This is a best prospect industry sector for this country. Includes a market overview and trade data.
Georgia has been 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, Turkey, Russia, and Armenia. With assistance from USAID, the EBRD, Kreditanstalt für Wiederaufbau (KfW), and the European Investment Bank (EIB), Georgia completed the 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 tendering a fully technical and economic feasibility study as of July 1, 2022.
Georgia made remarkable 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.
The Government of Georgia, with USAID assistance, is working to adopt a renewable energy incentive framework that is consistent, predictable, and attracts investment in the sector. After initially agreeing to issue government-backed power purchase agreements (PPAs) in a series of MOUs in 2015-2017, the government halted PPAs over concerns about potential budget liability and instead adopted a Public Private Partnership (PPP) framework. In addition, the government currently offers a feed-in-premium to certain types of power products. The government is examining all possible options as it works to adopt a renewable energy incentive scheme.
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), Georgia’s liberalized electricity market, and held targeted trainings to facilitate participation in Georgia’s energy markets. Originally slated to open on January 1, 2022, the official launch of GENEX has been delayed twice.
Hydroelectric Power, Wind Power, Solar Power, Transmission, and Distribution
The best opportunities for U.S. companies in this sector are in electricity power generation - specifically hydropower, wind, and solar. There are opportunities in power transmission and distribution infrastructure projects as well. 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 manufacturing solar panels at a facility in Kutaisi, Western Georgia, with exports to the United States. 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 opportunities in the wind and solar sectors.
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 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. Between 2017 and 2020, USAID’s Energy Program (UEP) supported Georgia in energy sector reform implementation per Georgia’s obligations, improving the legal and regulatory framework and increasing investments in the energy sector. The follow-on USAID Securing Georgia’s Energy Future Project supports further development of Georgia’s energy sector into an open, regionally-integrated, market-driven system, capable of independently planning, financing, and implementing solutions to Georgia’s energy sector energy security challenges, and further improving the enabling environment for private sector investments in renewable clean energy.