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ISET Economist Blog

A blog about economics in the South Caucasus.

Will Georgia Stay as a Net Importer of Electricity in 2013?

For the first time since 2007 Georgia is a net electricity importer. Last year the total electricity generated declined by 4% and a 1.3% increase in total internal demand was observed. What should we expect from 2013?

The year started with a reduction of final electricity consumption tariffs by 3.5 tetris for those consuming less than 300 kWh of electricity. This change will definitely lead to a greater demand from households and businesses. How will Georgia meet this higher demand?

Attracting investments for new generation capacities?

As more than one year is required to construct power plants, even this cannot save Georgia from staying as a net importer in 2013. However, for the future perspective, it is important to increase generation capacity.

BUT there are ongoing projects…

The Ministry of Energy and Natural Resources of Georgia (MENR) has made announcement on its website about ongoing power plant construction projects. According to the information given on the webpage, construction of six power plants will be finished in the second half of the year. MENR claims that those power plants will produce maximum 7% of the total electricity generation of 2012. Of course we do not expect such an increase this year as construction of the majority of these will finish after September.

What about consuming electricity more efficiently?

Reduced electricity tariffs are definitely not the right signal for consumers to increase efficiency in their consumption. However, promotion energy efficiency programs (with financial, technical or joint measures) is important for Georgia as there is a big potential of saving energy and lowering demand for electricity.

What if Enguri and Vardnili Hydro Power plants recover their generation?

Yes, this will definitely save us from staying as a net electricity importer. It is under question why those power plants have experienced such dramatic drop in generation. Whatever the reason is, Georgia should address this issues as it is highly dependent on the electricity generated from Enguri and Vardili power plants.

Why should we care about being a net exporter of electricity?

Georgia cannot get electricity cheaper than from its own hydro generation. Being net importer of electricity means higher prices for electricity, dependency on other countries and the uncertainties in those countries. Those are only a few reasons why should we care about being net exporter of electricity.

What should Georgia do to become a net electricity exporter again?

Invest in new generation capacities and not only in hydro power plants. Being dependent on rainy seasons is not an ideal situation. Why not wind energy? Additionally, electricity should be consumed more efficiently. Households, governments and private organizations have a huge potential to save electricity.

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Thursday, 29 October 2020

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