Armenia: Generating Clean Energy and Efficient Agriculture

One third of Armenia’s population of some three million lives in rural areas. But many people are emigrating to cities, with the Syunik region in the south hard hit by the rural exodus, serving as a gateway for refugees from Nagorno-Karabakh.  Armenia is striving to improve rural living conditions and develop its agricultural infrastructure, with support from AFD and its partners. 

AFD teams up with the EU for energy efficiency

Armenia’s National Mortgage Company has launched a major program to improve the energy efficiency of rural housing, much of which was built during the Soviet era. Supported by AFD and the European Union, the program is offering vulnerable households low-interest loans so they can better equip their homes and reduce their energy bills to improve their standard of living. Since 2013, about 15,000 beneficiaries have accessed the program. Some of the most vulnerable households can now afford solar panels, solar water heaters and gas heating systems, which can make all the difference in Armenia’s long winters.

Proparco supports the agricultural sector 

Developing the agricultural sector is also crucial to ensuring the resilience of rural areas. To this end, Proparco has been working with ACBA bank since 2020 to encourage agricultural entrepreneurs to develop their own farming operations. Founded in 1995 by regional agricultural cooperatives, ACBA Bank is the leading Armenian financial institution in this sector. 

Proparco has granted ACBA Bank a $20 million senior loan to support the growth of the bank’s loan portfolio and provide financing to SMEs and individual farmers, who often lack access to the financing required to grow their business. By taking out loans of this type with ACBA, the beneficiaries are able to finance the establishment of new farms or invest in equipment to reduce their energy and water consumption. As a result, the Armenian agriculture sector is better placed to lower energy consumption, create employment in rural areas and produce food to supply local and export markets.

The loan from Proparco is earmarked to support more than 500 SMEs and sustain around 12,750 jobs over the next few years, and will thereby contribute to Sustainable Development Goal 8, aimed at creating decent work and economic growth.

These two complementary AFD Group projects to support rural areas in Armenia are illustrated in our photo report: 

The Jerm Ojakh project - improving housing energy efficiency in Armenia (AFD and the National Mortgage Company)

Ashot Galstyan has opted for solar panels. Installed on the roof of his garage in Aghavnadzor, around 120 kilometers south of Yerevan, they have significantly reduced his energy bills. The energy produced not only covers all of the household’s electricity use, but also that of the adjacent wine producer.

As a winegrower, Ashot did not need to think long when offered the opportunity to equip his house with solar panels, financed via a low-interest loan (at 2%), thanks to the support of the government, AFD and the European Union. Just 10 to 15 days after the company and bank partnership first made contact, the panels were in operation.

Ashot can now monitor the amount of electricity generated by his new solar panels in real time.

"Now, we always have hot water available for doing the cleaning and laundry,” says Jemma Samvelyan. She recently had a solar water heater installed on her roof, which has significantly improved her standard of living: “It works perfectly, there’s always hot water. The hardest part for me is remembering which buttons to press to use the water!”

Jemma lives in the village of Angeghakot, in the Syunik province. This region is particularly unstable, but she wants to stay there and continue running the family farm, where they grow beans and potatoes, as well as raising cows, chickens and rabbits. 

The 300-liter solar water heater provides enough hot water for the whole house. Jemma’s son, who had been encouraging his parents to make home improvements, came up with the idea. Once the loan has been repaid, the next step will be to install solar panels.

Sevak is a mechanic, whose workplace is next to his house in the small town of Sisian, the capital of Syunik. He could not imagine leaving the region and so he took out a loan to improve the heating system and install better insulated doors and windows. 

“We used to burn wood for heating. The new system is much more efficient, and less expensive. We now wake up in the morning in a warm house, even in winter,” says Sevak. The new doors and windows also help to keep heat in the house. Just like Sevak and Jemma, 800 households in the Syunik region have been able to invest in their homes because of this program supported by AFD.

Supporting SMEs and the agricultural sector (Proparco and ACBA Bank)

Hovhannes Ghazaryan is a newcomer to agriculture. A former manager for the public authorities, he and his brother decided to launch a new farm and thus contribute to the region’s development and create local employment. A year ago, they planted 16 hectares of cherry and pear trees on the outskirts of Yerevan, on a previously unused site.

This reservoir is where the water required for their operation is stored. The state-of-the-art computer-controlled irrigation system maximizes watering efficiency, according to the moisture levels in the soil and air. Hovhannes has been given advice by agronomy experts on every aspect of farm management. He employs an average of 12 people, and up to 40 as required.

Run by Karapet Sepuhyan, this brand-new farm got off the ground thanks to the loan from ACBA Bank, which was used to finance the irrigation system, fruit trees and a greenhouse to grow roses.

Apple, pear and apricot trees grow side by side on this 20-hectare plot. Karapet chose this location because of its climate, which is well suited to cultivation, its four distinct seasons throughout the year and its proximity to Yerevan. He hopes to produce fresh fruit, roses and dried fruit in the warehouse located on the farm.

“We employ between eight and 20 people, according to our needs. They come from the surrounding villages.” The greenhouse, where all kinds of roses are growing, uses a drip irrigation system. The water comes from a canal which runs just underneath the ground.

Armenian irrigation systems are in need of renovation, with many dating back to the Soviet era. Every drop of water furthers the development of local agriculture and food security, and increases the resilience of local communities.

The content of this publication is the sole responsibility of AFD and does not necessarily reflect the opinions of the European Union.

Photos: © Hakob Kotolkyan / AFD