Georgia has been a net importer of electricity since 2012 but in the first half of 2023, became a net exporter due to increased demand from Turkey. 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, Turkey, Russia, and Armenia. With assistance from USAID, the European Bank for Reconstruction and Development, Kreditanstalt für Wiederaufbau (KfW), and the European Investment Bank, Georgia completed construction of an electricity interconnector project that allows for the export of electricity to more lucrative markets with high demand, such as Turkey, and potentially Europe, although there is unused capacity on the line and scope to increase flows. With assistance from KfW, a new high voltage transmission line between Georgia and Armenia is under consideration. In addition, Georgia is considering the development of a Georgia – Romania submarine transmission line connecting the Georgia and Romania power systems. If constructed, this interconnection would provide Georgia with a direct connection to Romania’s power grid and access to European markets. The World Bank is conducting a feasibility study, which is expected to be completed in the first half of 2024. On July 25, Georgia, Azerbaijan, Romania, and Hungary signed a memorandum establishing a joint venture to develop the Black Sea submarine transmission line.
Georgia made significant technological and economic progress since the early 2000s when the country’s energy system was fragile and customers could only expect a few hours of electricity per day in the capital, Tbilisi, with an even more dire situation in rural areas. Georgian policymakers took significant steps to adopt a modern and Westward-oriented approach to the energy sector, including unbundling and privatizing the state-owned vertically integrated electricity utility, establishing a strong regulatory commission, and others.
In 2017, Georgia signed the Energy Community Treaty. Under this treaty, Georgia is obligated to gradually implement certain EU directives and regulations in Georgia’s own legislation. In 2020, the U.S. government facilitated the establishment of the Georgian Energy Exchange (GENEX) with the goal of supporting Georgia to liberalize its electricity market. The official launch of the competitive power market that would be operated GENEX was originally planned for March of 2022, but has been delayed multiple times, mostly recently on July 1, 2023, when the government unexpectedly announced it would be delayed for an additional year. The repeated delays of the opening of the electricity market have created uncertain market conditions for international investors seeking transparency and predictability in Georgia’s energy sector.
Hydroelectric Power, Wind Power, Solar Power, Transmission, and Distribution
There are many opportunities for U.S. companies in electricity power generation - specifically hydropower, wind, and solar. There are opportunities in power transmission and distribution infrastructure projects, and battery storages as well, but a feasibility study on these opportunities has not been performed. 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. Georgia is also assembling solar panels (sourced from China) at a free industrial zone in Kutaisi, western Georgia, with exports to Mexico. 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, and KfW.
Other opportunities exist in demand-side energy management for the electricity distribution companies that serve electricity market end-users. These opportunities are for cybersecurity, smart grid, metering, and intelligent energy management systems for distribution grid operators, industrial and commercial users, and to a lesser extent, residential users, as the country develops better incentives for energy efficiency.
Georgia does not currently produce power generation and transmission equipment, except for some small capacity hydroelectric turbines, solar panel assembly, and electricity meters. Most current equipment was produced in the Soviet era, primarily in present-day Russia. Current efforts of the Georgian government to end subsidies for electricity and to develop renewable energy - including hydropower, wind, and solar generation infrastructure, as well as 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.