Georgia's Hydropower Sector - Friendlier rules, strong prospects


    Bank of Georgia Research



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Georgia’s hydropower sector holds ample development potential. The launch of a 400kV transmission line with Turkey and initiatives to harmonize the Georgian market with Turkey are key steps that position Georgia well to become an important regional energy player. It is believed that Georgia will increase hydropower output 41% to 11.5TWh by 2021. Given domestic consumption growth, a large chunk of this additional generation capacity could even be absorbed domestically. For 5 years up to 2012, Georgia was a net exporter of electricity, but low water levels and increased domestic consumption cut exports in 2013 and demonstrated the need for additional generation capacities. However, the Enguri hydro plant has signed an agreement with a Turkish party to sell 200GWh this summer (at US¢ 7.5/kWh), which signals a return to export markets after a poor 2013. Electricity prices remain stable, while new HPPs can now benefit from 10-year off-take tariffs for 20% of produced volumes with the Georgian market operator and priority access to the newly commissioned Turkish line.