Armenia establishes state-owned nuclear plant development company

The Armenian government in an Aug. 1 meeting established a company that will evaluate options for new reactor construction in the country.

The entity will look into technology vendors' proposals on the possible design and cost of a new nuclear unit in Armenia, with the goal of having a development plan for the new capacity by the middle of 2026, Gnel Sanosian, the Armenian infrastructure minister, said during the meeting.

The unit is slated to become operational by 2040 to replace the 440-MW Metsamor-2, currently undergoing life extension work that will allow it to operate through 2036.

When the new unit is built, the newly established nuclear power company will manage its operation, the ministry added.

Sanosian said that Armenia is in negotiations with Russian, US, French, and South Korean companies about building the new reactor.

The company's budget for the next two years is set at $2.5 million and will be covered by the national budget.

This is not the first time the Armenian government has decided to look into building a new nuclear plant.

In June 2023, Armenian Prime Minister Nikol Pashinian set up a working group to evaluate various scenarios of new constriction in the country within the next two months. However, information about that project's outcome has never been publicized.

So far, Armenia has relied on Soviet and then Russian nuclear technologies, but there are signs that the country is increasingly looking at alternative vendors amid the chill in political relations between Armenia and Russia.

The Armenian government is discussing new nuclear plant construction with the US, and negotiations have already moved to the advanced stage, Armen Grigoryan, the Secretary of the Security Council of Armenia, said July 3.

Armenia and Russia have seen their relations sharply deteriorate in recent months amid accusations by Yerevan that Moscow did not fulfil its obligations to defend Armenian security interests during the 2023 Karabakh War between Armenia and Azerbaijan.

Although the economic rationale behind building new nuclear capacity in Armenia is questionable, several other factors work in favor of such a move, Hayk Harutyunyan, former Armenian deputy energy minister and chairman of the Energy Agency of Armenia, a non-governmental organization, said in an interview Aug. 8.

In previous years, Armenian government officials warned that accommodating a large plant would be challenging for the national grid, as the country's total installed power generation capacity is around 4 GW. According to Harutyunyan, there are also concerns on whether nuclear generation, including small modular reactors, will offer a reasonable power generation cost.

"However, there is a social factor to be taken into account," Harutyunyan said, explaining that the nuclear industry employs thousands of highly skilled workers in Armenia and that comprehensive infrastructure has already been established to serve the Metsamor-2 unit.

Shutting down Metsamor-2 without building a replacement unit would trigger an emigration of highly paid specialists from the country, Harutyunyan added.

Energy security cited

Additionally, Armenia has learned lessons from the conflicts of the past decades, specifically over the transport blockade organized by Azerbaijan and Turkey in the 1990s during the first conflict around the Karabakh region, when deliveries of natural gas to Armenia were temporarily disrupted. Harutyunyan said that as nuclear power is comparatively self-sufficient, it was key to energy security.

The main challenge for Armenia is to secure funding for the construction project, Harutyunyan said, adding that as long as Armenian GDP experiences similar growth as in recent years, construction can be funded by state borrowing. Similarly, the Uzbekistan government, also considering nuclear power for the first time, plans to source money for its nuclear plant construction through loans, Harutyunyan noted.

In 2023, Armenian GDP grew by 8.7% compared with the previous year, Armenia's Statistical Committee estimated.

Aside from that, there are few opportunities for Armenia to get money for the construction project, Harutyunyan said.

Harutyunyan also said that there are forces that may try to "politicize" discussions around nuclear plant construction but emphasized that considering various technology vendors is a standard approach for countries seeking to build reactors.

Russian state nuclear company Rosatom's offer boasts an important competitive advantage, as the entire Armenian nuclear infrastructure is currently built around VVER technology, he noted.