KEY CHALLENGES OF GEORGIA’S ELECTRICITY MARKET

M.Matchavariani
Georgia

After singing a Protocol “Concerning the Accession of Georgia to the Treaty Establishing the Energy Community”, Georgia took obligations to transform its Energy Markets. Accession Protocol envisages mandatory changes of electricity market by implementing so-called Third Energy Package. Respective requirements have to be implemented within the outlined deadlines. Georgia’s Energy Market must go through major transformation towards fully competitive and liberalized market model by 1 January 2020. 

The paper discusses Georgia’s Electricity Market, including advantages and challenges it faces. The advantages of electricity sector of Georgia include its large hydro potential, interconnections with neighboring countries, good geographical location, etc. However, there are challenges and risks such as significant winter deficits of electricity, which is produced by hydro power plants and have to be filled by imports and thermal power plants in order to meet demand, difficulty in attracting foreign investments to the sector because of legal uncertainties, supply of electricity to occupied territory of Abkhazia and more. 

The paper studies current electricity market structure and discusses main challenges of the sector, which is going through major reforms in order to fulfill all the obligations country has undertaken. Among this challenges are guaranteed power purchase agreements, which were introduced as a renewable energy support mechanism, electricity supply to Abkhazia – cost of which is not paid, customer protection etc.