Georgia - Electrical Power Systems (ELP)Georgia - Electrical Power Systems
Georgia is a net importer of electricity since 2012 but still exports some electricity during the summer months. There is significant additional export potential, especially to markets in Turkey and Europe. Georgia also serves as a transit country for electricity flowing between Azerbaijan, Russia, and Armenia. With assistance from USAID, the European Bank for Reconstruction and Development (EBRD), Kreditanstalt für Wiederaufbau (KfW), and the European Investment Bank (EIB), Georgia completed construction of an electricity interconnector project that will allow for the export of electricity to more lucrative markets with high demand such as Turkey and Western Europe in the future. With assistance from KfW, a new high voltage transmission line is under development that, if constructed, will connect Georgia and Armenia and allow for greater power flow between those countries. The Government of Georgia has aggressively undertaken efforts to attract investments in the hydro power sector. During 2011-2012, the U.S. government financed the rehabilitation of transmission lines that are an important part of the power transmission infrastructure for increased security of supplies and reliability, facilitating exports, and assisting Georgia in the establishment of the Georgia Electricity Market Model of 2015 that facilitated the development of an electricity trading mechanism with Turkey. Regional legal, regulatory and technical advisory assistance for the cross-border electricity trade with countries in the region is underway, along with technical advisory assistance to reduce cyber security risks of the Georgian power transmission system operator and others in the region. The U.S. government also supported the development of the Energy Strategy for Georgia which was partly based upon the Market Allocation Model (MARKAL). In June 2015, the U.S.-based Schulze Global Investments private equity firm launched $100 million investment fund in Georgia that will mainly focus on hydropower projects and clean energy. The U.S. government provides legal and regulatory advisory assistance to Georgia to establish a fully competitive electricity market to meet the country’s obligations under the Energy Community Treaty and to create a competitive market with transparent pricing and a stable environment. The U.S. government also supports the development of wind and solar power generation projects through technical advisory assistance renewable energy incentives schemes.
Eighty percent of Georgia’s electric energy is produced by hydro power plants, 19 percent by thermal, and around one percent by wind.
Leading Sub-Sector: Hydroelctric Power, Transmission, and Distribution
The best opportunities for U.S. companies in this sector are in electricity power generation – specifically hydroelectric power, transmission, and distribution projects. There are also export opportunities for U.S. manufactured equipment and services during construction and rehabilitation of facilities, and management and upgrades of existing power infrastructure. Opportunities for U.S. suppliers are also available in projects financed by multilateral financial organizations and bilateral assistance: the World Bank, EBRD, the Asian Development Bank, the Japan Bank for International Cooperation (JBIC), and KfW. Investors are also looking at the opportunities that wind and solar energy projects hold. The government supports initiatives that relate to renewable energy to lessen dependence on fuel imports for thermal plants and to increase Georgia’s electricity export potential.
Other opportunities exist in demand side energy management for the electricity distribution companies that serve electricity market end-users. These opportunities are for smart grid, metering, and intelligent energy management systems for the distribution grid operators, industrial and commercial users, and to a lesser extent for residential users, as the country develops better incentives for energy efficiency.
Georgia does not currently produce power generation and transmission equipment, with the exception of some small capacity hydroelectric turbines and electricity meters. Most current equipment was produced in the Soviet era, primarily in present-day Russia. Current efforts of the Georgian government end subsidies for electricity and to develop renewable energy, including hydropower, wind, and solar generation infrastructure, and the construction of new power transmission infrastructure should create demand for equipment and opportunities for U.S. investors and exporters. All medium and large hydroelectric generation facilities except Enguri and Vardnili hydropower plants have been privatized. Between 2009 and 2014, USAID’s Hydroelectric Investment Promotion Project (HIPP) and Hydro Power and Energy Planning (HPEP) project worked with the Georgian Ministry of Energy to address gaps in Georgia’s regulatory framework to encourage private sector investment and create the market rules to enable electricity exports, primarily to Turkey. A follow-on project supported market-based initiatives to promote and secure international investment in Georgia’s small- and medium-sized run-of-river type hydroelectric power market. Development of the competitive electricity market and establishment of the renewable energy incentives should make wind, solar, and hydropower projects more attractive for investors, thus creating demand for U.S. equipment.
- European Bank for Reconstruction and Development
- Georgian Ministry of Energy
- Georgian National Electricity Regulatory Commission
- Georgian State Electrosystem
- Japan Bank for International Cooperation
- Kreditanstalt für Wiederaufbau Bank
- World Bank
Georgia Energy Trade Development and Promotion