Armenia quite rich in new renewable sources of energy

ARKA News Agency – Interview
July 23 2004


Robert KHARAZYAN’s, Member of RA Public Services Regulatory
Commission, Exclusive interview to ARKA News Agency.

ARKA – Which branches of alternative energy do you consider
perspective in RA? And which of them are successful already?

R. Kharazyan – There is a traditional belief that RA is rich with new
renewable energy sources. Particularly, in the field of renewable
energy, according to Institute of Armhydroenergoproject, RA has quite
high potential. Thus, it is possible to construct small hydropower
plants (SHPP) in 400 locations with capacity approximately 1-3 MWt
We mean technically available potential energy with capacity circa
1.5 b KWt/h. But what portion is economically available in the
conditions of today’s tariff system is a somewhat delicate question.
In any case, according to approximate estimations, in the light of
today’s tariffs this is 4.5 cents for each KWt/h provided from SHPP
approximately 25-30% of technically available potential may be
economically profitable. If we remember that today all our hydro
plants generate together 1.4 – 1.6 KWt/h we can speak of adequacy of
this value.

ARKA – What works are being done in the direction of development of
wind power in the Republic?

R. Kharazyan – Às for the wind energy field, there were intense
research monitoring works conducted, that revealed quite perspective
sites. These are particularly, Pushkin, Karakhach, Selim passes,
Sodk, where we see essential progress in regard of preliminary design
works. Monitoring of some sites was conducted and Wind energy Atlas
of RA was created with the support of USAID and with the financial
assistance of the Dutch Government. According to the Atlas, the
economically available potential of the wind energy is estimated at
400 MWt. However, in my personal opinion, this estimation is somewhat
optimistic and in the light of today’s tariffs 7 cents for 1 KWt/h
160-170 MWt is the most realistic figure. I would like also touch
upon some features of the wind energy for the last years. The matter
is that almost 80% of world markets of manufacturing of wind energy
facilities (WEF) fall to European companies and therefore the prices
are defined in EUR. Currently the leading companies are Danish Vestas
and NEG-Mikon, Spanish GAMESA, German ENERCON, NORDEX. Particularly,
Vestas and NEG-Mikon together cover 35 – 40% of the world market. At
that, the US General Electric is actively entering the market that
according to 2003 occupied the 2nd place in regard of sales volume,
while in 2002 it was ranking only the fifth.
Meanwhile, due to fluctuations of EUR-USD exchange rates on the world
financial markets, the cost of WEF essentially increased in USD.
Although the price for WEF with capacity of 1 kWt/h remained in the
range of EUR 1000, nevertheless due to the above fluctuations you
have to pay for these facilities USD 1200 against the previous USD
800. As a result, the RA Public Services Regulatory Commission is
forced to review the decision taken in 2001 on the wind energy and in
2004 it raised the price from 5 cents to 7 cents for 1 kWt/h. excl.
We have quite essential progress related to Sodk project, where the
company SolarEn International and the Armenian affiliate currently
are in intense negotiations with the financial organizations in order
to find investors for Sodk wind energy generating plant with capacity
20 MWt in terms of new tariffs. Today the main task of the Commission
is working out the conditions of connecting industrial WEF to the
transferring or distributing network and preparing typical sample of
sale and purchase agreement of energy generated by the WEF. The
process of reforming the electric power market of RA somewhat delayed
the working out of these documents. It should be mentioned that as a
rule, the electric networks without special happiness, agree around
connecting of small generating objects and this sector needs in state
regulations. The Danish Government, e.g. is forced undertake
re-nationalization of transferring networks in order to eliminate the
obstacles on the ways of small generators. I do hope that during the
nearest two-three months we would be able working out these documents
that will be approved with the distribution networks.

ARKA – Is there any dynamics of the development of wind energy in our

R. Kharazyan – Actually there is no a special dynamics in RA. We do
not have any wind stations that would generate electric power
simultaneously working in parallel with the energy system. We do hope
that during the nearest 1-2 years RA also would occupy its own place
on the world map of wind energy. The map shows such countries as
Romania (WEF capacity 1 MWt), Cyprus (2MWt), Estonia (3 MWt). In any
case, our Commission is making everything possible depending from it
in order to bring RA on this map.

ARKA – Could you please inform us on solar energy technologies
applied today in RA?

R. Kharazyan – There are numerous technologies in helio-energy. The
most expensive of them is the technology of photo converters or so
called photo electric (photo voltaic) facilities. There are few such
local facilities in RA with capacity up to several KWt, particularly
the one installed on the roof of the American University of America,
St. Sargis Church, on the seismic observations systems.
It should be noted that currently this field is being actively
developed providing the average annual growth approximately equal to
35-40%. At the same time, we see that not only the leaders of the
filed as the USA, Japan, but also such countries as China, where the
huge infrastructure is created and own photoelectric modules are
being regularly produced, are active in the field. Although being
expensive, photoelectric technology is irreplaceable in some context,
especially in some mountainous regions, remote from the main power
supply network. It should not be forgotten that today around third of
the world’s population, i.e. 2b people are devoid of possibility to
use electric transferring networks. This can seem surprising, but
even the US has regions where photovoltaic power system economically
is more profitable than the traditional energy generation. Other
components of helio-energy, so called solar-thermal facilities
unfortunately have not found wide application worldwide. It is early
today to speak about this technology, although such research works
are being implemented in RA. Particularly, the famous Armenian
researcher Paris Geruni proposed quite unique technology related to
solar electric stations. In any case, in respect of resources, RA is
a quite rich country. Thus, if the average European indicator of
solar energy received for 1 sq.m. of flat surface make approximately
1000 kWt/h, this indicator in RA reaches 1700-1800 kWt/h/m2 . The
rational usage of such huge flow of the solar energy is more
perspective in regard of thermal supply. Today the field of solar
water heating is developing in RA. However in this respect we are
remarkably behind of the developed countries and as appears we should
concentrate on solar energy sector. I would like to mention that
there are several companies in RA that design and supply such

ARKA – In your opinion, what perspectives does RA have related to
geothermal energy?

R. Kharazyan – RA, that being located on the volcanic structure is
considered to be quite reach in geothermal energy. However until now
the direct drillings revealed geothermal sources with temperature up
to 1000 C. Such temperature level is not enough for economically
justified generation of electric power (usually such is 1500 C). I.e
our potential can be realistically used in thermal supply field,
particularly for heating water and heating, but not for generating
power as the thermodynamic cycle requires higher temperatures showing
high performance factor.
ARKA – To what extent using of biomass for the purpose of generating
energy can be profitable in RA?

R. Kharazyan – Biomass is quite diverse phenomenon – this can be as
solid urban wastes, as well as wastes produced from animal raising,
agriculture and industrial output. I think it would be more
appropriate for RA if it uses solid urban wastes and agricultural
wastes. Today the Commission worked out only tariffs for generating
energy from solid urban wastes. The works are being performed for
defining tariffs for generating energy from the agricultural wastes.
Today there is no such produce in RA, but I consider utilization of
Nubarashen waste dump as perspective, from which we can be expect
generation of energy power with capacity circa 4-5 MWt. In this
context we base ourselves on research of Japanese company Shimidzu.
The company’s representatives made a detailed study on Nubarashen
dump and presented feasibility study on the technology of generating
energy from the rubbish wastes. Also this is of ecological value, as
it would eliminate discharge of methane – quite aggressive greenhouse
Currently, Yerevan municipality and RA Ecology Ministry are in charge
of these issues. In my opinion the tariff defined by the Commission
at 7 cents is quite attractive for investors for the first seven

ARKA – Has the Commission approved the feasibility study?

R. Kharazyan – Approvals of such feasibility studies is outside of
scope of liabilities of the Commission. We just make research of
concrete projects on the basis of international experience and set up
stimulating tariffs.
ARKA – Are local or foreign investors are interested in the project?

R. Kharazyan – As for the investors companies from Norway, Holland,
Japan displayed interest in technologies of solid urban wastes.
Absence of tariffs was the obstacle, however we filled that gap and
there is a hope that the sector will be more active. I would like to
mention that the Commission is creating economically attractive base,
while the further negotiations should be led with the owner or the
state structures.

ARKA – Which are the obstacles on the way of development of renewable
energy in RA? What do the Commission’s relevant specialists plan for
boosting the sector economically?

R. Kharazyan – The main obstacle for development of renewable energy
in RA and also worldwide are quite the same and are economic. First
of all this is non-competitiveness of alternative energy compared to
the classical energy sector. Therefore the nations that wish
developing these technologies make state support of the renewable
energy thru subsidies or setting tariffs. The state in RA also
supports the renewable energy thru privileged tariff. To remind, the
average tariff for generators is circa AMD 11.5 (incl. VAT), while
for wind energy and biomass energy this is 7 cents, i.e. almost AMD
40, so the benefits are obvious. As for small hydroenergy, there are
no limitations (for generating profits) for those ones constructed on
natural water currents. At the same time, the Government according to
law on energy guarantees non-problematic purchase of power produced
by the small hydropower plants up to 2016 at tariff 4.5 cents for
each kWt/h.
I would like to stress that approximately until mid-90s the
development of renewable energy always depended on the conjecture of
the oil market, nevertheless during the last decade the situation did
not change. I.e. the renewable energy entered such a development
stage that practically does not depend on the situation on the oil
market and this is quite a positive thing.

ARKA – Have the specialists of the Commission take participation in
discussion and working out the draft law on energy saving and
renewable energy? Please comment the effect of this law on the
development of that sector in RA.

R. Kharazyan – Of course, the specialists of the Commission have
participated in preparing the draft law on energy saving and
renewable energy. But unfortunately, the majority of proposals was
not included into the draft, I mean privileges for renewable energy
particularly reduction of tax liabilities for companies supplying or
assembling required equipment. However, there is quite positive
aspect – creation of energy saving and renewable energy Foundation.
Currently, the RA Energy Ministry undertakes relevant steps in this
regard. The Foundation project is already worked out and is being
approved with the state structures. If the Foundation is created it
would play an important role in the development of that sector in RA.

ARKA – According to your forecasts, can the sector of renewable
energy develop to that extent that it would be able to replace the
traditional sources of energy in the context of European
organizations’ demand on closing the Armenian Nuclear Power Plant?

R. Kharazyan – The development of the alternative energy sector does
not mean eviction of the existing classical energy, therefore the
renewable energy is not absolutely alternative today. I suppose that,
in any case, the renewable energy will be only a support, but not an
alternative to the classic energy.
Today it is difficult to forecast that in 20-30 years the solar or
wind electrical plants can evict the Armenian Nuclear Power Plant or
powerful thermal plants. Anyway, we see the nations where the
alternative sources of energy already play an important role.
Particularly in Philippines, the share of the sector makes 25%.
Germany stimulates the renewable energy by its intense programs and
as a result the share of wind energy reached today 2.4% in the
overall volume of energy production. The EU has very ambitious
programs aiming that the renewable energy sources will produce by
2012 around 12% of the whole electric energy, while this indicator
would be 20% by 2020.

ARKA – What are the foreign international organizations that RA
cooperates with related to alternative energy?

R. Kharazyan – RA Public Services Regulatory Commission cooperates
with the Association of authorities regulating the activity of energy
systems of the nations of the Eastern and Central Europe and FSU
states in its scopes of liabilities. The structure was established in
Dec. 2002 in Bucharest and relevant state authorities of 22 countries
of Eastern, Central Europe, Baltic States, Central Asia and South
Caucasus currently are its members. The Association is in charge of
regulating of not only energy, but also other branches of public
services – gas, thermal supply, water economy as the RA Public
Services Regulatory Commission does. RA quite actively cooperates
with the Association. Particularly, our specialists are involved to
licensing and tariff commissions of that body. The Association often
organizes meeting among its country members. There are many
organizations in the world that advocate the development of these
technologies and publish periodicals. Particularly we subscriber to
Renewable Energy World journal that contains the information and the
opinion on the world events and development in the given sector is

ARKA – Is there any publications on RA in similar periodicals?

R. Kharazyan – The matter is that RA, unfortunately is not
represented in Renewable Energy World journal. However, the
specialists and personally me are in charge of this issue and are
undertaking steps toward presenting RA in this journal. T.M. –0–
From: Baghdasarian