Enabling Armenia's Transition to Reliable and Sustainable Energy

Challenge

​​​​Armenia's transmission grid relied on aging Soviet-era infrastructure with frequent outages, equipment failures, and limited ability to meet growing domestic demand. These weaknesses affected electricity reliability, increased technical losses, and imposed costs on households and firms. Modernizing substations and rehabilitating transmission lines were essential to ensure stable, safe, and uninterrupted service, reduce system failures, and safeguard economic productivity. Frequent transmission-level outages also caused production disruptions for industrial and commercial enterprises, reducing operational continuity and raising business costs. ​​​

Approach

​​The World Bank supported Armenia with a sequenced, investment-focused approach centered on improving the reliability and safety of the high-voltage transmission network. The financing enabled the rehabilitation of critical substations and transmission lines, replacing obsolete equipment, upgrading the systems that protect the grid, and allowing operators to manage it safely, lowering the risk of equipment failures. The World Bank also helped the transmission company improve planning, safety, environmental practices, and day-to-day maintenance, focusing on the parts of the grid that caused the most outages, to achieve the largest improvements in reliability. Working closely with development partners ensured that all upgrades followed consistent, high-quality engineering practices. This long-term engagement helped High Voltage Electric Networks (HVEN) adopt modern operational and safety protocols, strengthen institutional capacity, and reduce system vulnerabilities. Through these targeted investments, the World Bank contributed to a more stable transmission network able to provide reliable electricity to households and industry.​

Results

​​Outcomes of the Electricity Supply Reliability Project include Reliability and system performance significant improvement, including:

• ​Outages on targeted transmission line sections reduced by 57 percent;
• ​Breakdowns at key substations dropped significantly by 50 percent, improving day-to-day reliability;

Outcomes of the Electricity Supply Reliability Project, Electricity Transmission Network Improvement Project include:

• Network capacity and operational safety successful enhancement, including Yerevan Thermal Power Centre (YTPC), Ashnak, and Ararat-2 substations recorded zero equipment failures in their final reporting year;
• ​Transmission capacity doubled at Ashnak and Ararat-2, and increased by 36 percent at Yerevan Thermal Power Centre, which can now carry more electricity, helping the grid stay stable during high-demand periods.

​ The projects directly benefited the entire population and key institutions:

• ​By the project closing, the whole country (over 3 million people) benefited from improved service reliability;
• ​A dedicated Environmental and Social Unit was established within High Voltage Electric Networks (HVEN) and long-term safeguard and compliance capacity was strengthened.​

Contribution to WBG Targets and Jobs

​​The projects contributed to improved economic productivity by reducing electricity outages and equipment failures, which previously caused production interruptions for businesses. Construction and rehabilitation works supported short-term jobs, while improved system reliability helps sustain long-term employment in industry and services. The strengthened transmission network also improves the investment climate by lowering operational risks for firms that depend on stable electricity.​

"After the rehabilitation of the Ashnak substation, the upgraded circuits significantly improved reliability and made our work much smoother. Switching operations that used to be done manually and took considerable time can now be carried out quickly, safely, and with far greater precision through the new computerized systems."Albert Arustamyan, Head of Ashnak Substation

Lessons Learned

​​Three lessons emerged. First, a careful assessment of which parts of the grid are most fragile is essential for improving reliability. Second, work at different substations needs to be well-coordinated so electricity supply is not disrupted during construction. Third, these investments last longer when combined with stronger safety procedures, better maintenance, and improved environmental and social practices. These operational and institutional improvements helped High Voltage Electric Networks (HVEN) manage complex works and will support long-term asset performance.​

Next Steps

​​Ongoing Armenia Enabling the Energy Transition Program-for-Results (EET PforR) builds on the reliability and institutional gains achieved under ESRP and ETNIP and supports the Government in strengthening the transmission system, improving High Voltage Electric Networks (HVEN)'s operational and financial sustainability, and modernizing sector governance. The program will fund important substation upgrades, help HVEN improve its management and planning, support modern tariff-setting rules, and prepare the grid for new technologies like battery storage.

​The World Bank is also supporting improvements in distribution reliability, sector laws and regulations, planning tools, and analysis for future needs such as battery storage and regional power links.

​These efforts (together with reforms under the EET PforR) aim to build a more resilient, financially sustainable, and investment-ready energy sector aligned with the World Bank's agenda on jobs, resilience, and sustainable infrastructure.​