Power to the Public Where the Market Ends and the Republic Begins

Armenia’s decision to take control of Electric Networks of Armenia (ENA) marks one of the country’s most consequential economic and strategic interventions since independence. More than a dispute over ownership or the prosecution of Russian-Armenian billionaire Samvel Karapetyan, it raises a fundamental question: who should control the infrastructure that powers the country?

To understand what this seizure actually means for Armenia, we need to better understand how Armenia’s electricity infrastructure is organized, how its composition compares to other countries around the world, and what the takeover practically changes. With a full term in office on the horizon, Armenia has the opportunity not only for sweeping and historic reform to better the lives of its population, but to truly gain economic and strategic independence from the imperial shadow cast over the country by Moscow.

What Is an Electricity System?

An electricity system consists of infrastructure that generates, transports and delivers electricity from power plants to homes and businesses. It starts with energy production; this could be a hydroelectric dam, wind turbines, a coal power station, or in Armenia’s case, a nuclear power plant. From here the energy gets transformed and travels through a transmission network, the huge metal towers holding up power lines we see in the countryside, to a smaller network called a distribution network, sort of like arteries and veins respectively. This smaller network then takes the power directly to homes and businesses within a specific locality.

Beyond the physical infrastructure, electricity systems also include retailers, which sell electricity to customers, manage billing, and handle customer contracts. Increasingly, they also incorporate energy storage, such as batteries, which help balance supply and demand by storing excess electricity for later use.

Who Owns the System?

In Armenia, ownership of the electricity system is divided between the state and private actors. Generation is the most diversified component: the state owns the country’s nuclear power plant and one thermal power plant, while Karapetyan’s Tashir Group jointly owns a gas-powered thermal plant with Gazprom Armenia, a subsidiary of Russia’s state-owned energy company. Electricity is also produced by numerous smaller hydropower and solar facilities, including privately owned rooftop solar installations. The result is a mixed ownership model, in which public and private producers operate alongside one another.

The transmission network itself is state-owned, which is logical given that there is only one transmission network, making it a natural monopoly asset. As discussed earlier, the distribution and retail components began moving into state hands in June 2025. The system is also overseen by the Public Services Regulatory Commission (PSRC), which regulates prices and the system generally. For all practical purposes, however, little has changed since the takeover began. Armenia’s government intervened in ENA, placed it under state-appointed management, moved to revoke its licence, and is proceeding toward full nationalization of its shares.

The government’s pretext for nationalization, that it would lower electricity prices, appears unconvincing. The state already had some level of control over regulation, and a year since the takeover prices have been revisited and not reduced. Many economists also warned the seizure would create a loss of international investor confidence. So far, those concerns have not yet materialized. On the contrary, Armenia has secured unprecedented commitments of support from the European union and the United States. On July 2, European Commission President Ursula von der Leyen reaffirmed the EU’s commitment to €52 million of investment in trade-related investments and proposed granting Armenia tariff-free access for 80% of its exports to the EU market.

What Are the Stakes?

With the removal of Karapetyan’s ownership, new opportunities to introduce greater competition into the market become possible. Armenia’s competition watchdog concluded that Karapetyan’s monopoly control of distribution effectively prevented competition from emerging, since any new retailer would inevitably have to rely on ENA’s infrastructure, solidifying ENA’s dominance over retail electricity sales. Basically, ENA had created a privately controlled chokepoint with close associations to the Russian state. At a time when Russia has repeatedly demonstrated its willingness to use economic leverage against Armenia, it is understandable that the government would view control of the distribution network as a matter of national security.

How Does Armenia Compare to Other Systems?

It is difficult to compare Armenia directly to any other country, however, there are some key strategic considerations which Armenia could learn from. Many countries in Europe have their electricity systems publicly owned to some degree: public ownership allows the state flexibility to make decisions about its major infrastructure, which is both a strategic asset and increasingly critical as the world turns to renewables to avoid the disasters of climate change. Investor finance has shown, time and time again, that it will not pivot away from fossil fuels at the rate needed.

In 2023, the French state completed its full renationalization of Électricité de France (EDF), the country’s dominant electricity producer and operator of its nuclear fleet. Like Armenia, France’s key power generation comes from nuclear energy, which was made more acute since the invasion of Ukraine. France’s system isn’t wholly owned or managed by the national government, likely due to the size of the country. Municipalities own the distribution networks at the local level. France’s retail electricity market is formally liberalized, meaning open to private market competition, but the state-owned EDF remains central. As of March 2026, 52% of electricity sites were still supplied under regulated tariffs chiefly by EDF and local distribution companies (Commission de Régulation de l’Énergie, 2026).

Denmark has a very different model from France, shaped by its own circumstances and advantages. Unlike France, Denmark’s electricity generation is highly diversified, with an estimated 81% coming from renewable sources, primarily wind, solar and biomass. While the largest electricity producer is state-owned, more than 52% of the country’s wind generation is owned directly by citizens. This is made possible through Denmark’s system of energy cooperatives, in which groups of citizens jointly own generation assets. In this way, Denmark has transformed its energy sector without fully nationalizing it, instead decentralizing ownership through public participation.

The state of South Australia took a very different direction. From 1946 to 1999 the state had owned, produced, transmitted, distributed and retailed 99% of the electricity in South Australia. Consumers saw affordable and falling prices, an advanced and maintained infrastructure, and a single retailer culturally attuned to its responsibility as the provider of essential human infrastructure. In 1999, the full privatization and liberalization of the system, including the transmission and distribution lines, was a disaster. Turning a monopoly asset private led to poorer service, a convoluted regulatory environment, and some of the highest electricity prices in the world.

California is another example that shows the more extreme danger of fractured accountability through sweeping private ownership. Not only did the state already have a privately owned and managed system, the addition of deregulation caused a swift catastrophic collapse of California’s electricity grid in the early 2000s, with the need for emergency state intervention affecting more than 1.5 million consumers over only two days.

What Can Armenia Learn?

Like France, Armenia has good reason to make state-owned nuclear energy its centrepiece and to create more power plants. For a landlocked country with limited domestic energy resources, expanding nuclear generation would strengthen long-term energy security while gradually reducing dependence on Russian energy. The government has announced it is undertaking a preliminary feasibility study for the construction of a second nuclear power plant.

Like Denmark, Armenia can speed up its already fast-paced transition to renewable energy. Expanding solar and hydropower, while encouraging greater citizen participation through distributed generation and community ownership, would further diversify the country’s energy mix and deepen its energy independence.

Armenia’s small size also creates opportunities that are unavailable to many larger countries. With relatively few population centres and a single national distribution network, a more integrated electricity system, similar in principle to South Australia’s model before privatization, is achievable. Strong public oversight of the grid, combined with robust regulation and a diverse mix of public and private generation, provides a sensible long-term direction.

It would not only lead to a strategically solid electricity system but would also become a jewel for the citizens to enjoy and be proud of. This would help cultivate more civic participation and develop the public’s trust in government, acting as evidence of legitimacy and competence. This is unlikely to be pursued in the short term, as Armenia is looking to further liberalize its production and retail sectors; but it’s important to remember that in a small country with approximately one national-scale distribution system, retail competition can become superficial. Companies may not actually produce cheaper electricity; they just compete over billing, contracts and customer acquisition.

What Comes Next?

Armenia is not simply nationalizing electricity. It is reclaiming the monopoly infrastructure that decides who controls the country’s energy future. Unlike South Australia, which privatized its only transmission lines, and unlike California, which fractured accountability through deregulation and plunged its population into darkness, Armenia’s strongest path is a public-grid model that takes lessons from its European partners: market participation around the edges of the system, with public control at the center.

Thus far, the seizure of the assets from Karapetyan have not created any immediate major problems for the government. If the current climate holds, the government has a once in a lifetime opportunity to reimagine Armenia’s electricity system and set the country up for many years of growth, prosperity and true independence.