A middle-income, emerging economy investing heavily in new technologies and products, Armenia cannot afford to miss the opportunity to grow green. For a small country like Armenia, the stakes could not be higher. Green growth is not a luxury reserved for the global economic elite; it is a necessity for a nation with scarce and increasingly stressed natural resources.
Text : Alen Gasparian Amirkhanian
Photo : AUA
Energy Transition and Security
In the energy sector, the rapid adoption of renewables and energy efficiency not only drives decarbonization but also strengthens Armenia’s energy security. The swift rise of solar power—from virtually zero to nearly 860 MW in just five years—is a genuine policy success. Yet the potential is far greater. Growth is now constrained by the country’s aging electricity grid, which struggles to handle surges in peak-hour solar generation and balance them with baseload suppliers. An overloaded grid is not unique to Armenia, but the combination of its outdated infrastructure and isolation from regional electricity markets presents distinctive challenges.
Strategic investments in modernizing the grid, improving regional interconnections, and expanding storage capacity (including hydro-storage, lithium batteries, and potentially hydrogen) are critical priorities for government action.
Any of these investments would be green investments that enhance Armenia’s security, as the country remains heavily dependent on energy imports—about 75% excluding enriched uranium, and roughly 94% when it is included. Importantly, not all renewables suffer from the intermittency of solar, wind, and small hydropower. Geothermal and biogas can provide stable baseload support, complementing existing baseload sources of nuclear and natural gas. A recent study commissioned by the AUA Acopian Center for the Environment under the Sweden-funded Waste Policy Armenia program suggests that, even under conservative scenarios, Armenia could replace 10% of its natural gas imports with locally produced biogas.
Meanwhile, the Institute of Geological Sciences at Armenia’s National Academy of Sciences estimates that Armenia’s geothermal potential is around 100 MW—roughly one-quarter of the capacity of the operating unit of the Metsamor Nuclear Power Plant. None of these options becomes redundant even if Armenia proceeds with building a new nuclear plant. Energy security requires a diversified mix of solutions. Moreover, evolving demand patterns must be addressed. For instance, Armenia has seen a surprising surge in electric vehicle (EV) adoption over the past two years—despite limited tariff waivers for imports due to quota constraints—indicating strong market momentum. Additionally, discussions around NVIDIA’s partnership with Firebird to build an “AI factory” in Armenia suggest that once operational, the facility could require around 100 MW of power, 3-4% of the country’s total available power generation capacity.
Mobility and Air Quality
Accelerating the transition to electric and micromobility can help tackle another critical challenge: urban air pollution. Approximately 65% of Armenia’s air pollutants come from mobile sources. Multiple efforts to introduce vehicle emissions inspections and controls have failed, and given current social and institutional realities, further attempts may prove equally futile. A shift to zero-emission EVs and large-scale micromobility may be the fastest route to improving air quality in Yerevan. Importantly, these vehicles can also serve as part of the country’s distributed electricity storage network.
Energy Efficiency: The Neglected Frontier
Energy generation and distribution are only part of the green transition. Equally important—if not more so—is the efficient use of energy. Armenia has barely begun to address this challenge.
Much of the country’s Soviet-era housing stock is notoriously inefficient, with energy consumption for heating exceeding 200 kWh per square meter annually, compared to an EU average of 55 and the global platinum standard of 15 kWh achieved by the PassivHaus standard. This wasteful energy regime carries significant geopolitical costs for a country like Armenia. A comprehensive green transition will directly bolster the country’s energy security.
Water Security: An Underappreciated Priority
Equally critical is the intelligent management of water. A 2024 study by the AUA Acopian Center found that although Armenia, Azerbaijan, and Georgia appear to have sufficient renewable freshwater resources per capita, both Armenia and Azerbaijan face water stress due to overuse. Each consumes nearly 40% of its annual renewable freshwater supply, putting them in the “extremely stressed” category. For Armenia, that 40% usage figure is based on a long-term average annual supply of 7.7 billion cubic meters.
Actual supplies in recent years have been far lower—sometimes as little as 4.4 billion cubic meters—pushing usage to 66% of available water. The situation demands urgent change. Climate change is projected to reduce precipitation and make it more erratic across Armenia and much of the Caucasus region. The country’s insufficient reservoir capacity already limits its ability to capture and store water for future use. Compounding this, Türkiye is rapidly expanding its reservoir infrastructure on the Araks and other rivers in the Kura-Araks Basin.
The newly constructed Soylemez Dam on the Araks alone has a capacity of 1.3 billion cubic meters—10% greater than the total capacity of all Armenia’s reservoirs combined. The most viable path to grow economically would be to do so by using significantly less water. Armenia (and much of the world) has to learn to thrive economically with less water. Without a fundamental shift in water use practices, the country’s water, food, and even energy security will be at risk.
Beyond Energy and Water
The green transition encompasses many other critical sectors. For example, scaling up biogas production not only contributes to energy security but also provides high-quality fertilizers, reducing dependence on imports. Similarly, improving chemical management, wastewater treatment, and ecosystem health will strengthen public health and national security. These measures are not luxuries for Armenia; they are imperatives for rapid modernization and a higher standard of living.
Policy Foundations and Next Steps
The Armenian government has already laid important foundations for the transition, including the planned adoption of green economy and circular economy strategies, as well as the establishment of a national green taxonomy to classify sustainable economic activities. Accelerating the implementation of these frameworks is now essential. The EU–Armenia Comprehensive and Enhanced Partnership Agreement (CEPA) provides a useful guiding framework, but the green transition must be embraced by all levels of government and society. After all, this is essential for the country’s security, resilience, and long-term viability.
Alen Gasparian Amirkhanian Director of the Acopian Center for the Environment and Chair of the
Bachelor’s in Environmental and Sustainability Sciences at the
Akian College of Science and Engineering at the American University of Armenia
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