The EBRD teamed up with Cascade Credit, a lending institution established in Armenia in 1994, to finance smaller renewable energy projects. Developing alternative energy sources in Armenia will mitigate the effects of the rising costs of fuel imports and the decommissioning of a nuclear power plant.
Armenia relies heavily on nuclear and thermal generation for its energy, with remaining demand being met by large hydropower facilities. Nuclear capacity comes from the Russian-managed Medzamor facility, a Soviet-era nuclear plant commissioned in 1980.
Securing alternative energy sources
The rising costs of fuel imports and the looming decommissioning of the Medzamor nuclear plant (scheduled for 2015) mean that Armenia needs to urgently secure its domestic supply and develop its own energy sources.
The potential for renewable energy in Armenia – beyond the existing large hydroplants – is significant. Most of this would be through modernising and increasing the capacity of existing facilities and building new small- and medium-sized hydro, wind and biomass power plants.
However, sources of finance for smaller renewable energy projects are extremely limited, despite a supportive regulatory framework.
Providing the necessary funding
To address this issue the EBRD teamed up with Cascade Credit, a lending institution established in Armenia in 1994, to finance smaller renewable energy projects. The EBRD provided a loan of US$ 7 million to Cascade Credit to be combined with US$ 5 million from the World Bank and US$ 3 million from Cascade Credit itself.
Since the loan was signed in May 2006, Cascade Credit has committed nearly all of the US$ 15 million facility to finance 22 subprojects related to the development of small hydropower plants. The EBRD has financed 15 of these subprojects.
A cleaner environment
Most of the projects will be located in very remote areas of the country. This enhances rural electrification coverage and improves quality of life. Air quality in Armenia will also improve and there will be a reduction in greenhouse gas emissions.
Supported by the EBRD, Cascade Credit will act as a bundling organisation under the Clean Development Mechanism development framework to aggregate and monetise carbon credits. This will allow Armenian developers to tap into the international emissions trading market.
