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Research Reports

Regulatory Impact Assessment on High Mountainous Region Designation of Energy Development and Access
Friday, 25 September, 2020

The Law of Georgia on Energy and Water Supply, adopted in December 2019, envisages certain general provisions concerning vulnerable customers. The Law states that the Georgian government and local government bodies, in consultation with other interested parties, shall develop special programs/measures/benefits to ensure the supply of electricity and natural gas for vulnerable customers. However, the provisions of the law do not specify the form of the support programs or the measures to be taken in protecting such customers.

Currently, from a policy perspective, there is neither a clear general long-term energy strategy nor individual strategies for municipalities. Moreover, there is no uniform policy to ensure energy access to the high mountainous regions, and certain mountainous municipalities are treated differently than others. For instance, residents permanently living in some villages of the Kazbegi and Dusheti municipalities received 700m3 of free gas per month (between 1 December 2019 and 15 May 2020 and from 15 October 2020 to 30 November 2020) (the State Law of Georgia, 2020). Consequently, such policies have to take into account the local context, fairness, and the equal treatment of each mountainous municipality.

Weak execution of the law is yet another challenge. In this case, the main problem relates to lacking a system for the effective collection of utility payments in particular regions (e.g. in Svaneti). Weak execution of the law, as a result, leads to an inefficient utilization of resources. Whereas from the legal perspective, the main challenges lie within the protection of customers, especially the vulnerable.

In order to ensure access to affordable, reliable, sustainable, and modern energy for communities in mountainous regions, the general objectives of governmental intervention are to:

  1. Ensure energy security in the mountainous regions of Georgia;
  2. Ensure affordability of energy to all existing and potential users in mountainous regions;
  3. Ensure environmental sustainability and reduced CO2 emissions;
  4. Ensure compliance with EU Directives and the 2030 Agenda for sustainable development.

A number of specific and operational objectives are further associated with the general targets listed above. These specific objectives include:

• The development of a reliable energy infrastructure, through the adoption of modern technologies in the utilization of alternative energy sources;

• The introduction of new economic instruments for reliable, affordable, and sustainable access to energy;

• A redesign of the energy subsidy programs currently implemented in mountainous regions;

• The implementation of awareness-raising activities on alternative energy sources and respective modern technologies.

This RIA considers three potential options for attaining the abovementioned objectives:

• Maintaining the status quo, where nothing is changed;

• The provision of grants and interest rate subsidies for HHs in mountainous regions;

• The provision of lump-sum payments to HHs in mountainous regions.

In each option, the relevant alternative energy sources for the various mountainous regions were selected based on their potential availability (solar, biomass, etc.).

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