New thermal energy plant in Yerevan to work on Iranian gas

Armenia and a number of major international companies have signed an agreement to construct a thermal power plant in Yerevan for $250 million.

Capacity and cost

The new unit will produce 250 MW of energy annually, which will be purchased by the state.

Initially, the price per kilowatt of energy will be 6.2 cents, but will later come down to 5.7 cents.

The Armenian Ministry of Energy and Natural Resources says that it will be the cheapest source of energy among the Armenian thermal power plants.

Energy Minister Garegin Baghramyan says the price and amount of energy produced will allow for a reduction in electricity tariffs throughout the country:

“We will be able to save about $6.4 million. This may lead to a reduction in tariffs in the country by 1.5 drams.”

Currently, the electricity tariff in Armenia is 47 drams per 1 kWh, that is, less than 10 cents.

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Where will funds to build the power plant come from?

The thermal power plant will be built with private capital by Italian company Renco, and the German company Siemens who will provide some of the needed funds. Other investments will come from credit organizations including the Asian Development Bank.

Construction of the plant will begin in two weeks – during the construction process, 1,000 – 1,200 people will be employed. Once the plant goes live, it will employ about 200 people.

Why the plant is so important for Armenia’s energy system

There are currently two thermal power plants in Armenia – Yerevan and Hrazdan.

In two years, the Hrazdan plant will be shut down. Thus, the construction of a new station is necessary to replace the old plant.

Electricity will be generated via natural gas, which the country will buy from Iran. In exchange, Armenia will export electricity to Iran. The barter system has been in use for many years, and in Yerevan they intend to increase supply volumes over time.

For the past 10 years, the Armenian-Iranian gas pipeline has been used at about a third of its capacity. However, after its modernization, it will be able to pump almost the entire volume that Armenia needs on an annual basis – about 2 billion cubic metres of gas.

This could allow Yerevan to diversify its energy system. As things currently stand, the country buys almost all the necessary volume of blue fuel from Russia.