Georgia has a hydro-based electricity generation system where approximately 70% of the generation in 2019 comprised of hydropower and approximately 30% 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 2021. 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 2019 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.
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.
Turkish and Georgian market access
AGL is required to sell the electricity produced to the Georgian market during in all months except May-July for the first five years of operations. During the rest of the year, AGL has the option to sell the electricity produced to the Georgian market or to the neighbouring markets, including the Turkish market.
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.