ISET Economist Blog

A blog about economics in the South Caucasus.
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What Can Be Learned from the Experiences of the Khadori 3 HPP Project?

News of the conflicts between the local population and the construction company involved in the construction of a small HPP in the Pankisi valley (Khadori 3) has recently made it into the headlines. Khadori is a small HPP with an installed capacity of 5.4 MW and an estimated annual generation of 27.5 mln. kWh. Construction of the Khadori 3 HPP started on 21 April, however, the local population resisted the project, and consequently its company involved law enforcement officials to ensure its secure implementation. This further increased tensions between ...
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Why Everyone Should Pay to Use Water, and How This Could (and Probably Will) Be Done in Georgia

“At least we have a lot of water - why should I pay for it?” One can frequently hear this phrase in Georgia. This popular saying is based on the relative abundance of water resources the country has: roughly 15,597 cubic meters of renewable freshwater resources per capita a year, well above the 2,961 cubic meters per capita in the European Union (World Bank 2014). However, having a resource does not mean being able to use it, nor being able to do so in a sustainable manner. Georgia lacks infrastructure both for water supply and sanitation, providing drin...
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Is Abkhazia Consuming Too Much? – March 2018 Electricity Market Review

In March 2018, Georgian power plants generated 997 mln. KWh of electricity (+35% compared to March 2017, and + 7% compared to February 2018). Nearly a quarter (24 %) of this electricity was produced by the Enguri and Vardnili hydropower plants, which produced 188 mln. kWh and 49 mln. kWh, respectively. Consumption of electricity on the local market was 1,116 mln. kWh (+9% compared to March 2017, and +5% compared to February 2018). Around 19% of this electricity was consumed by Abkhazia (207 mln. kWh). The Enguri and Vardnili HPPs represent nearly the onl...
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A Good February for Electricity Generation: Time for Reflection, After Last Year’s Worries

  In February 2017, Georgia experienced the largest gap between generation and consumption in the last decade. This was followed by an even greater gap in March 2017. The size of those gaps, and the fact that the historical trend was suggesting an increase in the electricity gap, prompted policy proposals emphasizing the need to encourage investments in power generation. The goal of such policies would be to avoid future energy security challenges due to electricity shortages and fast increasing electricity prices. Most of the strategies suggested s...
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2018 – A Turning Point for the Georgian Electricity Market?

This year Georgia’s electricity market will have to go through some crucial reforms. The signing of the Association Agreement and Georgia’s accession to the energy community in October 2016 imposed some important obligations on the country to reform its energy markets. For the electricity market, 2018 will be a turning point. Among the key obligations the country committed to under the energy community accession protocol were the adoption of: (i) Directive 2009/72/EC, concerning common rules for the internal market in electricity and (ii) Regulation (EC)...
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Why Is Georgia Importing So Much Electricity?

In October 2017, Georgian power plants generated 828 mln. KWh of electricity, marginally up (+0.79%) compared to September. Following the traditional seasonal pattern, the share of electricity produced by renewable sources declined to 71% of total generation (87% in September), while thermal power generation’s share increased, accounting for 29% of total generation (compared to 13% in September). When we compare last October’s total generation with the total generation of October 2016, however, we observe an 8.7% decrease in total generation (in October ...
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