On February 1, 2022, the gradual liberalisation of the Armenian electricity market started. The ultimate goal of liberalisation is to shift the electricity market from a single supplier model to multiple suppliers, an open market model. The formation of a transparent and competitive market is expected to increase investments in the country’s energy sector, as well as volumes of interstate electricity trade.
The following transitional provisions are currently in force to ensure step by step inclusion of prominent players in the new market regulation:
These measures are designed to ensure a smooth transition to the new market regulation.
According to the PSRC, following the initiation of the electricity market liberalisation, over the recent six months, more than 20 companies have applied for a license to operate under the new market rules, 10 of which have already received an electricity supplier license, and another seven companies have received a wholesale electricity trade license, while several more applications are currently under consideration.
According to the Deputy General Director of the “Settlement Centre” Norayr Harutyunyan[2], two newly certified energy supplier companies are currently active in the market – they already have both energy consumers and generation plants. There are also generating stations, mainly SHPPs, which independently sell their electricity through the new market mechanism. Also, a number of consumers (13 companies) are currently buying electricity through the new market mechanism.
Thus, at the moment, 35 generating stations and more than 13 consumers are already trading under the new market mechanism. At the same time, the electricity trading volume based on the latest market mechanism is about 5 % of the entire market. Considering that their transition to the new market was voluntary, this is a positive signal for all other participants in the energy market.
Perhaps at first glance, it may seem that the new market trading rules are complicated and challenging for commercial clients. But first, they are built on the simple principle of a fair market price. Second, the system is quite flexible due to various optional features. In addition, “Settlement Centre” in every possible way assists companies that decide to move from the previous scheme of paying for electricity by the meter to new market mechanisms for planning electricity consumption and purchasing at a more favourable tariff.
The new electricity trading market mechanism is built on the principle of an hourly generation and consumption schedule. For any consumer, accurate consumption planning is the key to reducing electricity costs by optimising the operation of generating power plants. On the other hand, a planned production schedule is the key to selling the generated electricity at the best price for a generating station.
Finally, the new market mechanism with all other benefits also opens opportunities for the further development of RE plants with commercial purposes, as well as expansion and diversification of RE sources usage.
[1] https://aex.setcenter.am/
[2] https://www.setcenter.am/