Policy & Strategy

In the early 2000s, Armenia's energy sector faced a set of interconnected challenges that resisted simple solutions. Electricity tariffs were below cost recovery, creating financial pressures on utilities and limiting investment capacity. The country's aging nuclear power plant—a cornerstone of supply security—was approaching the end of its operational life, raising urgent questions about what would replace it and at what cost to consumers. Regional integration offered potential benefits but also risks, and the sector's governance and institutional frameworks needed strengthening if reforms were to take hold. The World Bank hired DHInfrastructure to provide sustained policy advisory support as Armenia navigated these challenges, producing a series of Energy Sector Policy Notes that evolved in scope and depth as the sector's priorities shifted.

The initial engagement focused on establishing a clear-eyed assessment of the sector's strategic priorities and key bottlenecks, providing Government with an analytical foundation for reform decisions. DHInfrastructure developed a dispatch model using data on historic load growth and potential generation investments to forecast future capacity needs and estimate the cost-recovery tariff implications of different generation options, grounding the policy recommendations in rigorous financial and economic analysis. As the nuclear decommissioning question moved to the center of the policy agenda, the World Bank asked DHInfrastructure to update and deepen the analysis, examining the sector's long-term financial sustainability and energy security under different scenarios for replacing nuclear capacity, and assessing the implications of regional integration for Armenia's generation mix and tariff trajectory. In a further update, DHInfrastructure developed a full least-cost power supply plan—incorporating an updated demand forecast, assessment of transmission bottlenecks, and analysis of the end-user tariff impacts of different investment pathways—giving Government a comprehensive, quantified basis for its generation planning decisions.

Throughout the engagement, DHInfrastructure's role was to translate complex technical and financial analysis into actionable policy guidance: identifying not just what the numbers showed, but what they meant for the sequencing of reforms, the management of tariff impacts on consumers, and the regulatory and institutional changes needed to make the sector's long-term trajectory sustainable. The result was a body of policy advisory work that grew with the sector's needs, providing Government and the World Bank with a consistent analytical framework that could be updated as circumstances evolved.

Sub-Saharan Africa faces some of the world's most severe energy challenges: widespread lack of electricity access, unreliable supply, and utilities struggling to cover their costs. Addressing them requires sustained, well-targeted support from development finance institutions, which in turn demands a clear-eyed, country-by-country understanding of where the sector stands, what the binding constraints are, and where external support can make the most difference. The World Bank wanted to inform its energy sector operations across 26 Sub-Saharan African countries—assessing progress and challenges in each country and identifying strategic directions for future engagement—and engaged DHInfrastructure to help develop that foundation.

Working closely with World Bank country teams, DHInfrastructure researched and drafted Country Engagement Notes for each country, assessing progress and challenges across five dimensions: energy access, security of supply, operational competence, financial viability, and financing. For each country, we selected key performance indicators and developed a rating system that allowed consistent comparison across very different national contexts: from large, relatively developed power sectors to fragile states with minimal grid infrastructure. We presented draft Notes to each country team and incorporated their feedback, ensuring that the assessments reflected both the analytical evidence and the operational knowledge that country teams had built through years of direct engagement. This collaborative process was important: the Notes were intended not just as analytical products but as practical tools to guide the Bank's operational decisions, and their value depended on being credible to the teams who would use them.

DHInfrastructure then consolidated the country-level findings into a regional synthesis report that identified common challenges, summarized the Bank's existing engagement across the region, and outlined strategic directions for future operations during the IDA 18-19 period. The synthesis drew out patterns that were not visible at the country level (including recurring governance weaknesses, financing gaps, and reform sequencing challenges that cut across national boundaries) giving the Bank a regional perspective to complement the country-by-country detail of the individual Notes. The resulting body of work provided the analytical foundation for World Bank energy sector operations across Sub-Saharan Africa for a six-year period, directly shaping how one of the world's largest development finance institutions allocated its attention and resources across the region.

Saudi Arabia was undertaking a fundamental transformation of its electricity sector, moving from a vertically integrated, state-dominated system toward a market-oriented model built around competitive wholesale electricity. The transition raised practical questions about how to manage the existing stock of power purchase agreements during the reform period, how to design the market products and regulatory frameworks needed for competition to function effectively, and how to ensure that demand forecasting methods were fit for purpose in a rapidly changing system. The World Bank was supporting the Government through this transformation and hired DHInfrastructure to provide advisory support on the reform agenda.

DHInfrastructure advised on the full arc of the market reform pathway. We presented the Government with options for managing existing take-or-pay power purchase agreements and pipeline contracts during the transition, including the potential for vesting contracts as a mechanism for market stabilization. We outlined the energy, capacity, and ancillary services products that could be introduced as the market developed, and identified the prerequisite reforms—in pricing, institutions, and regulation—that would need to be completed before a competitive wholesale market could function effectively. We also advised on approaches to managing distributed generation within the reform context, an increasingly important consideration as rooftop solar and other distributed resources grew in the market. Supporting the market reform advisory work, we conducted a comprehensive review of demand forecasting methodologies (covering linear, econometric, and end-use models across different forecast horizons and analytical applications) and developed a taxonomy that helped the Government understand which approaches were best suited to different planning and operational needs, and how to address mismatches between actual and requested network load through regulatory mechanisms.