Electricity Production In Armenia

ELECTRICITY PRODUCTION IN ARMENIA

[ Part 2.2: “Attached Text” ]

Posted on July 25, 2013 by Areg Gharabegian in Featured, Special
Reports // 0 Comments

Electricity production in Armenia has fully recovered from the major
problems it was facing in the early 1990’s and is now a reliable
industry. Armenia’s energy issues began after the 1989 earthquake,
when the government of Soviet Armenia was forced to close the Metzamor
nuclear power plant under mounting pressure from a public that,
fearing a Chernobyl-type catastrophe, was concerned about safety.

1×1.trans Electricity Production in Armenia

Figure 1: Available electricity generation and production

In 1987, people in Armenia started demonstrating against Soviet rule.

After the devastating earthquake of 1989, some activists started
demanding the closure of the Metzamor nuclear plant as well as the
Nairit chemical and rubber producing complex. Shutting down the nuclear
plant was the worst mistake in recent Armenian history. Had the nuclear
plant not been closed, Armenia would not have plummeted into the dark
ages and, as a result, would have not lost one-third of its population
to forced economic out-migration. After more than 20 years, Armenia
still has not recovered from the devastation caused by these closures.

Even though Armenia had excess electricity production in 1989 and
was exporting electricity to other Soviet republics, shutting down
one-third of its electricity production capacity was bound to have
some negative impact on industry and economic wellbeing. However,
the main electricity production problems began only after the Soviet
Union’s collapse, after Armenia’s independence, and the Karabagh War.

Armenia had been relying on gas and oil imports from Russia to operate
its thermal power plants. Gas was being delivered via pipeline,
and oil via train, both traversing Azerbaijan. When, as a result
of the war, Azerbaijan imposed a blockade, Armenia was cut off
from its gas and oil supplies. Due to the lack of required fuel,
thermal power plants were shut down and Armenia had to rely only
on its hydropower production from the Sevan-Hrazdan and Vorotan
Cascades. These two hydropower cascades were not operating at full
capacity because required parts could not be delivered from Russia
via Azerbaijan. Industrial production ceased due to the lack of
electricity and fuel, resulting in the economy’s collapse.

Armenia’s energy sector has seen tremendous change in the last two
decades. Restarting the second unit of the nuclear power plant in
1995 helped bring an end to the energy crisis. The availability
of electricity service has increased from just a few hours a day
2 decades ago to 24 hours a day. Electrical production companies
have emerged from a heavy dependence on state funding to commercial
viability. However, the same issues that caused the collapse of
the system in the mid-1990’s still exist. Armenia still relies on
imported gas and oil for its energy production. A majority of the gas
is imported from Russia via a pipeline through Georgia and a small
amount of gas is being imported from Iran via a pipeline. Gasoline
and heavy fuel oil are delivered from Russia via tanker trucks.

Uranium for operating the nuclear power plant is also imported
from Russia.

1×1.trans Electricity Production in Armenia

Figure 2: The Hrazdan Thermal Power Plant

Armenia’s electricity system has 3,914 Mega Watts (MW) of installed
capacity, of which only 73 percent or 2,845 MW is currently
operational. Electricity is produced by three-generation sources:
nuclear (34 percent), thermal (32 percent), and hydropower (34
percent). The share of thermal and hydropower plants in the capacity
and production mix has increased in recent years as new plants have
been built and weather conditions have been favorable for hydropower
production.

The Metzamor nuclear power plant provides base load capacity. The
Vorotan and Sevan-Hrazdan Cascade hydropower plants provide daily load
regulation, while thermal power plants operate to meet winter’s peak
demand and to serve as the base load a few weeks in the fall when
the nuclear power plant goes offline for maintenance. (See Figure 1
for the composition of available capacity and production in Armenia.)

Thermal power plants

The main thermal power plant complexes are in Hrazdan and Yerevan.

The original equipment at these two gas-fired plants has worked beyond
the 200,000 work-hour design life and does not meet international
technical, economic, and environmental performance standards. These
plants have not undergone necessary capital improvements in recent
years, and operations and maintenance have been consistently
under-funded. The plants run on outdated Soviet technology, and
obtaining spare parts for maintenance is difficult and costly as the
equipment is no longer manufactured.

The construction of the Hrazdan thermal power plant was started in 1963
with a total capacity of 1,110 MW. The first unit became operational
in 1966. Its fuel efficiency is 35 percent compared to 57 percent for
a new, efficient thermal power plant. In 2004, Armenia transferred
the Hrazdan thermal power plant complexes to the Russian Federation
as a means of satisfying certain state debts.

ArmRusGasprom, the Russian owner of the Hrazdan complexes, has recently
completed construction of a new 440 MW Hrazdan 5 thermal power plant,
which is an efficient plant meeting today’s operational standards. (See
Figure 2 for a view of the Hrazdan thermal power plant complex.)

In 1963, the first of seven turbines of the Yerevan thermal power plant
began operation, with a capacity of 50 MW. The total installed capacity
of the plant complex is 550 MW, but only one of the older generating
units remains operational today, with a capacity of approximately 50
MW. This complex has operated for more than 40 years, although the
lifespan of thermal power plants throughout the world is 30 years. A
new 240 MW combined cycle gas turbine at the Yerevan thermal power
plant complex came online in 2010, and was constructed with a $247
million loan from the Japanese Bank for International Cooperation. The
loan was given in 2007 with an interest rate of 0.75%, a 40-year term,
and a 10-year grace period.

This gas-powered turbine is able to generate approximately one-quarter
of Armenia’s current electricity output. The unit is also twice as
efficient as the plant’s decommissioned units.

1×1.trans Electricity Production in Armenia

Figure 2: The Hrazdan Thermal Power Plant

The new plant was constructed with an aim to reduce the generation
cost of 1 KW/hour of electricity from the current 400 drams to 160-170
drams. Construction of the second and third power plants on the same
site is being considered by the government of Armenia.

There are also two other small plants in Armenia. The Yerevan
Thermoelectric Plant has only one turbine with a capacity of 50 MW, and
produces electricity, steam, and heat mainly for the Nairit Chemical
Plant. The Vanadzor Thermoelectric Plant, with a capacity of 50 MW,
is currently not operating; this will change only if the Vanadzor
chemical complex becomes operational.

Nuclear power plants

The Metzamor nuclear power plant was built during the 1970’s about 19
miles west of Yerevan. The total capacity of the two units at Metzamor
is close to 800 MW, but only one of the units is operational. The
plant is one of just a few remaining nuclear power reactors in the
world that was built without primary containment structures. It has
been operated by a Russian company, Inter RAO UES, since 2003, as
part of an agreement to help pay off Armenia’s debts to Russia. The
400 MW operational unit is beyond its 30-year design life and is
scheduled for decommissioning in 2021. Armenia will face a major
supply-demand gap once the nuclear power plant is retired; that is
why the government of Armenia is trying to secure financing to build
a new nuclear power plant, which is estimated to cost $4 billion.

Hydro power plants

Historically, hydropower has constituted a large part of Armenia’s
electrical energy production resources. There are two large hydropower
cascades, Sevan-Hrazdan and Vorotan, which have a combined installed
capacity of approximately 960 MW. As of 2012, there were more than
110 commercial size small hydropower power plants (SHPP) operating
in Armenia. About 60 of these were developed and constructed in the
past 10 years. There are also numerous small (micro) units that are
operated by individuals to satisfy their own electrical needs. The
forecast is that SHPP generation will grow from its current 5 percent
penetration level of total electricity generation to 10 percent over
the next 10 years.

The Sevan-Hrazdan Cascade hydropower system is one of the most
important hydropower generation assets in Armenia. It was built between
1936 and 1961. The system consists of seven run-of-the-river hydropower
stations, canals, and reservoirs between Lake Sevan and Yerevan. With
a total installed capacity of 565 MW, it currently supplies about 10
percent of the country’s electricity, and plays a significant role in
supporting the balance of the electric grid and providing affordable
energy. This system is majority owned by the Russian RusHydro Company,
one of the largest hydropower companies in the world.

The Vorotan Complex is the second largest hydroelectric power plant
in Armenia. It has three stations with a total installed capacity of
404 MW. The first unit came online in 1970, and the last one in 1989.

(See Figure 3 for Unit 2 of the Vorotan Complex.) The Armenian
government is planning to sell the Vorotan Cascade to ContourGlobal,
L.P., which is a New York-based independent power producer. It
develops, acquires, and operates electric-power and district-heating
resources primarily in underserved and overlooked markets worldwide.

System reliability

Reliable and affordable energy supply is critical for economic
growth. The Armenian government has set a target of up to seven
percent GDP growth, which is expected to result in increased demand for
energy resources. Key areas of economic growth include the industrial,
commercial, and retail services sectors. These sectors accounted for
45 percent of GDP in 2011 and have been the largest contributors to
GDP growth over the past 2 years. They sectors are energy-intensive,
accounting for 81 percent of non-residential electricity consumption
and 51 percent of total domestic consumption.

An old transmission and distribution infrastructure contributes to
energy security problems. Transmission infrastructures in Armenia are,
on average, more than 45 years old and require rehabilitation.

Roughly 33 percent, or 520 km. of power lines, are in poor condition
and require urgent rehabilitation at a cost of $80-$100 million. The
old infrastructure exacerbates Armenia’s energy security problems.

The available capacity of domestic hydropower resources is lower
than their installed capacities, and old thermal power plants make
inefficient use of valuable imported fuels.

The country’s heavy reliance on imported natural gas to generate
much of its power makes the sector susceptible to fuel supply
interruptions. Inefficient generation, transmission, and distribution
infrastructure means that the power sector must use more imported
fuel to provide the same level of electricity service than it would
if this infrastructure were more efficient.

Energy-generating companies

Currently there are four energy-generating companies in Armenia that
produce more than 80 percent of electricity in the country. These are
the Armenian Nuclear Power Plant, with a total gross output capacity
of 407.5 MW; the RazTES, with a gross output capacity of 1,110 MW and
a functioning output capacity of 760 MW; the Sevan-Hrazdan Cascade
hydroelectric power plant, with a gross output capacity of 550 MW;
and the Vorotan Cascade hydroelectric plant, with a gross output
capacity 400 MW.

Renewable energy resources

Armenia is planning to diversify its electricity generation and fuel
supply sources by exploiting domestic renewable resources.

Significant renewable energy potential exists, but the government
has struggled to attract private investors for non-hydro renewable
projects. It is estimated that Armenia has more than 1,000 MW of
technically viable capacity from solar photovoltaic (PV), 300-500
MW from wind, 250-350 MW from unexploited small HPPs, and 25 MW from
geothermal. There is also potential for producing roughly 100,000 tons
per year of biofuel from local plants to be used as gasoline additive.

Electricity trade with neighboring countries

The Armenian government has negotiated electricity trade agreements
with Iran and Georgia to improve energy security and affordability.

It negotiated a gas-electricity swap arrangement with Iran under
which it exports 3 kWh of electricity in exchange for 1 m3 of gas
from Iran. Trade with Georgia is limited because of an asynchronous
connection between the two systems. In the short-term, increased trade
with Georgia would allow Armenia to export its excess hydropower
generation during the spring and summer to Turkey via Georgia. In
the long-term, if Armenia builds a new nuclear plant, additional
transmission capacity will be needed to export electricity from the
plant, as the planned nuclear plant will be significantly larger than
what is needed for domestic demand. If Armenia does not build a new
nuclear plant, additional transmission interconnection capacity could
help Armenia meet its supply gap with relatively cheap hydropower
imports from Georgia.

From: Emil Lazarian | Ararat NewsPress