The rapid development of data centers and artificial intelligence infrastructure in Armenia could significantly increase the country’s electricity demand and require a revision of its current energy strategy. According to economic expert Hayk Gevorgyan, the scale of projects already announced or under consideration implies major changes for Armenia’s energy system.
Gevorgyan said that among the indicators used to assess data centers, two are particularly important: their computing capacity and the electrical power required to support it.
“A 40-megawatt data center has already been launched. That is an enormous figure when we consider that Armenia’s nuclear power plant has a capacity of around 400 megawatts. There was already a 7-megawatt center before that, and even more powerful facilities are planned,” he said.
According to Gevorgyan, if all announced projects are implemented, the combined capacity of Armenia’s data centers could reach 300 megawatts. That would be equivalent to roughly three quarters of the capacity of the country’s existing nuclear power plant.
Armenia May Need to Revise Its Energy Strategy
Under these circumstances, Gevorgyan believes Armenia may need to reconsider its energy strategy with a focus on expanding generating capacity.
“I think Armenia’s energy strategy will need to be revised toward increasing capacity. When that strategic program was developed, demand of this scale was not yet on the horizon,” he said.
The challenge, however, is not limited to the total volume of electricity generation.
One of the major problems facing Armenia’s energy system is the uneven distribution of consumption. According to Gevorgyan, Armenia operates a relatively isolated energy system and is not sufficiently integrated with the networks of neighboring countries.
As a result, there is a significant difference between minimum and peak electricity demand over the course of the year.
Gevorgyan cited May as an example, when electricity consumption in Armenia declines considerably. At such times, it may even become necessary to reduce the output of the nuclear power plant, which he described as technically undesirable.
During periods of peak demand, by contrast, relatively inefficient power plants must be brought online, increasing the cost of electricity generation.
One potential solution, according to Gevorgyan, is the development of industrial-scale battery storage systems.
“A few years ago, there was already discussion of 200 megawatts of storage capacity. Now systems of up to one gigawatt, or 1,000 megawatts, are being considered. That could smooth demand peaks quite effectively,” he said.
Armenia’s Power Grid Needs Deeper Regional Integration
In the longer term, however, Gevorgyan believes energy storage alone will not be sufficient.
Armenia will also require a new and more powerful nuclear power plant as well as deeper integration of its electricity system with neighboring countries.
This would include developing electricity links with Iran, Georgia, Azerbaijan and Turkey.
Gevorgyan recalled that one of Armenia’s strongest electricity transmission links in the past was the Turkey-Armenia line.
Restoring and modernizing such infrastructure would involve a number of technical challenges, including the need to synchronize electricity system frequencies. Nevertheless, he believes these investments have no real alternative and could pay for themselves over the long term.
AI Infrastructure Could Require Billions of Dollars in Investment
The new demand emerging in Armenia’s energy system would also require enormous investment.
According to Gevorgyan, creating a network of data centers and other AI infrastructure in Armenia alone could require approximately $4–5 billion.
In this context, he also addressed the proposed new nuclear power plant.
Gevorgyan said the project under discussion could cost between $8 billion and $9 billion. Part of that amount would cover construction itself, while the remainder would involve long-term maintenance and fuel supplies.
He considers it unlikely that investments on such a scale could be financed entirely from Armenia’s state budget.
One possible model, he said, is a build-operate-transfer arrangement in which a private investor or consortium finances construction and then recovers its investment and financing costs from project revenues over many years.
“Armenia neither has that amount of its own money nor would it make sense to spend so much of its own resources on building a nuclear power plant. The builders could co-finance the project and later recover those costs from the profits it generates,” Gevorgyan said.
He stressed that there is still no public clarity on the final financing model for the nuclear plant. For now, discussions are focused on technical capabilities, design and other engineering issues.
New Capacity Could Generate More Than It Costs
Gevorgyan believes that whatever model is ultimately chosen, the financial burden of a new nuclear power plant is unlikely to fall heavily on Armenia in the short term.
Over the longer term, the invested capital and financing costs will naturally have to be repaid, but those payments would be spread over decades.
In his view, those expenses must be compared with the economic value created by the additional energy capacity.
“On the one hand, we will take on costs, but on the other, we will receive enormous revenues. There is hardly a comparison. If, hypothetically, we pay 10 drams per kilowatt for installed capacity, we could receive 20 drams in revenue, even from the data centers alone,” Hayk Gevorgyan concluded.