Tuesday, May 21 2024 11:51
Naira Badalian

Armenia`s electric energy exports down last year; possible evidence  of decline in real economy - expert 

Armenia`s electric energy exports down last year; possible evidence  of decline in real economy - expert 

ArmInfo.In Armenia, electricity production and exports decreased in 2023, which raises some concerns.  This may indicate a slowdown in the real economy stated Associate Professor of the Armenian State University of Economics, economist Agasi Tavadyan.

As the expert notes, for a landlocked country heavily dependent on  imported fossil fuels, solar energy becomes important for several  reasons. Meanwhile, in Armenia, solar power plants accounted for 8.7%  of electricity generation in 2023, and 42% or 3,715.6 million kWh was  produced by thermal power plants, which use gas imported from Russia  to produce electricity and are the most expensive source of  electricity in the domestic market. In monetary terms, the republic  annually consumes electricity worth 260 billion drams, recalls  Tabadyan. "By using solar energy, Armenia can significantly reduce  its vulnerability to geopolitical tensions, price fluctuations and  supply disruptions associated with imported gas," he notes.

Regarding the reduction in electricity production and exports,  Tavadyan points out that in 2023, 8.845 million kWh of electricity  was produced, and in 2022 - 9.165 million kWh. Actual electricity  production fell by 3.5%. With the exception of solar power  generation, all other major forms of electricity production declined.  The production of thermal power plants decreased by 4.2%, the  production of nuclear power plants - by 4.8%, and the production of  hydroelectric power plants - by 15.2%. The increase was provided only  by electricity produced by solar power plants, where the increase was  about 55%. In 2023, 8.7% of the total volume of electricity produced,  or 772 million kWh, was provided by this source, 41% of electricity  was provided by thermal power plants, 31% by nuclear power plants,  19% by hydroelectric power plants.

Of course, the increase in solar electricity production is a positive  fact from the point of view of ensuring energy security, but the  decrease in total electricity production is worrying and may indicate  a decline in the real economy, since electricity is a commodity that  must be consumed immediately after generation, and the fact that 3.5%  less electricity was produced in 2023 than last year, indicating a  decline in industrial demand for electricity.

Meanwhile, the expert notes, forecasts for the next 2 years indicate  that, most likely, an increase in electricity production is not  expected, and other things being equal, 2023 may become the peak year  for electricity production.

At the same time, the economist points out, the reductions in  electricity exports are more significant. Thus, in 2022, electricity  exports recorded a record growth of 74.5% (from $50.9 million to  $88.8 million). This was mainly due to the economic recovery after  the pandemic and a large influx of capital from Russia. At the  moment, there is an outflow of capital, he notes.

In 2023, there is a decrease in electricity exports by 23.4% to $68  million. The sharp decline in exports on an annual basis continues,  Tavadyan emphasizes. Electricity is mainly exported to Iran under the  gas-for- electricity program. Since electricity must be consumed  during production, exports are arranged overtime, he adds.

"There is a worldwide trend toward electric vehicles and renewable  heating. Much of the heating of apartments and charging of cars will  probably be carried out using electricity in the future. The latter  will increase the demand for electricity, in which case an increase  in household consumption will lead to an increase in electricity  production. However, this could put a strain on Armenia's energy  system, since if the majority of households switch to electric cars  and electric heating, this will increase electricity demand by about  2 times, for which Armenia currently does not have the infrastructure  capacity. A possible doubling of supply and demand could put a strain  on the electricity infrastructure, which is in urgent need of  upgrading. To avoid these risks, it is necessary to increase  production capacity and the scope of electrification infrastructure.

Thus, a certain plan must be implemented so that in a few years the  electrical infrastructure of Armenia will be ready to provide 18  billion kWh of electricity per year," summarizes Agasi Tavadyan.

According to statistical data, in 2023, 8,845.1 million kWh were  generated in Armenia. electricity. In particular, thermal power  plants reduced electricity production over the year by 4.2% - to  3,715.6 million kWh, Armenian Nuclear Power Plant - by 4.8% to  2,709.2 million kWh, hydroelectric power plants - by 15.2% up to  1,645.8 million kWh. Wind farms increased electricity production by  29.8% to 2.3 million kWh. The production volume of solar stations at  the end of 2023 amounted to 772.2 million kWh.

In the first quarter of 2024, electricity generation in Armenia  amounted to 2,475.9 million kWh, slowing down in annual decline from  2% to 0.4%. In particular, in the first quarter of this year. Thermal  power plants reduced electricity production by 5.3% per annum - to  1,053.6 million kWh. At the same time, hydroelectric power plants  increased the volume of electricity produced by 7% per annum - to  309.4 million kWh, and nuclear power plants - by 0.8% to 947.1  million kWh. Electricity generation by wind stations also decreased -  by 35.1% per annum to 0.6 million kWh, and solar stations, on the  contrary, increased the volume of energy produced by 14.4% to 164.4  million kWh.

In general, in 2023, Armenia's GDP growth slowed to 8.7% (from 12.6%  in 2022), amounting to 9.503 trillion drams ($24.2 billion) at  current prices. The drivers of GDP growth in 2023 were largely the  trade sector - 25.7%, the construction sector - 14.8%, the service  sector - 10.3%, and to a slightly lesser extent the industrial sector  - 4.1%, and the agricultural sector was in a decline of 0.3%. A year  earlier, in 2022, GDP growth came from all areas: the service sector  - by 28.2%, the trade sector - by 17%, the energy complex - by 16.1%,  the construction sector - by 12.5%, the industrial sector - by 7 .9%  and the agricultural sector - by 0.4%.  

POST A COMMENT
Input digits     


News
EBRD appoints new Managing Director for Turkiye and the CaucasusEBRD appoints new Managing Director for Turkiye and the Caucasus
From January 1, 2026, medical insurance will become mandatory for   tourists  arriving in GeorgiaFrom January 1, 2026, medical insurance will become mandatory for   tourists  arriving in Georgia
IDBank issues the 3rd tranche of dollar bonds of 2024IDBank issues the 3rd tranche of dollar bonds of 2024
So that old age can be a joy! Present and future of funded pension  reform in ArmeniaSo that old age can be a joy! Present and future of funded pension  reform in Armenia
Premier: Armenia increases its level of sovereignty and independence  every dayPremier: Armenia increases its level of sovereignty and independence  every day
EventHub.am is the official ticketing agent for the concert of the world renowned Black Eyed Peas in TbilisiEventHub.am is the official ticketing agent for the concert of the world renowned Black Eyed Peas in Tbilisi
National Geographic recommends visiting Armenia as an attractive  tourist destinationNational Geographic recommends visiting Armenia as an attractive  tourist destination
Pashinyan: program for providing housing to forcibly displaced  persons from Nagorno-Karabakh is entering practical stage of  implementationPashinyan: program for providing housing to forcibly displaced  persons from Nagorno-Karabakh is entering practical stage of  implementation
Projects implemented jointly with Rosatom State Corporation discussed  in ArmeniaProjects implemented jointly with Rosatom State Corporation discussed  in Armenia
Assessing long-term impact of new US sanctions against Russia will  take time - Central Bank GovernorAssessing long-term impact of new US sanctions against Russia will  take time - Central Bank Governor
Martin Galstyan: Azerbaijan is not among top 50 remittance  destinationsMartin Galstyan: Azerbaijan is not among top 50 remittance  destinations
Armenian Parliament approves report on  Execution of State Budget for  2023Armenian Parliament approves report on  Execution of State Budget for  2023
Fly Arna staff demand salariesFly Arna staff demand salaries
Pashinyan: Work has begun on developing program to address priority  issues for restoring disaster zone Pashinyan: Work has begun on developing program to address priority  issues for restoring disaster zone 
Instant money transfers from Russia to Armenia with the “ФОРА-БАНК” appInstant money transfers from Russia to Armenia with the “ФОРА-БАНК” app
Since 2017, National Foundation for Servicemen Insurance has paid  monetary compensation to families of 5,345 dead, missing servicemenSince 2017, National Foundation for Servicemen Insurance has paid  monetary compensation to families of 5,345 dead, missing servicemen
Armenia`s CB revises GDP growth forecast for 2024 upward Armenia`s CB revises GDP growth forecast for 2024 upward 
Economic entities must not get accustomed to Economic entities must not get accustomed to "cottonwood existence" -  minister
State budget both financial and political document - minister State budget both financial and political document - minister 
Premier was presented with draft strategic employment programPremier was presented with draft strategic employment program
WB does not change previous improved forecast for Armenia`s GDP  growth of 5.5% in 2024 and 4.9% in 2025 WB does not change previous improved forecast for Armenia`s GDP  growth of 5.5% in 2024 and 4.9% in 2025 
Martin Galstyan: Under favorable conditions, loan interest rates may  dropMartin Galstyan: Under favorable conditions, loan interest rates may  drop
CBA: GDP above-potential growth and its non-widespread nature poses  uncertainties regarding relative position of aggregate demand versus  aggregate supplyCBA: GDP above-potential growth and its non-widespread nature poses  uncertainties regarding relative position of aggregate demand versus  aggregate supply
Central Bank Governor: Inflation in Armenia to approach 2.2%-2.5% by  end of yearCentral Bank Governor: Inflation in Armenia to approach 2.2%-2.5% by  end of year
Armenia`s Central Bank expects additional incentives after Government  increases spending on eliminating consequences of disaster Armenia`s Central Bank expects additional incentives after Government  increases spending on eliminating consequences of disaster 
idcoin: New tool in IDBank’s loyalty systemidcoin: New tool in IDBank’s loyalty system
Armenia`s Central Bank continues reducing refinancing rate Armenia`s Central Bank continues reducing refinancing rate 
Income tax on mortgage loans to be abolished in 2029 Income tax on mortgage loans to be abolished in 2029 
About 173 Million Drams and More Than 30 Beneficiary Funds. About 173 Million Drams and More Than 30 Beneficiary Funds. "The Power of One Dram" is 4 Years Old
Armenia to participate in Food Africa-2024 exhibition Armenia to participate in Food Africa-2024 exhibition
EasyPay Supports Launch of “Financial Literacy” Program by Armenian Code Academy and Technological Education Foundation EasyPay Supports Launch of “Financial Literacy” Program by Armenian Code Academy and Technological Education Foundation 
 Team promotes business education: CaseKey Academy opened Team promotes business education: CaseKey Academy opened
Armenian-Indian business forum held in YerevanArmenian-Indian business forum held in Yerevan
Armenia elected UN Economic and Social Council Member for 2025-2027Armenia elected UN Economic and Social Council Member for 2025-2027
Central Bank identifies two main risks threatening Armenia`s  financial stabilityCentral Bank identifies two main risks threatening Armenia`s  financial stability
Armswissbank issues 3 bonds from the 10th of juneArmswissbank issues 3 bonds from the 10th of june
The Power of One Dram to The Road of Life: July`s Beneficiary is Strong MindThe Power of One Dram to The Road of Life: July`s Beneficiary is Strong Mind
Recent floods in Armenia confirm need to ensure food security -  statementRecent floods in Armenia confirm need to ensure food security -  statement
AraratBank places dollar bondsAraratBank places dollar bonds
Russia making efforts to resume launch of Mir cards in Armenia,  Kyrgyzstan Russia making efforts to resume launch of Mir cards in Armenia,  Kyrgyzstan 
Deputy Minister of Finance: Export of goods of Armenian origin  decreased by 14.3% in Q1 2024Deputy Minister of Finance: Export of goods of Armenian origin  decreased by 14.3% in Q1 2024
OVIO modernizes its sales and service centers in Kapan, Kajaran and  GyumriOVIO modernizes its sales and service centers in Kapan, Kajaran and  Gyumri
EU to allocate EUR11 million for next 5 years to implement R2D Syunik  projectEU to allocate EUR11 million for next 5 years to implement R2D Syunik  project
New sports complex to be constructed in KapanNew sports complex to be constructed in Kapan
Higher-rate economic activity growth in Armenia Higher-rate economic activity growth in Armenia 
 Armenia`s regional administration to receive AMD 2.5bln for  subvention programmes  Armenia`s regional administration to receive AMD 2.5bln for  subvention programmes 
Turnover tax forming unhealthy economic environment should be  abolished - premier Turnover tax forming unhealthy economic environment should be  abolished - premier 
Armenia is especially loved by tourists from Russia, Georgia, Iran,  the USA, Germany, France, Ukraine, China and BelarusArmenia is especially loved by tourists from Russia, Georgia, Iran,  the USA, Germany, France, Ukraine, China and Belarus
CBA CBA "accuses" bank clients of "illogical behavior"
Sanosyan: some problems arose during implementation of first landfill  construction projectSanosyan: some problems arose during implementation of first landfill  construction project
Russian Digital Attache in Armenia: Russia`s experience in building  underwater fiber-optic link may be relevant, including for ArmeniaRussian Digital Attache in Armenia: Russia`s experience in building  underwater fiber-optic link may be relevant, including for Armenia
YOY inflation in Armenia decreased from 1.3% to 0.3% in May, due to  cheaper food productsYOY inflation in Armenia decreased from 1.3% to 0.3% in May, due to  cheaper food products
Agriculture is becoming labor reservoir for more efficient service  industry - expertAgriculture is becoming labor reservoir for more efficient service  industry - expert
Part of main gas pipeline supplying Armenia with Russian gas will  come under Azerbaijani control - political scientistPart of main gas pipeline supplying Armenia with Russian gas will  come under Azerbaijani control - political scientist
EU allocated EUR 2.9 million to Armenia for rebranding of Armenian  brandyEU allocated EUR 2.9 million to Armenia for rebranding of Armenian  brandy
Use of electric cars and solar energy will limit Armenia`s dependence  on oil and gas marketsUse of electric cars and solar energy will limit Armenia`s dependence  on oil and gas markets
Armenian MFA: decision on Armenia`s participation in Chabahar port  project to be made within few monthsArmenian MFA: decision on Armenia`s participation in Chabahar port  project to be made within few months
Papoyan: export development strategy is almost readyPapoyan: export development strategy is almost ready
North-South`s construction odyssey: Only 10% of road has been  completed in 12 yearsNorth-South`s construction odyssey: Only 10% of road has been  completed in 12 years
Formation of common energy markets major factor of EAEU development -  Armenian vice-premier Formation of common energy markets major factor of EAEU development -  Armenian vice-premier 
Read more
Exchange rates
17.06.2024
RUB4.37-0.03
USD388.780.29
EUR416.420.85
GBP492.55-1.03
CAD282.980.65
JPY24.66-0.08
CNY53.580.04
CHF435.850.96