In the early 1990s, Armenia was plunged into a deep energy crisis. After the collapse of the Soviet Union, political tensions disrupted Armenia’s energy supplies and blocked thermal power plants from operating. Metsamor—the country's only nuclear power plant—had been halted in 1989 after the Spitak earthquake, leaving Armenia almost entirely dependent on hydropower. Blackouts became widespread, paralyzing industries, freezing households through the winter, and pushing everyday life into survival mode.
HIGHLIGHTS
- In the 1990s, post-soviet Armenia faced severe energy shortages due to a halted nuclear plant, outdated transmission lines, and overreliance on hydropower, leading to blackouts and economic paralysis.
- With World Bank support, Armenia has modernized nearly 75% of its substations, strengthening the reliability and safety of the electrical grid.
- While there is still a long way to go, Armenia is taking the necessary steps to create a more favorable business climate and attract private investment.
In the 1990s, we could supply electricity for only one or two hours a day. Until 2017, the substation relied on old equipment that kept failing—switching and grounding had to be done manually, creating serious safety risks.
Although the immediate crisis passed, and the nuclear power plant resumed operations in 1996, the reliability of Armenia’s electricity supply remained poor. Decades of underinvestment in the transmission system left key infrastructure vulnerable, and aging equipment in substations and transmission lines caused more supply disruptions.
Rebuilding the Vital Backbone
Transmission lines are the backbone of Armenia’s energy system, carrying power from plants to industries, businesses, and households. Without a reliable grid, factories cannot operate, renewable energy cannot be integrated, and the economy remains exposed to outages and shocks. For decades, this backbone was weak: much of the network was more than 40 years old, under-maintained, and unable to meet modern demands.
By the early 2010s, the urgency to modernize Armenia’s transmission network grew. Essential infrastructure had deteriorated to the point where critical sections of the grid could no longer ensure reliable operation. These outages disrupted production, delayed investment, and undermined competitiveness. Without reliable transmission, businesses could not plan or expand, and the grid was unprepared to carry new sources like solar and wind.
In 2011, the Government of Armenia and High Voltage Electric Networks (HVEN), the national transmission system operator, partnered with the World Bank to launch the Electricity Supply Reliability Project—the first major investment in transmission in decades. The project rehabilitated 230 km of high-voltage transmission lines and three key substations. A follow-up project in 2015 expanded upgrades to additional substations serving residential and industrial consumers.
A More Reliable Grid for Businesses and Industry
Supported by the World Bank and other partners, HVEN has continued rehabilitating and modernizing substations. Almost 75% of Armenia’s substations have now been upgraded, strengthening the grid’s reliability, safety, and operational performance.
High-voltage power grids are the backbone of the energy sector. Without affordable, reliable electricity, we cannot have competitive production. Today uninterrupted energy supply is a necessity for large businesses, small businesses, households—for every unit in society
While the backbone of the system has been substantially reinforced, further complementary investments in regional interconnectivity and the distribution network will be required to ensure that all end-users fully benefit from the efficiency gains at the transmission level. These investments will become even more important as Armenia moves toward a liberalized electricity market, where reliable service and fair competition depend on strong performance across the entire power chain.
Next Steps
As Armenia prepares to integrate more solar and wind energy into its grid, the role of the transmission system becomes even more critical. In 2024, the World Bank approved the Armenia Enabling the Energy Transition Program under the Europe and Central Asia Renewable Energy Scale-up initiative. This five-year program will help HVEN complete the rehabilitation of its remaining substations and scale up grid automation.
New investments will introduce a digital platform that allows operators to monitor and control the grid in real time, along with automated protection and smart metering. Together, these technologies will reduce losses, cut outages, and enable more renewable energy to flow reliably into the system. This means more stable power for homes and businesses and a smoother transition to cleaner energy sources. A more reliable energy supply will strengthen the environment for private-sector growth, enabling businesses to expand and create more jobs.
Beyond infrastructure, the World Bank is supporting Armenia in carrying out key reforms in the energy sector, such as modernizing the renewable energy regulatory framework, further liberalizing the electricity market, and improving HVEN’s governance and financial performance. These steps will help transition Armenia’s power sector towards greater commercial viability and reduce reliance on government guarantees.
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