Armenia’s choice of a new nuclear power unit cannot be reduced to the question of which technology is cheaper. If the decision is genuinely to be made on economic grounds, the public should be shown a comparable calculation of the levelized cost of electricity over the plant’s full life cycle, or LCOE, including system costs. It should also be clear what the project will cost Armenia once the price of borrowing, construction time, fuel, operation, decommissioning and waste management are taken into account. Economic affairs expert Vahe Davtyan made these points while discussing Rosatom’s proposal, the possible construction of a new nuclear power unit and Armenia’s energy security challenges.
A “specific proposal” is not yet a contract
Rosatom Director General Alexey Likhachev has said that the Russian side submitted a “specific proposal” to Armenia. According to Davtyan, however, that description does not mean that a final financial or contractual package already exists. The main technological parameter is known from the information made public: the proposal concerns a VVER-1000 unit with a capacity of at least 1 GW. The project’s total cost, financing structure, loan interest rate, firm construction timetable, extent of state guarantees and final contractual arrangement have not yet been published.
Moreover, Likhachev himself has said that Rosatom must formulate its most competitive proposal over the coming months. Armenian government statements also refer to proposals and possible mechanisms for implementing them, rather than an engineering, procurement and construction contract ready for signature. “There is a proposed reactor family and a proposed capacity. There are probably preliminary financial and economic calculations as well, but they have not yet been published,” the expert said.
In his view, real clarity will begin when the principal figures are on the table: capital expenditure, the cost of borrowing, the construction period, the calculated cost of one kWh, fuel supply terms, waste management costs and the expense of taking the plant out of service.
An extension to 2046 should not delay the decision on a new unit
Armenia may examine the option of extending operation of its existing nuclear plant until 2046. According to Davtyan, however, that does not conflict with the need to decide on a new unit. Ten years or more may pass between choosing a new nuclear plant and bringing it into commercial operation. During that period, Armenia would need to select the technology, reach financial close, obtain licences, complete the design and construction, conduct tests and connect the plant to the grid.
“If Armenia begins thinking about a new unit only in 2035–2036, it will be much too late. That is precisely why the choice must be made now,” the expert said. At the same time, he considers it reasonable to study whether the existing unit could operate until 2046. Such an extension could give Armenia a time buffer if construction of the new project is delayed or the selected technology has not reached sufficient commercial maturity. But extending the current unit’s life should not become a reason to postpone the decision on its successor, Davtyan stressed.
VVER-1000 and SMRs should be compared using the same criteria
According to the expert, the most important question in choosing a new nuclear power unit is not the technology’s name, but how much its electricity will cost Armenia. If the choice is described as purely economic, he says, the public should be given a comparable figure rather than a general claim that one technology or another is “cheaper”.
That measure should be the levelized cost of electricity over the full life cycle, or LCOE, preferably alongside an assessment of system costs. The calculation should include more than the price of the reactor. It should also cover borrowing costs, financing during construction, fuel, operation and repairs, decommissioning, waste management and the additional investment required for Armenia’s electricity grid.
Davtyan cautions against assigning a definite price per kWh to the VVER and another to an SMR at this stage. Most American small modular reactors are still at the stage of their first commercial projects. According to estimates cited in the article, the projected LCOE of SMRs in the 2030s could be in the range of $94–121 per MWh. That figure, however, comes from modelling; it is not a commercial offer made to Armenia.
The same qualification applies to the Russian project. Until its capital cost, loan interest rate, repayment period and guaranteed construction timetable are known, it is impossible to calculate what one kWh would actually cost an Armenian consumer.
Is 1 GW what Armenia needs, or the size of the proposed technology?
Davtyan sees two lines of reasoning behind the 1 GW proposal. On the one hand, the Russian side forecasts growth in Armenia’s electricity demand by 2040. On the other, 1 GW is a natural technological scale for a large nuclear reactor. The question should therefore be asked the other way around: what capacity can be integrated optimally into Armenia’s power system, rather than what size of unit has been offered to it?
Armenia’s power system is relatively small. In calculations described in the article as being based on World Bank data, peak demand in 2040 is estimated at around 1.8 GW. In that context, a 1 GW unit could be too large a single source of generation. At the same time, the expert points to the possibility of rising electricity demand, particularly if artificial intelligence and other digital infrastructure develop in Armenia.
If Armenia regards digital technologies as a long-term strategic priority, electricity demand could rise substantially. Furthermore, if the country aims to become an electricity exporter, a large nuclear plant could provide infrastructure for that goal. Davtyan identifies Iran and Georgia, where electricity demand is forecast to grow, as potential markets. He says this possibility should also be considered in the context of developing a North–South electricity corridor.
The new plant should strengthen security without creating a new dependency
If Armenia chooses Russian technology, Davtyan says, managing long-term dependence will be one of the central questions. The nuclear plant is a major factor in Armenia’s energy security because it provides a substantial amount of baseload generation and reduces the electricity sector’s reliance on natural gas.
According to Davtyan, the issue should not be framed as ruling out cooperation with Russia. The more consequential question is how to structure the project so that it does not create an irreplaceable dependence on a single supplier over the next 60–80 years.
In this respect, he views favourably the possible international consortium format also mentioned by Rosatom, involving European and Asian manufacturers. International participation, however, should bring genuine technological diversification rather than a merely formal presence, he said.
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