More than a decade of ambitious sectorreform has led to a period of stability in the Armenianenergy sector. The sector faces challenges more typical of adeveloped economy than an emerging one: policymakers'concerns have shifted from avoiding total system collapse tooptimizing the energy supply mix to provide affordable,reliable, and sustainable energy services. However, some oldchallenges remain and new ones have arisen. Armenia is stillvulnerable to energy supply disruptions; tariffs lag thefull cost of service provision; and a significant investmentbacklog impedes progress in energy infrastructure. Thepurpose of this note is to present the analysis of thechallenges facing Armenia's energy sector,specifically, its electricity, natural gas, and heatingsubsectors. The intention of the note is not to prescribesolutions, but to present analysis of options and tradeoffsthat the Government can use to inform its decision-making.Armenia's energy sector has undergone a series ofreforms over the last fifteen years, which includedprivatization of the electricity distribution and gascompanies, and some generating companies, establishment ofan independent regulator, and development of a formalstrategic plan for the sector. This energy sector overviewhighlights important outcomes from reforms and describes keysector characteristics.