Small HPPs Are Growing: New Policy Of The Armenian Government

Sept 12 2011

YEREVAN. – The Armenian government proposed to the Public Services
Regulatory Commission of Armenia to limit 30 MW, instead of the
current 10 MW, as maximum capacity for small hydro power plants (HPP).

In this way, the relatively average-capacity HPPs will likewise be
defined as small HPPs. In addition, during a session on September 8,
the “Strategic Development Program of the Hydro Energy Domain” was
approved, whereby it is planned to produce – through small HPPs – 1
billion kW/hour annual electricity, instead of the current 400 million.

But this decision by the government has already received negative
reaction from the environmentalists. According to EcoLur organization,
in this way the water systems of Armenia’s rivers could be destroyed
since there is no regulation as to which part of the river water can
be used without damaging the ecosystem.

Nonetheless, there is no doubt that the country’s water potential must
be used effectively, and this is the case in terms national security,
in the first place.

According to expert analysis, from Armenia’s largest rivers the Debed –
together with its Dzoraget creek – and the Araks are poorly used for
energy purposes.

But large-scale HPP construction, or planning, is underway at those
3 rivers. In addition, 74 small HPPs are under construction, and 101
small HPPs were producing energy as of March 1, 2011.

Also, the Armenian government prepared an interesting proposal toward
developing the country’s hydro energy potential; but this proposal
could change the price of electricity being supplied to consumers. The
Public Services Regulatory Commission is recommended to increase,
starting from 2016 and up to 6.5 US cents, the electricity supply
tariff for HPPs with over 10-MW capacity. This is a fairly important
decision considering the fact that the price of electricity supplied
from large HPPs is fairly low.

At present, the price of electricity supplied from small HPPs is
17.2 drams ($.05 dollars)/kW, without value added tax. But even if
the change in tariff of small HPPs might not substantially reflect
on the price of electricity supplied to the consumer, in the case of
large HPPs a price change cannot be avoided.

It is apparent that, first and foremost, the government is trying to
stimulate construction of large or medium-size HPPs, as the priority
was formerly given to up-to-10-MW-capacity HPPs.

Samvel Avagyan

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