by Alexander Pracht
Yerevan and Washington have signed a Charter on Strategic Partnership, marking a new phase in bilateral relations. While the agreement does not include security guarantees, a pressing concern for Armenia amidst the volatile ceasefire with Azerbaijan, it directly addresses what many see as the country’s second-highest priority: energy security.
CivilNet reported in August that Armenia might join the so-called 123 Agreement, which would enable Washington to cooperate with Yerevan in the field of civil nuclear energy. This agreement could include the transfer of nuclear technologies, fuel supply, and even the potential construction of a new nuclear power plant in Armenia. Now that the strategic partnership has been signed, it is evident that the two countries are getting closer to a level of collaboration that, just a few years ago, seemed unthinkable to experts and the Armenian public alike.
What does the charter say?
The charter, signed last week, emphasizes a shared commitment to a “well-functioning, resilient, and secure market-oriented energy sector” in Armenia. Among the key areas outlined are diversifying Armenia’s energy production, boosting the share of renewable energy in the country’s energy mix, and enhancing energy connectivity to regional and European markets. Notably, the charter also includes plans to develop a civil nuclear power program in Armenia, adhering to the highest standards of safety, security, and nonproliferation.
A press release from the U.S. Secretary of State further revealed that the two countries will begin negotiations on a 123 Agreement. Once concluded, this agreement will provide Armenia with a platform for enhanced nuclear energy collaboration with the States, as required by U.S. federal law. Washington currently has such deals with 48 countries and territories.
What’s the background?
Metsamor, Armenia’s only nuclear power plant, was launched in 1976. While the facility remained intact after Armenia’s devastating 1988 earthquake, the Soviet government decided to shut it down shortly afterward. Not willing to take any risks running a nuclear reactor in an active seismic zone, Moscow yielded to growing public distrust toward nuclear power, largely fuelled by the 1986 Chernobyl disaster in Ukraine.
Metsamor’s shutdown played a key role during Armenia’s early 1990s energy crisis, which was exacerbated when Azerbaijan cut off natural gas supplies during the first Nagorno-Karabakh war, while gas flow from Georgia became sporadic, with repeated damages to the pipeline going through Azerbaijani-populated regions of the country. With no gas to feed its thermal power plants and Metsamor offline, Armenia faced a devastating humanitarian disaster. This period saw a massive outflow of Armenians seeking better living conditions abroad, which significantly impacted the country’s demographics and hindered its economic growth, with repercussions of the crisis still felt today.
Energy security amid Russian monopoly
With a capacity of 400 MW, Metsamor currently meets some 30% of Armenia’s domestic energy needs. Initially due to be shut down in 2017, it has had its lifespan repeatedly extended. The plant’s operations are fully dependent on Russia’s state-run atomic energy company, Rosatom, crucially including nuclear fuel supplies. The Armenian government inked a $65 million modernization and renovation deal with Rosastom in December 2023 to keep the Soviet-era facility running until 2036. After that, it will have to be decommissioned.
While Metsamor is owned by the Armenian government, most other energy producers and infrastructure in the country are controlled by Russian entities. The Sevan-Hrazdan Cascade, a Soviet-era complex of hydropower plants providing about 10% of Armenia’s electricity, is owned by the Russian-based Tashir Group, controlled by billionaire Samvel Karapetyan. Tashir also owns the Electric Networks of Armenia and the Hrazdan thermal power plant, which relies on natural gas supplied by Russia’s fossil fuels giant Gazprom. The latter also controls Armenia’s gas distribution network. Notable exceptions to this dominance include the U.S.-owned Vorotan Cascade of hydropower plants and the state-owned Yerevan thermal power plant, launched in 2021.
Such reliance on Russia in Armenia’s energy sector poses significant risks, especially given the increasing rift between the two countries’ governments. Armenia continues to be economically dependent on Russia, both in imports and exports, with food security remaining a major concern. While the country has become less reliant on remittances from Russia in recent years, with fewer Armenians seeking work there, the issue of food security remains pressing. Moreover, Armenia’s economic diversification is lagging behind the ambitious goals declared by the government. The importance of diversifying food security was also emphasized in the charter on strategic cooperation with the U.S.
In response to energy risks, Prime Minister Nikol Pashinyan announced last February that Yerevan might explore the possibility of constructing a U.S.-designed modular nuclear plant, which could generate up to 300 MW of power and replace Metsamor. The government believes this option may not only offer more energy security but could also be safer than a traditional nuclear reactor.
How soon can Armenia switch to U.S.-supported nuclear energy production?
Countries operating Soviet-designed nuclear power plants are increasingly changing their suppliers of nuclear fuel, Hakob Vardanyan, Armenia’s former Deputy Minister for Energy, told CivilNet. He pointed to Bulgaria, Czechia and other nations that have shifted from Russian nuclear fuel to American suppliers.
Vardanyan emphasized that such transitions are possible even under extraordinary circumstances, using Ukraine as a prime example. Ukrainian nuclear power plants, which, like Armenia’s, previously relied on Russian nuclear fuel, successfully switched to American supplier Westinghouse after Russia annexed Crimea and used its proxies to start a war in the country’s eastern regions in 2014. Vardanyan noted that this shift was accomplished in a remarkably short amount of time.
While the strategic partnership was signed during the final days of the Biden administration, the process of finalizing the 123 Agreement could take years to complete, and U.S. involvement in South Caucasus matters is expected to diminish under Donald Trump. However, this move remains a crucial step for Armenia, providing an opportunity to significantly diversify its energy sector and enhance its alarming energy security.
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