Iran–armenia vector in the regional electricity architecture
Vahe Davtyan IAPDE expert Doctor of Political Sciences, Professor.
The formation of transregional energy corridors across the South Caucasus and the Middle East in recent years has been accompanied by a redistribution of influence and the acceleration of infrastructure projects capable of altering the balance of power in the regional electricity sector. Within this dynamic environment, the Iran–Armenia vector is acquiring particular significance, serving simultaneously as an element of Armenia’s national energy security and as a key component of the international North–South Electricity Corridor. Delays in the implementation of critical infrastructure projects, increasing competition from neighboring states, and changes in the structure of Iranian demand have created a complex set of challenges requiring comprehensive analysis.
The agreement signed in 2016 by Iran, Armenia, Georgia, and Russia on the establishment of the international North–South Electricity Corridor envisaged the synchronization of the power systems of the four countries and the organization of bilateral and transit electricity flows. However, the project has yet to reach the operational stage and is currently under threat due to the active promotion of an alternative format—the Iran–Azerbaijan–Russia route. The key risk factor has been the significant delay in the construction of the third Iran–Armenia transmission line, which constitutes the central element of the corridor. This power line was originally scheduled to become operational in 2020 and was expected to triple the electricity exchange capacity between Armenia and Iran—from approximately 400 MW to 1,200 MW.
Traditionally, the Iranian market has been the primary destination for Armenian electricity exports, with annual deliveries reaching approximately 1 billion kWh. Electricity demand in Iran continues to grow steadily, particularly against the backdrop of increasing energy shortages in the country’s northern provinces. In December 2024, amid colder weather conditions, Iranian authorities were forced to introduce electricity-saving measures. President Masoud Pezeshkianpublicly appealed to citizens to reduce boiler temperatures by two degrees, while schools, universities, and several public institutions in a number of provinces temporarily suspended operations.
Growing electricity demand is strengthening the positions of two neighboring states—Turkmenistan and Azerbaijan. Iran is simultaneously promoting projects aimed at expanding electricity exchanges with both Ashgabat and Baku. Turkmen electricity is supplied to Iran through the Balkanabat–Gonbadand Shatlyk–Sarakhs transmission lines, providing up to 1 billion kWh of imports annually. In addition, construction continues on the new Mary–Mashhad transmission line, which is expected to significantly increase supply volumes.
Iranian–Azerbaijani energy cooperation is primarily based on the Imishli–Parsabad transmission line. Tehran has already expressed readiness to import up to 140 MW of Azerbaijani electricity, creating conditions for the consolidation of the North–South Corridor in the Iran–Azerbaijan–Russia format. This process is reinforced by efforts to promote the Qazvin–Rasht–Astara railway project as a component of the International North–South Transport Corridor (INSTC), as well as agreements regarding the construction of the Russia–Iran gas pipeline through Azerbaijani territory. The Caspian Flow project also remains under discussion.
The existence of these infrastructure links, coupled with the active planning of new transmission lines, will inevitably increase the share of Turkmen and Azerbaijani electricity in Iran’s import structure, thereby creating direct competition for Armenia.
At the same time, current trends do not necessarily indicate a substantial increase in Azerbaijani electricity exports to Iran. Data for the first eight months of 2025 show that electricity export volumes declined by approximately 10%, while export revenues fell by more than 8%. The most significant decrease was recorded in exports to Russia, where deliveries dropped by nearly 1.7 times and revenues by more than half. Similar trends have been observed in exports to Turkey and Iran, where declines amounted to 19.8% and 11.9%, respectively. These indicators suggest not a crisis in individual markets but rather a systemic contraction of external electricity flows.
The delay in constructing the Iran–Armenia transmission line poses not only external but also domestic risks. It negatively affects the operation of several major Armenian generation facilities, most notably Unit 5 of the Hrazdan Thermal Power Plant—one of the largest projects in Armenia’s energy sector, built by a Gazprom-affiliated structure with investments totaling USD 465.2 million. This facility forms part of the broader system of Iran–Armenia energy exchanges.
Since 2007, following the commissioning of the Iran–Armenia gas pipeline, bilateral cooperation has developed according to the “gas-for-electricity” barter mechanism. Under this arrangement, for every cubic meter of Iranian natural gas imported, Armenia supplies 3 kWh of electricity to Iran while retaining an additional 1.5 kWh for domestic use. The system relies heavily on the thermal power generation complex, including the aforementioned generating unit. Due to delays in the construction of the third transmission line, the projected operational parameters of the facility have not been realized, leading to the suspension of its operation in 2021 and preventing the Russian side from recovering its investments.
It should also be noted that in August 2023 Armenia and Iran extended until 2030 the validity of the “Gas for Electricity” agreement, which envisages increased volumes of gas imports and electricity exports. Part of the electricity generated by Armenian thermal power plants using Iranian gas is exported to Iran, while the surplus remains in Armenia.
Overall, it should be emphasized that two 220 kV transmission lines currently operate in the Armenia–Iran direction, while one 220 kV line and two 110 kV lines connect Armenia and Georgia. The 400 kV Armenia–Iran transmission line is being constructed through an Iranian loan, with the Iranian company Sunir serving as the contractor, while the line toward Georgia is expected to be financed through a loan from the German development bank KfW.
According to current projections, the construction of the Iran–Armenia transmission line may be partially completed during the first half of 2026. By that time, one circuit from the Iranian border to the new Noravan substation is expected to be commissioned, temporarily increasing transmission capacity to approximately 500 MW. The full capacity of 1,200 MW will only be achieved after the completion of both circuits and the connection of the line to the Ddmashen substation.
The risks of Armenia being excluded from the emerging North–South Electricity Corridor are further exacerbated by the Georgian factor. Difficulties in synchronizing the Armenian and Georgian power systems, the limited capacity of existing interconnections, and the lack of progress in constructing the new Armenia–Georgia transmission line complicate the implementation of the corridor in its original configuration. The project, whose construction was expected to begin in 2019, has been hindered by prolonged tender procedures, Siemens’ withdrawal after successfully completing the first stage of the selection process, and various organizational and bureaucratic obstacles.
As a result, Armenia, despite possessing substantial surplus generation capacity, continues to record a negative balance in electricity exchanges with Georgia. According to 2024 data, Georgia exported 137.4 million kWh of electricity to Armenia, whereas Armenian exports to Georgia amounted to only 72.7 million kWh. The Armenian government is currently preparing a new tender to select the main contractor for the Armenia–Georgia transmission line, which may provide some progress in the development of the North–South Electricity Corridor.
The combination of the processes described above creates a complex and multilayered configuration of threats for Armenia, directly linked to the dynamics of Iran–Armenia energy relations. Delays in the implementation of the key project—the third Iran–Armenia transmission line—are weakening the country’s position in the Iranian market, where competition from Turkmenistan and Azerbaijan is intensifying against the backdrop of growing domestic consumption in Iran.
Simultaneously, delays in the construction of the Georgian segment of the corridor limit Armenia’s ability to integrate into the original architecture of the North–South Corridor and increase the likelihood of the emergence of an alternative Iran–Azerbaijan–Russia axis. In this regard, it should be recalled that during a trilateral meeting of representatives of the governments of Azerbaijan, Russia, and Iran in Baku in October of this year, dedicated to current issues of cooperation in transport, energy, and customs affairs, officials announced progress in the synchronization of the electricity systems of the three countries. Furthermore, in May of this year, Moscow declared the possibility of supplying 200 MW of electricity from Russia to Iran through Azerbaijani infrastructure.
Under these circumstances, energy partnership with Iran becomes for Armenia not only a geo-economic priority but also a factor of strategic resilience. Accelerating infrastructure projects, restoring synchronization with the Georgian power system, and strengthening bilateral energy cooperation with Tehran are critically important for preserving Armenia’s role as a full-fledged participant in transregional corridors.