The Government of Georgia has been reforming the country’s electricity market since 2019, when a new Law on Energy and Water Supply entered into force and established a general legal framework to further implement the European Union directives and regulations.
The new Electricity Market Model Concept, which is one of the main components of the Law on Energy, is to be launched on 1 September. According to Deputy Minister of Economy and Sustainable Development of Georgia, Romeo Mikautadze, the concept introduces general principles for the organisation and functioning of the wholesale trade market of electricity, such as:
By design, an electricity market will enable numerous HPPs in Georgia to become buyers and sellers of electricity. Furthermore, it will stimulate large-scale investments in other renewable energies as well, such as solar and wind. These large-scale projects will not only contribute to the security of energy supply and decrease Georgia’s dependency on other countries, but they could also give rise to related businesses, such as solar panel production. As an additional benefit, local vendors might develop new business areas. Commercialising renewable energy will also strengthen the expertise of local suppliers and their employees.
Developing large-scale renewable energy projects requires long-term financing and capital. In the greener economies of the world, the existence of and access to green financing constitute a crucial part of the development chain. Financing renewable energy projects is one of the main pillars of GEFF in Georgia, and for its last three years of operation it has successfully financed numerous projects for businesses, ranging from supermarkets to metal production. GEFF in Georgia offers financing for the technologies needed for solar, wind and water power generation as well as all related businesses, including, but not limited to, the production of these technologies.
As for the organised electricity market, the concept foresees the establishment of a few competitive markets, where participants will be able to purchase and sell electric energy at binding day-ahead prices for following day (day-ahead markets or DAMs), and buy or sell energy on the same trading day (intraday markets or IDMs). Apart from buyers and sellers, however, the market will consist of services that ensure the security of supply (balancing and ancillary services). The market will also allow for bilateral agreements, where parties can freely negotiate prices for their products.
“As a result of this reform, competition in the electricity market should be gradually developed through a gradual opening of the market,” Mr. Mikautadze said.
The large-scale reform should qualitatively change the existing market model and lead to the establishment of a system that will give the right price signals to both generating investors and consumers.
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