Growth in energy consumption and decommissioning of nuclear plant will require new capacity in Armenia: Igor Yushkov

Igor Yushkov, Leading Analyst at the National Energy Security Fund and expert at the Financial University under the Government of the Russian Federation, commented to Alpha News on the prospects for developing Armenia’s energy sector, rising energy consumption and the possible construction of a new nuclear power unit.

In the expert’s opinion, Armenia’s growing electricity demand, against the backdrop of economic development and data centers, will require replacing the existing nuclear power plant and taking into account possible changes in the terms of Russian gas supplies.

“There really are risks of growing energy consumption. Armenia expects its economy to develop, and accordingly more and more energy will be needed. At the same time, projects are emerging to create data centers and other energy-intensive facilities, which will require additional generation in the country. All of this is happening against the backdrop of the fact that the old nuclear power plant will have to be decommissioned in the near or medium term anyway. In addition, there is uncertainty over the terms of gas supplies. If Armenia leaves the EAEU, the price will rise by at least 30%, since there are currently no export-import duties within the EAEU, while Russia has an export duty on pipeline gas of 30% of the market price,” Yushkov said.

According to the expert, rising gas prices will force Armenia to look for the most cost-effective generation, and a single modular power unit may not be enough to cover the needs of the energy system and replace the unit being decommissioned.

“If Armenia leaves the EAEU, the gas price will rise, and the question will arise of which generation is then the most cost-effective to build. That is why the assumption arises that a modular power unit is not enough, because its capacity will not be able to compensate both for the old unit going offline and for the needs of a growing energy system. Modular power units mean small capacity and a small volume of electricity generation. So one must either build a large conventional plant, which is what Rosatom, for example, usually delivers in foreign projects, or use another configuration of comparable capacity. In Belarus, for example, a nuclear plant with two 1,200-megawatt reactors was built. In Egypt, Rosatom is building units with a capacity of about 1,000 megawatts each,” the expert said.

Yushkov also stressed that building a large nuclear plant involves technical, financial and political risks, and that the previous scheme with a Russian state loan now looks riskier.

“There is a hint here that Rosatom should nevertheless build a nuclear plant. Rosatom’s leadership recently said it was ready to carry out this project, but it must be understood that the risks of implementing such projects under the old scheme have now become higher for Russia. Under that scheme, Rosatom came with a Russian state loan, built the plant with Russian money, and the investment was repaid after construction was completed and the plant was launched. A plant takes five to seven years to build from the start of the project, and what the political relations between us will be in five to seven years is hard to say. Who knows, they might later tell us that your banks are under sanctions, so we cannot transfer the money back to you, or other restrictions might appear,” Yushkov explained.

According to the analyst, Armenia needs to consider how to finance a future power unit and look for large investments, since building a modern nuclear plant requires multibillion-dollar funding.

“I think the classic scheme under which Rosatom builds foreign projects should be reconsidered. The question arises for Armenia: who will build the power unit and on what terms? No company comes with its own money. Multibillion-dollar investments are needed, which must be made all at once or over several years. Whether Armenia has such an opportunity is a big question. So the leadership must soberly