Armenia energy profile

Armenia Energy Profile

Overview

• Country Overview: Armenia is a landlocked country in the southern Caucasus region, bordered by Turkey, Georgia, Azerbaijan, and Iran. With a population of approximately 2.969 million and a land area of about 29,800 km², the capital Yerevan is home to 1.092 million people. Since the early 1990s, Armenia has transitioned from a centrally planned economy to a partially market-oriented one, with significant privatization of state enterprises. Economic growth has been driven by foreign capital and aid, leading to a real GDP increase of 5.72% annually from 2002 to 2021.

• Energy Supply and Demand:

  • Production: Armenia produces around 0.96 Mtoe of energy annually, primarily from nuclear and hydro resources. In 2020, natural gas dominated the energy mix (59.6% of total energy supply).
  • Electricity: In 2021, Armenia produced 7.7 TWh of electricity, with natural gas accounting for 44% (3.4 TWh), hydro and other renewables 30% (2.3 TWh), and nuclear 26% (2.0 TWh).
  • Demand: Energy demand averaged over 3 Mtoe in 2020, with residential and transport sectors consuming 0.86 Mtoe each (33% of total final consumption). Natural gas and electricity are the primary energy sources for households, while transport consumes natural gas and oil products.

• Imports/Exports: Armenia relies heavily on imports for its energy needs, with natural gas representing over 80% of energy imports (2.147 Mtoe out of 2.8 Mtoe in 2020). Russia is the dominant supplier of natural gas (87.7% in 2021), followed by Iran. Armenia is a net exporter of electricity, primarily exchanging it for natural gas from Iran.

Key Policies

• Energy Security: Armenia's reliance on imported natural gas and oil exposes it to supply risks and dependence on a single supplier. The government is focusing on developing indigenous energy sources, particularly renewables, and extending the lifetime of the nuclear reactor that supplies nearly one-third of the country's electricity.
• Energy Policy: Armenia aims to enhance energy efficiency and develop its energy infrastructure. The second National Energy Efficiency Action Plan (NEEAP-2) was developed in 2020. The government is also working on strengthening regional policy and broadening market integration, having joined the Eurasian Economic Union in 2015 and becoming an observer of the Energy Community in 2011.

Conclusion

Armenia faces significant challenges in ensuring energy security due to its heavy reliance on imported natural gas and oil. However, the country is making efforts to diversify its energy sources and improve its energy efficiency. With ongoing support from the donor community and strategic regional partnerships, Armenia is working towards a more sustainable and secure energy future.