World Bank supports Armenia with $40m for transmission modernisation

The World Bank’s Board of Executive Directors has approved $40 million for the Republic of Armenia, focusing on the rehabilitation of power transmission substations, the adoption of reforms to allow the country’s transmission company to access private financing and the promotion of energy sector modernisation.

The funding comes in support of the Enabling the Energy Transition project for Armenia, which will assist in the implementation of the country’s Energy Sector Development Strategy to 2040.

The Enabling the Energy Transition project seeks to attract private investment totalling $550 million, upgrade all transmission substations with automated control and digital protection systems and increase the total capacity of transmission substations from 2,711MVA to 3,109MVA.

These efforts are part of a strategy to enhance renewable energy adoption, minimize environmental impact and modernise the grid for increased efficiency and reliability.

The end goal of the project is to facilitate the integration of an estimated 1.1GW of renewable energy generation capacity into the transmission grid by 2032, which is enough to power over 690,000 households. This will reduce the annual emissions of net greenhouse gas by 540,000 tonnes.

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Commenting in a release was Carolin Geginat, World Bank country manager for Armenia: “To ensure affordable, reliable and clean electricity supply for consumers, Armenia needs continued investments in modernising 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.”

Armenia’s energy transition project also forms part of the Europe and Central Asia Renewable Energy Scale-Up Multiphase Programmatic Approach (ECARES MPA) Program, which has an overall financing envelope of $2 billion equivalent. The Programme was approved by the World Bank’s Board of Executive Directors in March this year.

The ECARES MPA is designed to increase renewable energy capacity in participating countries of the Europe and Central Asia region, support the acceleration of their renewable energy transition and achieve scale and impact through private investment, while fostering regional knowledge sharing.

According to the World Bank in a release, Armenia’s power sector is heavily dependent on imported fuels, especially natural gas, which creates significant energy security risks, compounded by the global energy crisis.

Attracting private investment is essential to fund the large-scale projects needed in the sector. In 2021, they state, 62% of Armenia’s total energy supply came from natural gas, followed by oil (16%), nuclear (14%) and hydro (5%), whereas the share of nontraditional renewable energy sources (wind and solar) was only about 1%.