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Georgia needs favourable regulations and government support to develop renewables – interview with Manana Kochladze, CEE Bankwatch Network

Georgia has unconditionally committed itself to reduce greenhouse gas (GHG) emissions by 35 per cent by 2030. This obligation is inscribed in the country’s Law on Promoting the Production and Use of Energy from Renewable Sources which was adopted in 2019. The country is also a signatory to the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement. With these commitments, coupled with progress on adopting the EU acquis, Georgia has an opportunity to expand renewables and reap the benefits of reducing emissions from its energy sector.

CEENERGYNEWS spoke with Manana Kochladze, CEE Bankwatch Network‘s Regional Coordinator for the Caucasus about building energy efficiency of Georgia’s most important electricity producer (hydropower infrastructure), the barriers to the development of alternative renewable sources and peculiarities of the country’s energy system. Ms Kochladze is also the Chairperson of the Tbilisi-based environmental association Green Alternative. One of her main focuses is the sustainable development of Georgia’s energy sector.

Georgia possesses vast potential for the development of renewables but with the exception of the country’s leading energy source, hydropower, this potential remains largely untapped. The energy intensity of Georgia per unit of GDP is about 46 per cent or twice as high as the EU average which calls for carrying effective energy efficiency measures across all sectors, including industry, buildings, transport and large infrastructure. Applied to hydro energy, introducing efficiency measures would mean upgrading the country’s old hydropower plants which could optimise their power generation capacity.

Manana Kochladze.

Ms Kochladze tells CEENERGYNEWS that the rehabilitation of ageing hydropower infrastructure should be Georgia’s priority in parallel to the development of renewable energy sources.

“In Georgia, we have six ageing hydropower plants, three of them are 40 years old and three are less than 20 years old. All six of them need complete rehabilitation which will greatly increase their power generation, stability and supply efficiency […] Indisputably, hydropower will remain the pillar of the country’s energy sector for the foreseeable future […], the renovations are a must as it is about increasing energy efficiency and secondly, it is a security issue for people living downstream.”

A good illustration of the effectiveness of efficiency improvement in hydroelectricity generation is the recent renovation of Enguri HPP, Georgia’s largest power producing plant which generates 40 per cent of the country’s electricity.

“After the renovation, there is no significant water leakage from the tunnels of Enguri HPP. As a result, its efficiency has increased significantly if compared to the previous year. Upgrading its turbine-generation units can also increase the power capacity of its 120-megawatt Vardnilli cascade to 135 megawatts”, she notes and adds that “the modernisation and digitalisation of hydropower technologies, in combination with Operation and Maintenace [such as] digital controls, intelligent condition monitoring systems, remotely operated systems, supervisory control, data acquisition system, can also increase energy generation efficiency.”

According to Ms Kochladze, enhancing hydropower infrastructure with other renewables such as solar panels and wind turbines could boost their power generation capacity too.

“I think that integrating additional renewables on existing hydropower plants would be an effective measure for increased energy production. There is a number of hybrid projects around the world where solar PV plants or wind turbines are installed on HPP reservoirs, allowing these plants to balance each other and ensure supply stability, saving on land and grid connection costs that are otherwise incurred in greenfield solar projects”.

Hydropower holds a large share of Georgia’s energy mix. Seventy-four per cent of the country’s electricity is produced by hydropower plants, providing a good reason to assume that the sector is mostly renewable-based.

“The popular opinion is that our energy sector is built on hydro, but in reality, it depends on the subsidised imported gas which distorts the market rules. This is because the subsidy is not only for the households. The same gas-fired power plants consume subsidized gas, and at the end of the day, we do not know the actual cost of electricity or why it costs so much”, remarks Ms Kochladze.

These facts suggest that Georgia needs to develop an appropriate environment and support schemes to develop alternative renewable energy sources. This trajectory could not only allow the country to decarbonise its power sector but catalyse new infrastructure and advance its energy resilience. The country’s sole wind farm has already proven that there is tremendous potential for this particular type of renewable energy in Georgia.

“When Gori wind power plant started generating [electricity], everyone believed that 6.5 US dollars cent tariff per kilowatt was too expensive and that wind power would never be profitable but the opposite has happened. It generates electricity during the period of power deficit in the system in January and February. It also generates more energy than initially projected and produces more than all the new 14 small hydropower plants together that have gone into operation since 2015. The wind is one of those energy sources that can balance the system’s seasonal disbalance”, emphasises Ms Kochladze.

For her, a noteworthy development in Georgia’s renewable sector is that as a result of the recent surge in energy prices, commercial banks have begun lending to organisations and companies that are willing to install solar panels.

“Quite a few enterprises have started investing in these technologies because they have realised that this move can be profitable for them and significantly reduce their energy consumption. This tendency means two things. First, it indicates that renewables are developing in the private sector and second, the rate of energy intensity of these companies will eventually drop, thus the [commodity] production costs can decrease too.”

Nevertheless, attracting investors in a new and untested market remains a challenge in Georgia. According to Ms Kochladze, there are manufacturers and investors who are trying to proceed with solar and wind projects but they encounter a lot of barriers.

“Entering the local market for new renewable projects is still very difficult. Companies that install solar panels face problems because they are unable to sell the excess solar energy that they produce. Currently, there is a cap on how much electricity you can sell to the central power system. This cap is calculated for only residential panels and it is around 500 hundred kilowatts. This is too little. Therefore, there is a need for change in the regulation […]. For investments, favourable regulations and government support are crucial but we don’t see this happening at present”.

The design and planning of Georgia’s power system in a way that can support the integration of renewables is another roadblock for the development of the sector.

“According to the government’s estimation, the power system can only receive 1.300 megawatts of wind and solar by 2030 which means that it is not ready for the integration of renewables”, notes Ms Kochladze, adding that “the integration of alternative renewables into the system will render its management much more difficult because moving to a smart system and smart grids will become necessary. This also means that our energy mix will become much more complex. Now it is simpler as the Georgian energy system produces electricity for all types of demands [not just peakload]. In itself, it is not a suitable energy model but this is what we have and we cannot change it at once. What we can do, however, is to think about how to restructure it”, concludes Ms Kochladze.

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