy based annual electricity generation increased from 150

GWh in 2005 (2.5 percent of total generation) to 740 GWh in 2013 (around 10

percent of total generation).

• The donor community played an important role in promoting development of

renewable energy in Armenia through a number of projects, including resource

assessments and mapping, which also provided both investment and technical

assistance to improve the legal and regulatory framework for renewable energy.

• Research and technical capacity as well as studies, policies and plans for

renewable energy development already exist in Armenia.

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Development of renewable energy sources in Armenia

Investment projects: WB&EBRD REP; GEF/WB REP; KfWREP; EBRD–ArmSEFF, IFC–SEF

TA projects financed by WB, USAID, ADB etc

The German Government will provide a concessional loanfor development of renewable energy in Armenia. In 2010the German KfW bank provided to Armenia a loan of €18million and a grant of €1.5 million (the second stage of theproject), under which 16 SHPPs of 52.5 MW total installedcapacity were financed up to date. In November 2013 withinthe framework of Project III a loan of up to €40 million wasprovided; the possibilities of providing assistance to otherrenewable energy areas are currently being negotiated.

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Development of renewable energy sources in Armenia

On 27 June 2014 the Bord of Climate Investments Fund adopted theparticipation of Armenia in SREP – scaling-up RE in low incomecountries programme.The Ministry of Energy and Natural Resources of RA developmentof the investments plan for the Renewable Energy extension projectthat will make possible receiving $40 million of grant and loanmeans from the Climate Investments Fund, aimed to financeinvestment programs estimated to nearly $150 million. Based on theresults of the Geo-Thermal Project the extension of the project hasbeen included into the Armenia Renewable Energy InvestmentProgram, which was submitted for financing within the frameworksof the Renewable Energy Extension Program of the ClimateInvestment Fund.

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Development of renewable energy sources in Armenia

The Scaling-Up Renewable Energy Program of theClimate Investment Funds seeks to demonstrate theeconomic, social and environmental viability of lowcarbon development pathways in the energy sector inlow-income countries. SREP does this by supporting thedeployment of renewable energy technologies such assolar, wind, bio-energy, geothermal and small hydro inlow income countries. The support is intended to have atransformative impact on the country, leveraging SREPfunds to remove barriers to renewable energy and lead tothe replication of renewable energy investments throughother sources of financing.

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Development of renewable energy sources in Armenia

The Investment Project is the result of an extensive internaland public consultation process, led by government, toidentify priorities in the development of renewable energytechnologies for electricity and heating. The consultationsincluded a wide range of government agencies, as well asrepresentatives from the private sector, civil society, andacademia. Discussions were informed by the analysis of theRenewable Resources and Energy Efficiency (R2E2) Fundand international consultants. The IP also serves as anupdate and further elaboration of the Renewable EnergyRoadmap developed for Armenia in 2011.

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Promotion of energy efficiency in Armenia:

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Promotion of energy efficiency in Armenia

ó In 2012 the RoA government has approved the energy efficiency projectunder the World Bank financing (implemented by the ArmeniaRenewable Resources and Energy Efficiency Fund). The project istargeted to implement energy saving activities in public facilities(schools, other educational institutions, kindergartens, hospitals,administrative buildings, cultural centers, external lightening ofresidential buildings). The purpose to develop this project is to reducethe level of energy consumption by social and other public facilities.The cost of the project estimated to be about 10.7 million USD.

ó Within the framework of the Energy efficiency investments in publicbuildings component about 230 public utilities submitted applicationsfor participation in the project. 77 of the submitted applications fromutilities were rejected due to small energy costs, 22 were approved - ofwhich in 13 utilities the works were completed in 2013 and 49.3 %energy savings in average were ensured, while works in 9 utilities areplanned to be completed in 2014. The remaining utilities are in theprocess of study and assessment.

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Promotion of energy efficiency in Armenia

ó Membership in the Eastern Europe Energy Efficiencyand Environment Partnership (E5P) will enableimplementing very important energy efficiencyprojects. This will provide an opportunity to receivenot only grants, but also very soft loans forimplementation of energy saving and energy efficiencymeasures in urban areas of Armenia that makes anintegral part of the National Energy EfficiencyProgram.

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Promotion of energy efficiency in Armenia

}Investment projects: WB-Urban Heating Project; GEF – EnergyEfficiency Project, EBRD–ArmSEFF, IFC–SEF}TA projects financed by WB, GEF/UNDP, USAID, EBRD, etc

}R2E2 Energy Efficiency Project• Objective – Reduce energy consumption in public buildings• Financing - Revolving Fund – $8mln. from GoA to R2E2 Fund

WB/GEF Grant - $1,8mln.• Beneficiaries – public and municipal agencies• Typical ESMs – Insulation of walls and roofs, replacement windows,

replacement of street lighting system• Repayment within 10 years with 2.5% interest• Currently about 15 Energy Savings Agreements were signed, 2.6

mln$

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Development of Nuclear Energy

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Development of nuclear energyó In October 2009 was adopted the Law of the RA “On construction of new

nuclear unit(s) in the Republic of Armenia”, which will serve as a legal basis forconstruction of the new nuclear unit in Armenia.

ó In accordance with the provisions of international conventions and the internallegislation of Armenia was developed the document «Environmental ImpactsAssessment», and had been held the public hearings on the EnvironmentalImpacts Report. At the same time has been developed the document «seismicand volcanic hazard assessment for the new unit at the Armenian NPP site»,which had the positive feedback from the IAEA experts.

ó In August 2010 an agreement was signed between the governments of Armeniaand Russia “On construction of a new nuclear power unit on the territory of theRA”. According to the Agreement, the Russian portion of investments willcorrespond to the cost of equipment supplied for the “nuclear island”. Theproject is open for other investors.

ó Other nuclear unit components of the project, i.e. Turbine Island, I&C systemswith agreed Rosatom can be Western technology. It is the subject ofnegotiations with international suppliers.

ó According to the Government decree 511-A as of 19.05.2014 the new nuclearpower unit have to be start operation at 2027.

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Development of nuclear energy

Taking into consideration the restrictions on providing thecredits to the Republic of Armenia by sovereign guarantee, theimplementation of the project on the construction of a newnuclear unit(s) in Armenia was slowed.

Since the development of Armenia New Nuclear Unit has beendelayed the Government of Armenia made the decision toextend the life time of the existing unit in order to assuresustainable and secure electricity supply to Armenia customers.

On 27 March 2014 the RoA Government has approved aDecision on the ANPP Design Lifetime Extension Program.

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District Heatingó Until the economic and energy crisis of the 1990s, the district heating system in

Armenia supplied nearly all heating and hot water to residential and publicbuildings.

ó The district heating system had actually collapsed: heat generation by districtheating systems in 2005 fell to about 2.5% of that in 1990.

ó There were no regulations or authorised body designated responsibility for thesector, no targeted social support and no financial support schemes.

ó Public reliance on individual heating solutions for heating and hot waterincreased;

ó The gas supply system was expanded and safety requirements were relaxed forusing natural gas for heating purposes in multi-storey residential buildings.

ó The development of Cogeneration in market conditions , without of crosswisesubsidies.

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