In recent years, Armenia has taken remarkable steps to regain control over its energy infrastructure. The most concrete example of this process is the decision adopted in July 2025 to nationalize the Armenian Electric Networks (ENA), which manages the country’s electricity distribution infrastructure. Pursuant to the legislation adopted by Parliament, the government directly assumed the management of this infrastructure, thereby terminating the operating rights that had been held since 2015 by the Tashir Group, owned by Russian-Armenian businessman Samvel Karapetyan. The Armenian government presented this move as a necessary intervention to ensure energy supply security and to reduce external dependence.[i]
However, this decision has sparked various criticisms both domestically and internationally. Economists and legal experts have argued that such interventions may undermine investor confidence, lead to capital flight, and trigger international arbitration cases.[ii] Indeed, Karapetyan’s legal team obtained a temporary injunction from the Arbitration Institute of the Stockholm Chamber of Commerce in an attempt to halt the nationalization process. Yet Armenia maintains that this ruling is unenforceable on the grounds that it violates public order.[iii] Minister of Justice Srbuhi Galyan also emphasized that restrictions on property rights are permissible only within the framework of the constitution and civil law, and must be accompanied by fair compensation. These developments have fueled important debates on how to strike a balance between public sovereignty and market liberalization.
The nationalization decision may be considered part of Armenia’s broader transformation of its energy policy. In line with the “Energy Sector Development Strategy Until 2040,” adopted in 2021, the country aims to diversify its energy supply, modernize electricity networks, accelerate the transition to a liberalized market structure, expand renewable energy sources, and sustain investments in nuclear energy.[iv] Armenia’s energy structure differs from that of the region: the country imports nearly all of its fossil fuels (especially natural gas) from Russia, while maintaining significant capacity in hydroelectric and nuclear power generation. As of 2021, 44% of electricity production was derived from natural gas, 30% from hydroelectric and other renewable sources, and 26% from nuclear energy.
Armenia has set the target of generating 66% of its electricity from renewable sources by 2036. In this context, plans include the construction of approximately 950 MW of solar power, 500 MW of wind power, as well as small- and large-scale hydroelectric plants. It is known that international energy companies such as Masdar, along with the European Investment Bank, have provided investment support for these projects. One of the country’s flagship projects, the Masrik-1 Solar Power Plant, stands as a tangible manifestation of Armenia’s renewable energy vision.[v] Furthermore, to promote energy efficiency, the government has introduced a comprehensive energy savings program in the agriculture, industry, and services sectors, setting a target of saving approximately 931 thousand tons of oil equivalent by 2030.[vi]
Despite this green transition, nuclear energy continues to occupy a crucial place in Armenia’s energy security strategy. The Metsamor Nuclear Power Plant, a Soviet-era facility, has been frequently criticized by international actors for safety concerns, yet it still supplies roughly one-quarter of the country’s electricity needs. With a capacity of 440 MW, the plant’s operational life has been extended until 2026, with a modernization investment of $150 million foreseen to allow continued operation until 2036. Although Armenia plans to eventually shut down this plant, it has made clear that nuclear energy remains indispensable during the transition period. The country has also shown interest in small modular reactor (SMR) technologies.
Armenia’s geographical location positions it as a strategic actor in regional energy cooperation. The country lies at the crossroads of energy corridors linking Russia, Iran, and Georgia, enabling the flow of energy through existing electricity lines and natural gas pipelines. Under the “North-South Energy Corridor” project, infrastructure is being developed to allow for asynchronous electricity exchanges with Georgia, with financial support provided by the European Union.[vii]Energy relations with Iran are also significant. Gas-to-electricity swap agreements are in force between the two countries, while new hydroelectric projects, such as the planned Meghri Dam on the Aras River, are also on the agenda.[viii]
At the regional level, Armenia participates in multilateral energy platforms such as the Commonwealth of Independent States Electric Power Council and the Black Sea Economic Cooperation Organization. Although closed borders with Azerbaijan and Turkey limit regional integration, cross-border energy exchanges with Georgia and Iran partially offset this gap. By exporting electricity during the summer and importing in the winter, Armenia manages seasonal imbalances and seeks to ensure supply security.[ix]
In conclusion, the nationalization of ENA can be regarded as a strategic step by Armenia to reestablish state control within its long-term energy transition process. The transfer of electricity distribution infrastructure to public ownership provides the government with greater authority to regulate tariffs, manage the timetable for market liberalization, and integrate renewable resources. Nevertheless, this approach carries the risk of clashing with the investor confidence required by a free-market economy. Over the next decade, Armenia’s energy policies will be shaped by the delicate balance struck between these two dynamics. The country’s success in building a diversified, environmentally sustainable, and resilient energy system will ultimately depend on how effectively it aligns infrastructure control with investor-friendly regulations and regional cooperation.
[i] “Can Armenia refuse to implement arbitration court’s decision? Nationalisation of Electric Networks of Armenia”, Jam News, https://jam-news.net/electric-networks-of-armenia-all-about-the-nationalisation-process/, (Date Accessed: 04.08.2025).
[ii] “Risks of investor outflow and damage to economy – experts on nationalization of Electric Networks of Armenia”, Arka News Agency,https://arka.am/en/news/economy/risks-of-investor-outflow-and-damage-to-economy-experts-on-nationalization-of-electric-networks-of-a/, (Date Accessed: 04.08.2025).
[iii] Ibid.
[iv] Armenia 2022 Energy Policy Review, OECD, https://www.oecd.org/en/publications/armenia-2022-energy-policy-review_e420e867-en.html, (Date Accessed: 04.08.2025).
[v] Armenia, International Atomic Energy Agency (IAEA), https://www-pub.iaea.org/MTCD/publications/PDF/cnpp2022/countryprofiles/Armenia/Armenia.htm, (Date Accessed: 04.08.2025).
[vi] Ibid.
[vii] Armenia’s Energy Security and Regional Cooperation, Caucasus Watch, https://caucasuswatch.de/en/insights/energy-security-and-regional-cooperation.html, (Date Accessed: 04.08.2025).
[viii] Ibid.
[ix] Ibid.
