Publication: Eurasia Daily Monitor Volume: 4 Issue: 220

The United States has voiced support for the ambitious idea of building a new nuclear power station in Armenia in place of an aging Soviet-era facility, boosting the chances of its realization in the near future. Moreover, the U.S. government announced last week that it will finance the first preliminary feasibility study on the project, to be launched early next year.

The development came amid the unfolding preparations for the closure of the nuclear plant at Metsamor, some 30 kilometers (19 miles) west of the capital, Yerevan. The Armenian authorities have pledged to shut down its sole functioning reactor by 2016 after years of pressure from the United States and the European Union, which consider it to be inherently unsafe. The EU, in particular, had classified the VVER 440 Model V230 light water-cooled reactor, which currently generates about 40% of Armenia’s electricity, into the “oldest and least reliable” category of all 66 Soviet reactors built in Eastern Europe and the former USSR.

Metsamor had two such reactors when it began operating at full capacity in 1980. They both were brought to a halt shortly after the catastrophic 1988 earthquake that devastated much of northwestern Armenia. Dismissing Western and local environmentalists’ concerns, the country’s first post-communist government reactivated one of the reactors in 1995 to end a severe energy crisis caused by the war with Azerbaijan and broader turmoil in the region. The United States and the EU had no choice but to help Yerevan boost the plant’s safety. They have each spent tens of millions of dollars upgrading its equipment and financing subsequent safety measures. The plant has also been regularly and closely inspected by the International Atomic Energy Agency (IAEA).

The Armenian government has said all along that Metsamor will be decommissioned only when it finds an alternative source of inexpensive energy. That alternative, according to Yerevan, is a new nuclear plant meeting modern safety standards. The administration of President Robert Kocharian underlined the seriousness of its intentions in early 2006 when it pushed through parliament legislation allowing foreign ownership of Armenian nuclear facilities. The move was aimed at attracting foreign investors, as at least $1 billion is needed for the new plant’s construction. The government acknowledges that it is too cash-strapped to foot the bill.

The Russian government and energy companies promptly showed interest in the project. The issue was high on the agenda of an April 2007 visit to Yerevan by Sergei Kiriyenko, head of Russia’s Federal Agency on Atomic Energy (Rosatom). News emerged shortly afterward that the Armenian and Russian governments have formed a joint task force looking into the matter. And on October 25 Russia’s state-owned Atomstroyexport company revealed through its vice-chairman, Alexander Glukhov, that it is also in talks with Armenian energy officials (Itar-Tass, October 25).

Significantly, the United States indicated throughout 2006 and this year that it is ready, in principle, to assist Armenia in replacing Metsamor with a new plant. Washington went further on November 21, pledging to provide $2 million in funding for preliminary research that will precede in-depth feasibility studies for a new nuclear power generation unit as well as an assessment of its likely impact on the environment.

In a statement issued after the signing of a relevant memorandum of cooperation by Armenian Energy Minister Armen Movsisian and the U.S. charge d’affaires in Yerevan, Joseph Pennington, the U.S. Agency for International Development announced, “The results of these studies will be used by the Armenian government to choose the best technical solutions and project logistics. They will also serve as a basis for negotiations with potential suppliers and international financing institutions.”

In Pennington’s words, the United States supports construction of a new nuclear plant “not only to improve Armenia’s energy security but also because of continuing concerns regarding the safety of the existing nuclear plant.” Furthermore, “We look forward to the rapid replacement of the Metsamor facility with a more modern and safer plant,” the diplomat said at the signing ceremony (RFE/RL Armenia Report, November 21).

U.S. support for the Armenian nuclear project is quite interesting, given the murky prospects for resolution of the Karabakh conflict and the accompanying risk of a renewed Armenian-Azerbaijani war, which could grow in the coming years. Washington appears to have arrived at the conclusion that landlocked and resource-poor Armenia has little choice but to continue to heavily rely on nuclear energy.

The project should be highly beneficial for Armenia. With a planned capacity of 1,000 megawatts, the new Armenian reactor would be more than twice as powerful as the existing one and would fully meet the country’s electricity needs at a considerably lower cost. That would, in turn, ease its heavy dependence on Russian natural gas, which accounts for another 40% of Armenian electricity production, and reduce Iran’s significance for Armenia’s energy security. The Islamic Republic plans to supply gas to Armenia through a pipeline that is due to be fully constructed by the end of next year.

According to Energy Minister Movsisian, work on the new nuclear plant will likely take five years and could be completed even before 2016 (Hayastani Hanrapetutyun, November 22). The key question of who will finance it remains unanswered, however. While the Russians are interested in designing and building the plant, they will by no means make the required investments. U.S. financial support for the construction work is even less likely. As Pennington pointed out, the U.S. government is only ready to help the Armenians find foreign (presumably Western) investors.