Year 3 Work Plan for Market Liberalization and Electricity Trade (MLET) Program

The program will assist the Ministry of Territorial Administration and Infrastructure (MTAI), the Public Services Regulatory Commission (PSRC), and other energy sector institutions to adopt legal-regulatory reforms, accelerate the implementation of market liberalization mechanisms, and strengthen Armenia-Georgia dialogue on cross-border trade. The program's objectives are aligned with the Government of Armenia's (GOAM) commitment to liberalize the energy sector and develop cross-border trade. Following amendments to the Energy Law in February 2018, the GOAM adopted an Action Plan for Liberalization of the Republic of Armenia (ROA) Energy Sector Electricity Market and Development of Cross-Border Trade. The MLET Program will support the development of regulations, rules, and implementation mechanisms to define and introduce the wholesale and retail electricity markets in line with the Concept. The program will be implemented through three tasks: Energy Market Development, Promote Energy Supply Diversification, and Facilitate Cross-Border Trade. Task 1 will focus on developing a liberalized electricity market model for Armenia, strengthening the Market Operator (MO), System Operator (SO), and Market Participants (MPs). Task 2 will support the transition of Armenia's Least Cost Energy Development Plan (LCEDP) model from the MARKAL software to The Integrated Markal EFOM System (TIMES) and update the LCEDP to incorporate recent changes in renewable energy and nuclear technology. Task 3 will strengthen Armenia-Georgia electricity dialogue through support to the Joint Working Group (JWG), promote export and import transactions in wholesale markets, and support regional studies on electricity generation and transmission. The MLET team will regularly monitor activity progress to ensure that any issues that may affect implementation are identified as early as possible and to assess how best to advance activities in the Work Plan. The program will assist in creating an investor-friendly environment to accelerate competitiveness, power sector development, and regional trade; and in a broader context, to improve the country's economic development and minimize the potential for corruption. Through the MLET Program, USAID Armenia will assist in developing and implementing liberalized market rules, which will support energy market compliance with western approaches and facilitate expanded electricity trade with Georgia. The MLET Program will work closely with counterparts to ensure alignment with program objectives, maintain appropriate timelines for deliverables, and address the needs of counterparts. The program's activities will be carried out in a stepwise approach, with gradual introduction in certain segments, while the remainder will remain regulated. The program's overall goal is to improve the country's energy security and reduce its dependence on energy imports. The program's activities will be implemented in close consultation with counterparts, including the MTAI, PSRC, and other energy sector institutions. The MLET team will provide advisory services to MPs, support the revision of market operating procedures, and assist in the development and implementation of non-discriminatory cross-border access to all eligible entities. The program's success will be measured through regular monitoring and evaluation of activity progress, which will ensure that any issues that may affect implementation are identified as early as possible and to assess how best to advance activities in the Work Plan. The program's overall goal is to create an investor-friendly environment to accelerate competitiveness, power sector development, and regional trade; and in a broader context, to improve the country's economic development and minimize the potential for corruption.