Monica Ellena in Tbilisi -

The steam rising from the gargantuan cooling towers at Matsamor nuclear plant casts a shadow over Armenia’ energy independence like the snow-capped Mount Ararat always looms on Yerevan’s horizon.

Landlocked, sandwiched among natural resources-rich neighbours, but not blessed with any, nuclear power is critical to Armenia’s survival. A holdover of the Soviet era, Metsamor comprises two VVER-400 V230 376 megawatt nuclear reactors supplying about 31% of the country’s needs, the rest coming from hydro and gas-burning plants.

Slated to be decommissioned in 2016, two years ago Metsamor’s life was extended by the government through to 2026, causing a national and international outcry.

Armenia is one of 13 countries relying on nuclear energy to supply at least one quarter of their total electricity but unlike the others, its plant sits in earthquake-prone terrain.

Neighbouring countries, namely Turkey and Azerbaijan, have been protesting loudly against the plant and have clubbed together to lobby for its closure. Father afield, the European Union (EU) has repeatedly asked for “the earliest possible closure” of the facility, arguing that the plant is a threat to the region and offering financial support for the facility’s decommission. Yerevan kindly rejected the offer.

Last November Yerevan inked a $270mn loan from Moscow to upgrade and re-equip the working unit of the two-reactor plant, while pressing ahead with ambitious plans to build a new nuclear plant operating at double the generation capacity of Matsamor in the same location.

The Russian-manufactured light-water reactor Armenia considers comes at an eye-watering price tag of €4.4bn and the hunt for investors has been so far fruitless. After years of trumpeted announcements of a new facility coming into operation as early as 2027, on October 7 the Armenian government announced that the “construction of a new nuclear power plant is not on the agenda”. There is no cash.

A vital black swamp

Metsamor stands out in a barren landscape some 30km from the capital Yerevan, a living though decrepit reminder of the USSR’s nuclear adventure. Built in 1976 on an earthquake fault line, the then-Soviet authorities took the plant offline in 1989 on safety concerns the year after a deadly 6.9 magnitude shock in Gyumri, the country’s second biggest city, levelled towns and killed some 25,000 people.

In the wake of the Soviet Union meltdown, Armenia suffered the consequences of its newfound independence. As the war with oil-and-gas rich Azerbaijan over the breakaway region of Nagorno-Karabakh broke out in 1992, Turkey imposed a still-enforced economic barrier and Armenia was cut off from all vital energy links.

The only remaining open pipeline [from Georgia] was often sabotaged, hence not reliable. Ian McGinnity, research fellow at the Regional Studies Centre, an independent think-tank in Yerevan wrote that “as an immediate stop-gap measure, the Armenian government was forced to utilise its hydropower resources, the Sevan-Hrazdan Cascade, at Lake Sevan as its sole manner of electricity generation from 1992-1996".

Brutal winters, as little as one hour of electricity per day, and the collapse of the centralised district heating system pushed Armenians to turn to wood stoves. The result was mass deforestation.

Karine Danielyan, professor of geographical sciences at Yerevan State University, is an environmentalist and a critic of nuclear energy, but the former minister of environment headed the delegation that in 1994 requested the International Atomic Energy Agency (IAEA) to help safely restore Metsamor.

“We were in a transport and energy blockade, people were really dying,” she recalls in an e-mail to bne IntelliNews. Those years are carved into the memories of Armenians whose fear of returning to bone-chilling cold is deeper than the fear of nuclear risks.

Armenia was left with no other choice but to turn the turbines of one of the units back on in 1995. Matsamor, or the “black swamp” in Armenian, was a life saver as it “flooded the grid with electricity, returning to Armenians a sense of normalcy after years of war and want”,  added McGinnity.

Calls for closure

Though often described as a disaster in waiting, it was the earthquake-cum-tsunami disaster at the Fukushima nuclear plan in Japan in 2011 that reignited the debate over whether Metsamor should be shut down. Environmentalists argue the aging facility would not absorb a quake shock.

Former Prime Minister Hrant Bagratian, now an opposition MP, also stated that Armenia could “face a danger worse than Chernobyl one day". In fact, Armenia is the last country outside of Russia that still uses a Chernobyl-type Soviet-model pressurised water reactor designed in the 1960s.

The VVER-440 uses water to both moderate and to cool the fuel – hence the name from the Russian initials for water-water-power-reactor – and the cooling system prevents the reactor from overheating. Since its re-opening, thousands of safety improvements have been made, including cooling towers and reinforcement of the plant’s foundations. However it lacks a shell that would contain radiation in the event of an accident, the chances of which some say are on the rise.

“The metal of the reactor is getting thinner by the day, losing flexibility and increasing the risk of accidents,” contends in a phone interview Hakob Sanasaryan, a chemist who heads the Greens Union of Armenia. “It should have been closed in 2006 and yet we are talking about whether it should continue through 2026.”

The government adamantly insists that the plant is safe and had been passed as acceptable by the IAEA. Armenian media outlets reported that "as for seismic stability, according to expert assessments, the plant can stand an 8 magnitude earthquake [on the Richter scale]".

The Vienna-based agency highlights that nuclear safety is each country’s responsibility and its role is to help countries to fulfill this responsibility. In an e-mail statement to bne IntelliNews, Greg Rzentkowski, director of the IAEA division of nuclear installation safety said that the agency encouraged “[the] Armenian authorities to strengthen the national nuclear safety framework to support the nuclear power reactor’s continued operation and prepare for potential construction of new reactors. We understand that the Armenian authorities have developed a plan for this and the IAEA stands ready to support them.”

Rzentkowski was one of the 20-member team who visited Metsamor in June that, while praising Armenia’s use of international support, stated that the country “faces many challenges in regulating nuclear safety”. It added that though the unit’s operating license expires in September 2016, the Armenian Nuclear Regulatory Authority (ANRA) has not yet received an application for a the license extension which requires “careful safety evaluation by the regulatory body and it usually takes more than one year”.

Depending on Russia for anything from gas to grain, Metsamor’s fate is also in the hands of Armenia’s former master. Since 2003 Russian-owned Inter Rao has managed and operated the plant as part of an arrangement to pay off the debt the government had incurred to purchase the Russia-supplied fuel. In 2009 the government gave the green light to set up Metsamorenergoatom, a 50-50 Armenian-Russian stock company owned by the Ministry of Energy and Natural Resources and the Russian nuclear export company Atomstroyexport, which will own and operate the new NPP and is tasked with procuring investment.

No easy options

Today hydropower and gas-burning thermal plants (TPP) have decreased Armenia’s blackouts, but the country remains wedded to power generating by Metsamor, whatever concerns critics raise.

The country is at an energy crossroads - the World Bank highlights that the energy infrastructure and electricity distribution system is inefficient, outdated and dilapidated, causing high outage rates, while both Yerevan and Hrazdan TPP are ageing.

“Not having energy is not an alternative,” McGinnity points out in a phone interview with bne IntelliNews. “Relying exclusively on natural gas thermal plants is also a no-option as it would increase the country’s dependency on Russian gas. And from an energy security standpoint is certainly unwise.”

As its calls to close Metsamor have fallen on deaf ears, the EU has provided aid to improve the NPP’s safety, while international financial institutions are chipping in to support renewable energy projects and regional cooperation projects.

The thaw between the West and Iran could, potentially, fuel new opportunities. The countries are on good terms and in 2007 a natural gas pipeline connected Armenia with its southern neighbour. However, in June Gazprom purchased the 41km-long section of the pipeline, leaving the Russian group in total control of Armenia’s gas supply routes.

“It shows that when Russia thinks that something is not in its best interest it will intervene or show it has the ability to [intervene],” concludes McGinnity.

Potentially, smaller reactors, such as the Canadian-built 700MW Candu reactor, could be an alternative for a new plant – its $3.4bn price tag is substantially lower than its Russian counterparts – but it would still be a complicated and financially challenging project.

Renewables are gaining pace, mainly thanks to international donor support – there are about 165 small hydro plants and the government is looking at solar power and wind parks. However, Danielyan maintains that “adjustments are needed,” and “renewable energy can not replace nuclear power, it takes time to develop it”. “Today, the country simply has no other option,” she says.