U.S. MOVES TO HELP ARMENIA BUILD NEW NUCLEAR PLANT
By Emil Danielyan

Eurasia Daily Monitor, DC
Nov 28 2007

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.