Georgia has a number of laws and regulations governing water resources, dating back to the late nineties and partially amended after 2003. These changes, however, have not always followed a clear and coherent strategy. Consequently, in the words of the United Nations Economic Commission for Europe (UNECE), the current legislation is an “unworkable and fragmented system”.

Looking at annual consumption and generation trends, from 2012-2016, it is clear that generation typically exceeded consumption. Consequently, the generation-consumption gap remained positive. However, in 2017 this trend reverted, and the electricity generated by local resources on the Georgian market was no longer enough to supply the local demand. As shown in Figure 1, the gap widened even further in 2018; with the negative gap increasing by 30% (from 344 mln. kWh in 2017 to 447 mln. kWh in 2018).

Why do we care about competitiveness in energy markets? And, what are the benefits of increased competition from the supply side of the electricity market?

This year has plagued a number of countries with tremendous natural disasters and extreme weather events. Greece was challenged with extensive fires and South Africa with a shortage of water. As late as November this year, the US was still struggling to tame forest fires. Something is certainly happening with the climate. These problems arise from society only being concerned with growth.

After the generation deficit of September, the decreasing trend in generation continues, while the gap between consumption and generation keeps widening. Chiefly, compared to September, total electricity generation has decreased by 8% in October 2018, while in contrast with the previous October 2017, electricity generation has decreased by 5%. This reduction in generation on a yearly basis is specifically due to the decrease in hydropower (-1%) and thermal power generation (-17%), which more than offsets the increase in WPP generation (+4%).