The preceding insights and analysis can inform Armenia’s transition to a more efficient, resilient and affordable building stock over the next 20 years. Although policies and approaches will inevitably be adjusted during this time, it is possible to identify some activity and focus areas that are likely central to the long-term transition. Conceptually, a 20-year roadmap could be divided into five-year intervals across four categories of activity: policies and financing; markets and capacity; projects and technologies; and future readiness.

Within each of these activity areas, Armenia could achieve numerous key building efficiency-related outcomes across a range of focus areas, including laws governing the way MABs are managed, data collection and quality, and ESCO market expansion.

Unfortunately, it is beyond the scope of this report to provide detailed action plans for each of the focus areas. Based on the Government of Armenia’s preferences, these would be developed separately and as appropriate, relying on the expertise of policy makers, international organisations and lenders, NGOs and other stakeholders working to advance building efficiency in Armenia.

Nonetheless, the activities and focus areas outlined in Table 1 are intended to help structure discussions, support strategy development and prioritisation, provide initial inputs for funding proposals, etc. In this spirit, the following sections provide additional ideas and approaches.

Given the number of concurrent building efficiency-related initiatives presently being enacted, 2020 is an opportune year for Armenia to develop a robust and supportive policy framework for building efficiency. The NEEAP-3 development process, along with the NZEB Roadmap, for example, provide excellent opportunities to address remaining gaps in key building efficiency areas, such as MEPS and labels (or passports) for individual technologies and entire buildings. In parallel, the IDR process can help identify any additional policy or process gaps (e.g. concerning data collection) and how to address them in the wider context of energy sector development and reform.

In the public sector, budgeting rule reforms could unlock ESCO market development, particularly since R2E2’s activities have proven the concept of EPC-based projects. Meanwhile, the adoption of laws in 2020 governing HOAs and HMCs can provide greater legal certainty for residential building retrofits, which could in turn support the development of financing agreements with LFIs, for example.

The 2020-25 period is an ideal time to make progress while trialling new approaches and identifying additional focus areas. Work being carried out as part of the European Union’s high-level initiative, combined with UNDP-led efforts related to de-risking and scaling up investments, gives Armenia the opportunity to kickstart and expand its residential efficiency financing market. The challenge for policy makers will be to ensure that these and other initiatives are well co‑ordinated, and that experiential learning informs further initiatives that promote residential efficiency financing.

At the same time, properly implementing and enforcing existing policies must be an ongoing priority for Armenia. Rule enforcement is inextricably linked with deeper systemic capacity and market concerns, as local and national government departments, lenders and other market participants must have the capacity to properly implement standards and labelling strategies. International experience suggests the effectiveness of combining policy approaches and financing instruments with capacity-building measures (including awareness-raising), particularly in complex areas such as household efficiency improvements and major building retrofits.

Training sessions, technical support and public awareness/information campaigns can help Armenia enact a more robust and well-enforced policy framework that would in turn stimulate the building-efficiency market. Indeed, Armenia is already employing such a combined approach as part of EAEU standards and labelling work, based on a multi-pronged approach that includes the development of testing capacity and awareness-raising (EAEU, 2020). Meanwhile, public awareness-raising efforts accompany implementation of the NIP, being delivered in collaboration with EU partners (EC, 2019a).

In certain cases, capacity-building can also take the form of a new dedicated institution or entity to address key market barriers. For instance, particularly during its initial phases, the KredEx facility discussed previously relied heavily on the dedicated new KredEx foundation. The role of the foundation is to design loans, including all relevant terms and conditions, co ordinate funding delivery with both IFIs and LFIs and, together with ministry colleagues, engage HOAs and other key market stakeholders. R2E2 also played a role similar to that of the KredEx foundation during development of its public sector building efficiency initiative. There is scope to expand or renew R2E2’s remit in this area, or to create a new entity to deliver building efficiency upgrades.

The dynamics of India’s UJALA programme are comparable, as a dedicated super-ESCO (Energy Efficiency Services Limited) was created to procure LEDs in bulk and distribute them across India. Energy Efficiency Services Limited is a “joint venture of four major government-owned companies: Power Grid, NTPC, Rural Electrification Corporation Limited and the Power Finance Corporation Limited” (EESL, 2017). Owing to its success, Energy Efficiency Services Limited is now engaging internationally in clean-energy-related initiatives.

Many countries have developed a considerable number of building efficiency financing instruments to generate financing for energy efficiency in recent decades. Lessons from their efforts could offer helpful insights for policy makers in Armenia working on roadmap focus areas. While approaches may differ according to local context (notably prevailing market conditions and finance ministry and LFI capacities), instruments are generally accompanied by enabling measures – from collateral development and training programmes for auditors, installers and local lenders, to the creation of dedicated organisations to lead implementation.

In addition to being paired with enabling/capacity measures, policy efforts can be strengthened if they are delivered in tandem with effective outreach and communication, including public awareness-raising. This applies particularly to more comprehensive initiatives (e.g. adopting laws on HOAs and HMCs, combined with promoting whole-building retrofits). Efficiency interventions in buildings can be disruptive and appear costly for homeowners and building occupants unless policy makers, installers, energy providers, lenders and other stakeholders convey their benefits using effective communication tools:

• Local assemblies and meetings (with Covid-19 precautions in place) or online alternatives to introduce initiatives and address questions/concerns
• Newspaper and billboard advertisements
• Dedicated websites
• Social media campaigns
• Television advertisements (including by energy providers/utilities partnering with the government to deploy grant schemes, for example).

Communication with the public is clearly essential for efficiency programmes to be successful. New Zealand, for example, has made clever communications and awareness campaigns a core part of its overall efficiency strategy, which includes the Kiwi Warmer Homes programme. The country’s Gen Less campaign was praised in the Global Commission for Urgent Action on Energy Efficiency’s recommendations because it “seeks to make a climate-positive lifestyle appealing and desirable through positive messages and articulates the role of energy use and energy efficiency in achieving that lifestyle” (IEA, 2020b).

Good communications and awareness-raising are also important for effective engagement with key market and supply chain actors (construction firms, auditors, installers, etc.). Using voluntary agreements and/or having networks of companies collaborate on energy efficiency-related issues can ensure private sector support for key changes to building codes and other efficiency regulations. One means to increase private sector interest and engagement in these networks is to emphasise the job creation potential of building-efficiency upgrades. Building retrofits are generally labour-intensive and “create mostly non-exportable jobs, with 15‑19 jobs created for every EUR 1 million invested” (World Bank, 2014).

Given the importance of capacity and markets – and associated communications and awareness-raising campaigns – it may be appropriate for Armenian policymaker and expert discussions to focus on these topics during 2020 and beyond. It is certainly relevant for the Energy Efficiency Board (being established as part of the EU-Armenia high-level initiative) to consider these areas carefully. Alternatively, a dedicated committee, working group or other body could be established to ensure that targets set in the NEEAP and other policy documents are achievable from a capacity point of view and can be accompanied by awareness campaigns. This would also be an opportune moment to identify capacity gaps that could be addressed, for example with additional IFI support. The creation of a dedicated energy agency or super-ESCO, or an expanded remit for R2E2, would likely be one of the core propositions in these discussions.

Investing in building-efficiency projects in Armenia could be highly cost-effective, given the country’s significant potential for project and market development, investment opportunities, reduced costs for consumers and improved living conditions. In other words, the underlying business case for raising building efficiency is as strong in Armenia as it is in many other countries across the globe.

Heating – upgrading existing home systems to increase both efficiency and thermal comfort, particularly for low-income households – clearly must be a key focus area for the government. International precedents for programmatic retrofits and technology deployment, especially through bulk procurement, could be further examined to determine their feasibility for Armenia.

In the area of lighting, Armenia could investigate the feasibility of a bulk procurement programme for LEDs that could be rolled out with support from international lenders and local supply partners, potentially during 2025-30 or earlier. Such a programme could, in turn, provide the basis for subsequent or parallel heating-related endeavours (e.g. the large-volume purchase of highly efficient boilers for apartments) that could be launched simultaneously with grants for rural households to replace biomass-based heating systems.

Bulk procurement – or at least a programmatic approach – could also be used to promote efficient cooling, to ensure that Armenians do not make impromptu purchases of inefficient AC units and fans if average temperatures and summer heat wave frequency and intensity continue to increase.

Concerning technologies used in public and commercial building projects, the EBRD technology selector provides a foundation for further work to target and promote specific technologies, for example through tax-based incentives. This is the basis of the UK Enhanced Capital Allowance (ECA) scheme, which lists approximately 14 000 technologies that are among the top 25% most energy-efficient in their category. Companies that invest in listed technologies can benefit from tax relief of up to GBP 1 million over a two-year period. Among the many technologies included in the ECA scheme are heat pumps; heating, ventilation and air conditioning (HVAC) equipment; motors and drives; and solar thermal systems (Department for Business, Energy and Industrial Strategy, 2020).

As emphasised in the discussion on markets and capacity, efficient and reliable technologies and services need to be readily available on the market for projects to be successful, and all parties along the supply chain – architects, contractors, installers, energy auditors and technicians, in addition to banking and real estate professionals – need to be knowledgeable about high-efficiency options.

Building-efficiency technologies are increasingly intertwined with renewable energy and digitalisation, both in homes and in public and commercial buildings. This combination presents both challenges (from technical issues such as interoperability and grid integration, to regulations relating to data and privacy) and opportunities in terms of unprecedented connectivity, optimisation and analytics. The pilot projects proving new concepts and innovations in this area around the world may now be particularly relevant given the shift in work locations and patterns incited by the Covid-19 pandemic.

In this context, the NZEB Roadmap is an excellent aid for policy makers charting the course of Armenia’s buildings sector for the next 20 years and beyond. Combined with data collection and planning work related to BEVs and their potential integration with buildings and storage systems, Armenia’s NZEB aspirations can help stimulate innovation and increase progress on building efficiency. 

Armenia has considerable untapped potential to raise the energy efficiency of its buildings, but several barriers and challenges must be addressed if notable progress is to be achieved in the coming decades. The information contained in this roadmap is intended to support strategic discussions and decision-making. Rather than a fixed blueprint, it is meant to provide a framework that can be adjusted according to policy discussions and evolving priorities.

International collaboration is likely to remain key for ensuring both the short-term success and the long-term viability of Armenia’s efforts. Collaboration and engagement with the EU in the context of CEPA, or UNDP’s work around de-risking and scaling efficiency financing, for example, are opportunities for Armenia to make progress in key areas. The challenge for policy makers will be to ensure coordination across these and other initiatives, and to ensure that lessons are used to inform wider building efficiency progress.

At the same time, proper implementation and enforcement of existing policies remains an ongoing priority for Armenia. This is an issue that is inextricably linked with more systemic capacity and market issues. Indeed, capacity building, combined with communications and awareness raising, are fundamental to the success of building efficiency in Armenia. Key actors along the value chain – public officials, lenders, energy auditors, contractors, etc. – must have the information and capacity to deliver their role in building efficiency programmes, such as reforms to the communal management of apartments, the delivery of whole building retrofits, or the development of a market for energy services.

While sweeping political changes in 2018 and the Covid-19 pandemic in 2020 delayed or slowed progress, Armenia’s building efficiency work is slowly regaining momentum. The period 2020 to 2040 presents a window of opportunity to address barriers, progress ongoing initiatives, trial new approaches and identify feasible opportunities related to digitalisation and electrification. Ultimately, strong political commitments and a focussed approach are needed so that building efficiency can progress in Armenia.