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
Team Energy shaping electric vehicles culture in Armenia Team Energy shaping electric vehicles culture in Armenia 
Armenia to attract EUR 75 million from French Development Agency to  finance state budget deficitArmenia to attract EUR 75 million from French Development Agency to  finance state budget deficit
IMF Executive Board completes Third Review under Stand-By Arrangement  with ArmeniaIMF Executive Board completes Third Review under Stand-By Arrangement  with Armenia
Armenia to join Black Sea Basin. Interreg Next programArmenia to join Black Sea Basin. Interreg Next program
Armenian government, KfW to extend loan programme Armenian government, KfW to extend loan programme 
Jermuk Group CJSC to invest AMD 10.3bln in production of polyethylene  thermal insulation filmJermuk Group CJSC to invest AMD 10.3bln in production of polyethylene  thermal insulation film
AMD 600mln to be allocated for housing programme for large families AMD 600mln to be allocated for housing programme for large families 
EDB forecasts downtrend in GDP growth to 5% EDB forecasts downtrend in GDP growth to 5% 
Air Cairo airline launches Cairo-Yerevan-Cairo flights Air Cairo airline launches Cairo-Yerevan-Cairo flights 
European Commission to provide EUR 15mln to Armenia for forcibly  displaced Armenians European Commission to provide EUR 15mln to Armenia for forcibly  displaced Armenians 
USA interested in restoration of flood-destroyed bridges USA interested in restoration of flood-destroyed bridges 
Pashinyan: Pashinyan: "iGorts" program establishes organic link between our  compatriots in Diaspora and country`s state system 
Saving on Wildberries with IDBankSaving on Wildberries with IDBank
Armenian wines were awarded 5 gold and 11 silver medals at Concours  Mondial de BruxellesArmenian wines were awarded 5 gold and 11 silver medals at Concours  Mondial de Bruxelles
Armenia`s Minister of High-Tech Industry visits EUROSATORY exhibitionArmenia`s Minister of High-Tech Industry visits EUROSATORY exhibition
Armenia at the forefront of science and technology - Richard VermaArmenia at the forefront of science and technology - Richard Verma
EU to send EUR 100 thousand in humanitarian aid to Armenia to support villages most affected by floodEU to send EUR 100 thousand in humanitarian aid to Armenia to support villages most affected by flood
Sarah Morgenthau: US is ready to expand economic relations with  ArmeniaSarah Morgenthau: US is ready to expand economic relations with  Armenia
Armenia, Ukraine discuss possibilities of expanding trade and  economic cooperationArmenia, Ukraine discuss possibilities of expanding trade and  economic cooperation
EDB provides AMD 100 million to help overcome flood consequences in  ArmeniaEDB provides AMD 100 million to help overcome flood consequences in  Armenia
2024-2030 employment strategy presented in Armenia 2024-2030 employment strategy presented in Armenia 
Ardshinbank CJSC joins the Partnership for Carbon Accounting Financials.Ardshinbank CJSC joins the Partnership for Carbon Accounting Financials.
SCR launches Yerevan-Batumi-Yerevan trainSCR launches Yerevan-Batumi-Yerevan train
Large-scale road construction work suggests creation of new road  networkLarge-scale road construction work suggests creation of new road  network
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
Read more
Exchange rates
21.06.2024
RUB4.55-0.15
USD388.520.36
EUR415.06-1.36
GBP490.90-1.40
CAD283.720.68
JPY24.44-0.06
CNY53.510.05
CHF435.37-0.96