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Wind energy production

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Wind energy production

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Renewable Resources and Alternative Energy
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Alternative Energy
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
Annual renewable energy sector capacity of 4,400 - 4,900 GW.
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Affordable and Clean Energy (SDG 7)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Industry, Innovation and Infrastructure (SDG 9) Sustainable Cities and Communities (SDG 11) Responsible Consumption and Production (SDG 12)

Business Model Description

Establish large-scale private wind power stations linked to the central grid of the Electrical Networks of Armenia and provide electricity at guaranteed price for revenue generation; or establish small-scale decentralized wind power stations with up to 0.5-MW to generate electricity for own use in households, businesses and communities.

Expected Impact

Promote wind energy production to increase income and resilience of SMEs and households, reduce use of fossil fuel and the country's environmental footprint, and improve its energy security.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • Armenia: Gegharkunik
  • Armenia: Lori
  • Armenia: Syunik
  • Armenia: Shirak
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Renewable Resources and Alternative Energy

Armenia is self-sufficient in energy generation but dependent on imported fuel (4). 85% of energy is from thermal and nuclear power plans, with negative environmental effects on soil, air and water. After closure of nuclear plants, the need for alternative energy will increase. Armenia has underutilized potential in renewable energy (4,400-4,900 GW/year) with 180 small hydropower plans (24, 25).

Energy security is a high priority in the Government agenda. Government policies promote the investment in renewable energy and energy efficiency technologies (1, 2, 3). These include the Scaling-Up Renewable Energy Program (SREP) and the Law on Energy Efficiency and Renewable Energy, which provide a sound foundation and principles for promoting sustainable energy practices.

To promote investment in renewable energy, the Government applies a number of programs, including feed-in tariffs in solar energy sector, tax advantages for investment in renewable energy, including small hydropower plants, solar and wind (2, 3, 7, 27).

Sub Sector

Alternative Energy

The Government introduced feed-in tariffs for wind energy, which allows households to sell the excess electricity to the electric networks, and coupled it with subsidized financing in the subsector, which is expected to make wind energy projects feasible in Armenia in the mid-term perspective (2, 3, 7, 27).

Industry

Wind Technology and Project Developers

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Wind energy production

Business Model

Establish large-scale private wind power stations linked to the central grid of the Electrical Networks of Armenia and provide electricity at guaranteed price for revenue generation; or establish small-scale decentralized wind power stations with up to 0.5-MW to generate electricity for own use in households, businesses and communities.

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Annual renewable energy sector capacity of 4,400 - 4,900 GW.

Armenia's renewable energy sector capacity is estimated at 4,400-4,900 GW annually (24, 25, 26).

There are around 950 ha of land available under the category in the land cadaster as “objects of energy, transport, communication and utility infrastructures”, which can be used for establishing wind power stations (24, 25, 26).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

10% - 15%

The Semyonovka wind power plant is expected to have an IRR of 11.6% (28).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Short Term (0–5 years)

According to stakeholder information, wind power stations can be built in less than five years, and start to produce cash flows as soon as the power station is connected to the network.

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

< USD 500,000

Market Risks & Scale Obstacles

Capital - CapEx Intensive

Especially larger installations have high capital requirements for solar energy.

Market - Volatile

The currently beneficial tariff for wind energy, applied since 2017, may change in the future, given the currently ongoing liberalisation of the energy market.

Market - Volatile

Foreign exchange rate fluctuations may impact the predictability and profitability of the investment.

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Armenia depends on imported fuel to cover its electricity needs (4). 85% of energy is from thermal and nuclear power plants, with negative environmental effects on soil, air and water. After closure of nuclear plants, the need for alternative energy will increase. (24, 25).

Armenia has high potential for wind energy; there are an estimated 1000 km2 of land with good-to-excellent wind resource in Armenia. Assuming an output of 5 MW per km2, this area may provide 5,000 MW of potential installed capacity. Wind power is a renewable energy source, with possibility to produce at varying scale (6, 8).

Gender & Marginalisation

Women and children particularly suffer from unstable electricity supply, hampering for example educational opportunities.

Expected Development Outcome

Reduced use of fossil fuel in TPPs and reduced radioactive waste (also addressing the high cost of its treatment) thanks to greater renewable energy application overall.

Enhanced energy security, increased share of renewable energy, and reduced environmental footprint of Armenia's energy sector through the wind installations.

Gender & Marginalisation

Increased income for rural and marginalised communities thanks to stable energy supply.

Income generation opportunities for women engaged in the production of wind energy.

Primary SDGs addressed

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy

7.2.1 Renewable energy share in the total final energy consumption

7.a.1 International financial flows to developing countries in support of clean energy research and development and renewable energy production, including in hybrid systems

7.b.1 Installed renewable energy-generating capacity in developing countries (in watts per capita)

Secondary SDGs addressed

9 - Industry, Innovation and Infrastructure
11 - Sustainable Cities and Communities
12 - Responsible Consumption and Production

Directly impacted stakeholders

People

Households and SMEs that establish and benefit from wind power stations.

Gender inequality and/or marginalization

Women benefitting from income generation opportunities directly or indirectly created by the wind installations.

Planet

Environment thanks to reduced pollution caused by thermal power plants and nuclear power plants.

Corporates

Wind power stations generating income.

Public sector

Schools, kindergartens and hospitals with access to stable energy supply.

Indirectly impacted stakeholders

People

Consumers benefiting from better energy supply and enhanced energy security.

Corporates

Secondary firms providing services to the wind power stations, and those making use of the enhanced energy supply for productive activities.

Public sector

The Armenian economy at large thanks to greater productive opportunities created by the stable and safe energy supply of the wind installations.

Outcome Risks

Industrialization of wind power may increase the average electricity tariff since renewable energy has higher end tariffs, making it unaffordable for consumers.

Transportation and installation of wind systems can created significant levels of greenhouse gases.

Operating wind turbines may lead to negative sound and visual effects, especially disturbing wildlife, notably birds and bats.

Impact Risks

High capital costs for wind installations, and challenges in accessing financing, may limit the realisation of large installations, which will minimise the positive effects of the energy source.

Procedural difficulties related to allocation of land for building solar power stations may limit the realisation of solar installations.

Possible changes of the currently beneficial tariff for wind energy may discourage investors, leading to the non-realisation of installations.

Impact Classification

B—Benefit Stakeholders

What

Investment in wind energy contributes to increasing income, independence and resilience of small- and medium-firms and households; higher share of sustainable energy, and less use of fossil.

Risk

The model is proven and the technology for wind power stations is readily available and affordable.

Impact Thesis

Promote wind energy production to increase income and resilience of SMEs and households, reduce use of fossil fuel and the country's environmental footprint, and improve its energy security.

Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

The promotion of renewable energy technologies and enhancing the renewable energy capacity, including wind energy production, are high priorities for the Government of Armenia, as outlined in the Government Plan 2019-2023 (1).

To enhance the capacities in renewable energy, the Government plans to support the creation of 60 MWT capacity in the next 2 years, which is in addition to the 55 MWt PV station already set up (2, 3).

Financial Environment

Financial incentives: Armenia offers various financial instruments, such as green leasing, that offer below market interest rates for renewable energy production. Beneficial tariffs are applied for renewable energy producers (2, 7, 8).

Fiscal incentives: Armenia extends tax privileges for importation of materials and equipment for the renewable energy industry, which also allows for extended VAT payment times for imported products (10).

Regulatory Environment

Energy tariffs are set by the PSR Committee and beneficial tariffs are applied for electricity from renewables (solar, wind and biofuel). The tariff for wind power is applied since 2018 (27).

Industrial wind power stations with power exceeding 500 kWt are subject to licensing by the Public Services Regulation Committee (30).

Based on the Commission Decree N 88-N of 22 April, 2015, in the end of every year the tariff for wind energy is indexed to reflect fluctuations in the national currency against USD. Tariffs for wind power plants with over 30 MW is reviewed under investment projects (32).

The Decree No 1030-L of 2018 enhances the capacities in renewable energy and assists with the implementation of private projects of wind power plants of about 300 MW (29).

Construction of a wind power station is permitted on the land categorized in the land cadaster as “objects of energy, transport, communication and utility infrastructures” (31).

Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Wind power plants such as Semyonovka, Pushkin Pass (Lori Marz).

Government

Public Services Regulation Committee, Ministry of Territorial Administration and Infrastructure, Ministry of Environment.

Multilaterals

Several international financial institutions and multilateral banks support the promotion of renewable energy, such as the World Bank, European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ABD).

Non-Profit

Renewable Energy Producers’ Association Union of Legal Entities.

Public-Private Partnership

Active partnerships, such as the Government cooperation with the Spanish firm Acciona Energy Global SL and the UAE firm Access Infra Central Asia Limited, which also receives feasibility studies and investment support from the public.

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

Armenia: Gegharkunik

The key regions with the best wind power output are Lori, Syunik, Shirak and Gegharkunik. Main sites are located in Zod pass, Bazum Mountain (Qaraqhach and Pushkin passes); Jajur pass, Geghama Mountains, Sevan pass, region of Aparan, highlands between Sisian and Goris and Meghri. (24, 25, 27, 33).
rural

Armenia: Lori

The key regions with the best wind power output are Lori, Syunik, Shirak and Gegharkunik. Main sites are located in Zod pass, Bazum Mountain (Qaraqhach and Pushkin passes); Jajur pass, Geghama Mountains, Sevan pass, region of Aparan, highlands between Sisian and Goris and Meghri. (24, 25, 27, 33).
rural

Armenia: Syunik

The key regions with the best wind power output are Lori, Syunik, Shirak and Gegharkunik. Main sites are located in Zod pass, Bazum Mountain (Qaraqhach and Pushkin passes); Jajur pass, Geghama Mountains, Sevan pass, region of Aparan, highlands between Sisian and Goris and Meghri. (24, 25, 27, 33).
rural

Armenia: Shirak

The key regions with the best wind power output are Lori, Syunik, Shirak and Gegharkunik. Main sites are located in Zod pass, Bazum Mountain (Qaraqhach and Pushkin passes); Jajur pass, Geghama Mountains, Sevan pass, region of Aparan, highlands between Sisian and Goris and Meghri. (24, 25, 27, 33).

References

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