The Georgian government is currently pursuing further development of its hydropower sector as a pathway to increase energy security and reduce reliance on fossil fuel imports. Following the collapse of the Soviet Union in 1991, Georgia was plunged into a deep recession; however, extensive economic reforms, beginning in 1995, resulted in dramatic improvements to the country’s power sector.
The first phase of these reforms lasted until 2004, establishing the Georgian National Energy and Water Supply Regulatory Commission (GNERC), and bringing about systematic change under the principles of ownership unbundling, commercialisation and privatisation.
The second phase of reforms, beginning in 2004, ushered in further deregulation and privatisation of the power industry. This allowed for generators, distributors, customers and exporters to enter into direct contracts. In addition, the Electricity System Commercial Operator (ESCO) now buys and sells balancing power and reserve capacity, and has the authority to negotiate power purchase agreements.
Today, hydropower accounts for more than 80 per cent of Georgia’s generating capacity and between 75 to 90 per cent of power generation, based on average hydrologic conditions. By the end of 2015, Georgia had installed more than 70 operational hydropower stations, totalling 2,727 MW in capacity. Two stations alone provide roughly 45 per cent of the domestic electricity supply: the Inguri dam (1,300 MW) and its downstream sister-station, Vardhili HPP (210 MW).
The country’s dependence on hydropower means that the reliability of supply is threatened in the winter months when power demand is high and hydropower capacity is reduced due to depleted storage in reservoirs. Much of the power deficit is made up through domestic thermal generation using imported natural gas or imported power from neighbouring Russia and Azerbaijan. Georgia exports power in the summer months, but relies on neighbouring countries for power trade. In 2015, 63 per cent of exports were traded with Turkey, and 77 per cent of imports were traded with Russia. Georgia also exports excess hydropower to other neighbouring countries in the summer.
The completion of the Black Sea transmission interconnection in 2013, which runs between east and west Georgia and the north-east of Turkey, has attracted significant multilateral support in 2015 with the view to encourage cross-border energy trading in the region.
Most recently, the country commissioned the 87 MW Paravani station, which is located just 25 km from the Turkish border in the south-west.
This project was financed through loans from the European Bank for Reconstruction and Development (USD 52 million), the International Finance Corporation (USD 40.5 million) and Turkish Bank TSKB (USD 23 million), and owned by the Turkish Anadolu Group. The project is connected to both the Georgian and Turkish power grid. The power generated here will be used in Georgia during the winter months and sold to the Turkish grid during the rest of the year.
The 187 MW Shuakhevi hydropower scheme in south-western Georgia has also been spurred on by international support, and is expected to begin commercial operations in 2016. The project has received financing from the IFC, ADB and EBRD, and is being built as a joint venture between India’s Tata Power and Norway’s Clean Energy Invest. The Clean Development Mechanism (CDM) accredited power station is part of a cascade complex that also includes plans for the 150 MW Koromkheti, 65 MW Khertvisi and 10 MW Skhalta stations.
Another project nearing completion is the 108 MW Dariali run-of-river project in north east Georgia, close to the Russian border. The project is the first infrastructure scheme to be structured as a public-private partnership in the country. 2015 also witnessed the announcement of a number of significant projects with international support, including the 51 MW Kheledula 3 project, which is being developed by the Turkish Anadolu group, as well as the 280 MW Nenskra, which is receiving support from Korea’s K-water, the EBRD, ADB, IFC, the Korean Development Bank, and the European Investment Bank.
This country profile is featured in the 2016 Hydropower Status Report. You can download the full report here.
This profile was last updated in May 2016.