Georgia has a hydro-based electricity generation system where approximately 75% of the generation in 2017 comprised of hydropower and approximately 25% of thermal power, mainly gas fired and imports. Electricity in Georgia can either be sold through bilateral contracts or on the exchange. ESCO is the market maker in Georgia setting monthly prices for electricity composed of a mix of hydro, imports and thermal generation.
As part of its commitments in the EU Association Agreement signed in 2017, Georgia is obliged to develop a transparent hourly day-ahead and balancing market for electricity by 2019. The plan is also to further integrate the market with the neighbouring countries, including Turkey.
Turkey has a developed day-ahead and intraday market and a rapidly developing OTC market which enables the projects to hedge forward market positions. A growing share of Turkish electricity is expected to be traded through the EPIAS exchange in the coming years.
Georgia has a modern transmission system with a low load and low losses (approximately 2% transmission losses in 2017 in the high voltage network). The country’s electricity grid is expanding rapidly. A 700 MW Siemens back to back station was completed in Akhalsikhe in South-western Georgia in 2013. A transmission line was built from Akhalsikhe to Borchka in Turkey for export of electricity. The construction agreement for a new 400 kV transmission line Akhalsikhe – Tortum was signed between TEIAS and GSE, the TSOs in Georgia and Turkey in May 2016.
A new 220 double-circuit transmission line is under construction linking up Batumi with Akhalsikhe. The 187 MW Shuakhevi project will be connected to this grid. A ten-year transmission grid development plan is guiding the development of the electricity grid in Georgia.
Turkey, a member of ENTSO E is expanding its grid significantly in North-eastern Turkey with the construction of several new 380 kV lines. The bottlenecks experienced during the spring period in 2014 and 2015 are expected to be resolved by 2020.
Turkish and Georgian market access
The project companies are required to sell the electricity produced to the Georgian market during the three winter months of December, January and February, for the first ten years of operations. During the rest of the year, the company has the option to sell the electricity produced to the Georgian market or to the neighbouring markets including the Turkish market. The project companies have a 20-year export agreement with the Government of Georgia on capacity allocation for the cross-border transmission line.
Turkey has historically experienced high electricity prices and high prices are expected in the future due to the importance of Combined Cycle Gas Turbines (CCGT) in the electricity mix.
Electricity demand in Turkey has been growing rapidly over the last 50 years and this development is expected to continue, driven by population growth and increase in per capita consumption. The Georgian population consumes far less electricity than western industrialized countries, and somewhat less than the neighboring country Turkey. Per capita electricity demand growth is expected to increase the overall demand for electricity in the coming decade.