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Armenia Calling:
A New Frontier for Renewable Energy

Situated in the Caucasus mountains, Armenia, a nation of just 3 million, is rich in fascinating history and stunning natural landscapes. The country may be small in size, but this hides another reality; Armenia is a powerhouse in the making. Boasting a dynamic economy with double-digit growth figures in recent times, the country has made astonishing progress over its three decades of independence. Fuelling this high growth is its former status as the Soviet Union's primary tech hub, leaving it with a wealth of human capital. Since its independence in 1991, tech unicorns like AI image editor Picsart and ServiceTitan have emerged from its fertile innovation scene. In the meantime, foreign investors, lured by the promise of further growth, have been flocking to Armenia, with tech giants Nvidia and AMD, among others, setting up R&D and Software Development offices in Yerevan, the country's capital. There is more to Armenia's rapid growth than meets the eye though: as the world shifts toward renewable energy sources in the pursuit of achieving Net-Zero emissions, Armenia is turning itself into a new frontier for green investment, offering unique opportunities for foreign investors and its economy to thrive.

Independent Armenia has been a pioneering nation in the South Caucasus in its journey towards renewable energy, embracing wind power as early as 2005 with the establishment of its first wind power plant, Lori-1. Located to the north of the Middle East and graced with steep and mountainous terrain, the country has a strong geographical position for harnessing the power of sun, wind and water. This suitability for solar, hydro and wind energy, among other renewable sources, in helping Armenia reach energy security was corroborated by a comprehensive 2019 USAID report, which identified them as ‘part of the least cost solution for new generation under all scenarios.’ [1]  Recognizing the critical importance of boosting renewable energy production capacity for enhancing energy security and sustaining economic growth, the Armenian government has embarked on an ambitious ‘Vision 2040’ initiative. This forward-looking strategy aims to achieve ‘maximum use of renewable energy potential’ [2] , with the government actively engaging with foreign investors to reach this broader goal alongside more specific ones, such as having 15% of domestic energy production from solar power by 2030, setting a promising course toward a cleaner, more sustainable future.

Pushkin Pass Wind Farm - Image.jpg

Pushkin Pass Wind Farm

Armenia's commitment to making these goals reality has already started to be seen through the  partnership between the Armenian National Interests Fund (ANIF), the state investment fund, and Masdar, a leading Emirati renewables development firm. Their collaboration has given birth to a joint venture to construct the Ayg-1 solar power plant, which will be the country’s biggest solar power plant yet, expected to produce 200MW from 2025 onwards. By joining forces with established industry leaders, Armenia underscores its dedication to its renewable energy aspirations. Looking into the future, ANIF is in talks with Masdar for a follow-up project, Ayg-2, a second solar plant that aims to produce an additional 200MW of solar power. It is worth noting that these significant undertakings are not isolated ventures, but part of a broader trend in Armenia's renewable energy landscape. In 2022, a surge of solar plant constructions took place, with 34 of the country's 60 solar plants being built in that year. This wave of activity demonstrates that Armenia's commitment to clean energy has captured the attention of investors, signifying a promising trend for both the nation and the global renewable energy sector.

The opportunities for investment in Armenia are not confined to electricity generation alone though; they extend to the design and production of essential renewable energy components too. The government has taken proactive steps to facilitate this through subsidies aimed at boosting the local manufacturing of wind and solar components, as well as net metering and feed-in tariffs to promote the domestic market for their purchase. This strategic move is expected to further accelerate the burgeoning trend of solar and wind plant construction already underway in the country. Armenia has started to make steps in producing solar panels suitable for both small-scale and large-scale installations. Companies like Ecoville LLC, a local innovator in solar panel and solar heating system development and construction, have attracted financial support from international institutions such as the London-based EBRD, European Bank for Reconstruction and Development, and private equity funds like Amber Capital Armenia.


These investments are yielding solid results, as seen in Ecoville LLC's expansion into Georgia following a string of successful solar panel installations for homes, power plants and factories in Armenia and the development of its own ‘AREGA’ portable solar power generator for off-grid applications. Armenia’s ability to serve as a hub for developing new renewable technologies and then act as a launchpad for business expansion into other countries is a testament to its potential dual role in the green energy revolution. This success shows that Armenia's renewable technology sector could mirror its achievements in the software and chip design sectors in the future, where foreign investors have capitalised on the country's rich human capital to design high-quality products and technologies before introducing them to global markets. The country's small size is no impediment to its long-term potential and its combination of strong human capital, entrepreneurial ambition and governmental support for renewable energy component production positions it as an attractive destination for investment in the development and construction of renewable projects.

The opportunities for foreign investors in Armenia extend even further still into the broader areas of sustainable development and energy efficiency. A recent example of the ample potential to be fulfilled came in June 2023, when Shell made its mark on the Armenian market by inaugurating two new petrol stations in the capital city of Yerevan. What sets these stations apart from existing ones is the introduction of Shell's 'V-Power' fuels, which boost not only fuel economy but also engine efficiency, representing a major step forward as the first cleaner premium fuels for sale in the country. Shell's ambitions in Armenia do not stop there; they are set to unveil electric car charging facilities at these stations too. The significance of Shell's entry into the market should not be understated, as it underscores both a vote of confidence in Armenia's growth potential and a belief in the country's security and stability, compelling them to invest substantial resources according to political and economic analyst Eric Hacopian. [3]  . Moreover, it implies that there is a middle class in Armenia substantial enough to purchase these premium fuels and charge their electric cars. This combination of economic viability and sustainable practices makes Armenia an attractive prospect for foreign investors looking to participate in the nation's journey towards sustainable development and energy efficiency.

In the areas of renewable energy and sustainable development, Armenia has revealed itself to be a land of promise and potential with its plans to construct new renewable energy plants, taking full advantage of its mountainous landscapes and abundant sunshine, signifying strong commitment to its Vision 2040 initiative. The government's successful engagement with prominent foreign investors, exemplified by the Ayg-1 200MW solar power plant venture with Masdar, marks an encouraging beginning for Armenia's green revolution. While the path forward to renewable energy is still in its early stages, the eagerness of private companies like Shell to invest in Armenia's energy generation, renewable technology and related activities underscores the market's high potential and the exciting opportunities it presents to foreign investors. As Armenia strides forward to a brighter, more sustainable future, it invites those outside the country to join it on this transformative journey with open arms.


If you’re interested to find out more about Armenia’s renewable energy sector or are considering entering the market, get in touch at and let’s have a chat.

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