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%.
