Hydropower, Solar

Legislative Reform to Promote Solar Energy in Armenia

The Armenian Parliament on May 12 adopted the second and final reading draft amendments “On Energy Saving and Renewable Energy,” giving strong impetus for the development of solar energy in private and industrial segments of the Armenian economy, according to market participants.

“[The] new version of the law provides the use of [solar PV] systems with peak power capacity that does not exceed 150 kW,” Armenian renewable energy consultant Hovhannes Tevosyan said.

He noted that a solar PV system with 1 kW of peak power, occupying the territory of six square meters, in Armenia produces 1,800 kW/h per year of electricity under perfect weather conditions. However, to make a system profitable, it is necessary to bring peak power capacity to 20 kW.

“The introduction of these systems will pay for itself in 10 years, lasting in total for 25 years,” he said. “Cost per kW of energy will be about US$ 1,500 – 1,600, including taxes. According to the amendments, if weather conditions do not allow producing of solar energy, the user can switch to the conventional energy network.”

In addition, new amendments provide that users can sell the excess of energy back to the conventional energy network in case it produces too much to consume at half the price of the energy tariff.

The system can be installed both at private households, in the form of solar panels at the roofs of the buildings, and on an industrial basis. According to Deputy Minister of Energy and Natural Resources of Armenia Hayk Harutyunyan, the amendments are necessary as Armenia has taken a stance to develop renewable energy.

“This initiative is expected to significantly ease the burden of the country’s energy system, reducing dependence on imported hydrocarbons,” Harutyunyan said.

According to the forecasts of the Armenian Fund for Renewable Energy and Energy Saving, by 2020 the country should produce up to 8 percent of all consumed energy from alternative resources. This total should be achieved with the commissioning of solar plants with a total capacity of up to 50 MW, with the amount of investment close to US$ 80 million.

Armyen Gabibyan, renewable energy specialist at Armenia’s Energy Ministry, said that the potential capacity of the country in terms of solar power production is 3,000 MW, which is enough to not only meet domestic demand, but also provide the whole Caucasus region with energy.

At the same time, market participants believe that current amendments should be added with the relevant changes to taxation, introducing breaks on fees for importing solar PV systems.

“In Armenia, there are no proprietary technologies for manufacturing of solar systems details,” Tevosyan said. “Modules, inverters are imported to the country at high customs fees, so it is necessary to stimulate assembly of photovoltaic systems, releasing it from some taxes and customs duties.”

Artak Manykyan, a spokesperson for Transparency International, said that in the future, development of solar energy may help Armenia avoid energy deficit in the event of a loss of the country’s nuclear capacity. Nuclear power is the main source of energy in the country, but local ecologists have been fighting to shutter the resource. The European Union has conducted negotiations on discontinuing the nuclear resource since 2007, offering Armenian government up to EUR 200 million for that purpose.

“Cost of electricity produced by nuclear power is low, so closure of [Armenia’s nuclear plant] will lead to an increase in electricity tariffs,” Manukyan said. “However, use of electricity produced by alternative systems, hydroelectric and thermal power stations, will make this transition less painful.”

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Lead image credit: theregeneration | Flickr