The World Bank’s Board of Executive Directors has approved a $40 million loan to support the “Enabling the Energy Transition” project in Armenia. This initiative will assist in the implementation of the Republic of Armenia’s Energy Sector Development Strategy up to 2040, reports Zartonk Media citing the Armenian Office of the World Bank.
The funding will be directed toward the rehabilitation of power transmission substations, adopting reforms to enable the transmission company’s access to private financing, and promoting modernization across the energy sector. The project also aims to foster regional energy cooperation among emerging and developing economies within the Europe and Central Asia region.
Currently, Armenia’s power sector relies heavily on imported fuels, particularly natural gas, which poses a significant energy security risk”especially amid the global energy crisis. Attracting private investment is essential for funding the large-scale projects needed in the sector. In 2021, 62 percent of Armenia’s total energy supply was derived from natural gas, followed by oil (16 percent), nuclear energy (14 percent), and hydroelectric power (5 percent). Non-traditional renewable energy sources such as wind and solar represented a mere 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,” stated Carolin Geginat, World Bank Country Manager for Armenia.
The project’s objectives include the integration of an estimated 1.1 GW of renewable energy generation capacity into the transmission grid by 2032, which could power over 690,000 households. This integration is expected to reduce annual net greenhouse gas (GHG) emissions by 540,000 tons. Additionally, it aims to attract private investments totaling $550 million, upgrade all transmission substations with automated control and digital protection systems, and increase the total capacity of transmission substations from 2,711 megavolt-amperes (MVA) to 3,109 MVA. These enhancements are part of a broader strategy to boost renewable energy adoption, minimize environmental impact, and modernize the grid for improved efficiency and reliability.
This initiative is part of the Europe and Central Asia Renewable Energy Scale-Up Multiphase Programmatic Approach (ECARES MPA) Program, which encompasses an overall financing envelope of $2 billion.
Approved by the World Bank’s Board of Executive Directors on March 28, 2024, this program is designed to increase renewable energy capacity across participating countries in the Europe and Central Asia region. It supports the acceleration of renewable energy transitions, achieves scale and impact through private investment, and fosters regional knowledge sharing.
