Georgia
With a cumulative score of 1.35, Georgia ranks number 69 among emerging markets and number 98 in the global ranking.
- Emerging markets
- Asia-Pacific
1.55 / 5
Power score
1.07 / 5
Transport score
1.03 / 5
Buildings score
Low-carbon strategy
Net-zero goal and strategy
Georgia does not have a net-zero goal.
Nationally Determined Contributions (NDC)
The targets laid out in its Nationally Determined Contribution (NDC) – a non-binding plan to achieve the goals set out in the Paris Agreement. Aside from clean electricity generation, the country has several policies aimed at improving energy efficiency in buildings.
Based on the latest NDC, Georgia will reduce its emissions by 35% compared to 1990 levels. There are both conditional and unconditional targets set for the country. Georgia will reduce emissions 35% from 1990 levels unconditionally. With the right international support it will reduce emissions 50-57% of 1990 levels. All sectors are included apart from land use, which is still being audited. Firewood use in particular is tricky to measure, since deforestation to use fuel for heating is widespread in rural areas. Illegal cutting of trees for firewood is a widespread problem and a concern for conservationists, but with a lack of economic alternatives for heating in rural areas, the trend is likely to continue, and could complicate the setting and measuring of targets in this sector.
Fossil fuel phase-out policy
The Georgian energy mix is primarily hydropower, and therefore considered fairly clean already. Demand is rapidly growing, and more generation capacity is needed. Currently, Georgia is dependent on its neighbors Russia and Azerbaijan for electricity and gas imports, which are key to meeting its energy needs. Hydropower is fairly seasonal so firm/thermal capacity is preferred, and retirement of fossil fuels is not on anyone's minds.
Power
Power policy
Following the 2019 passage of the Law on Promoting the Production and Use of Energy from Renewable Sources, some standards around accounting for energy from different sources have been developed and published. More details around contracting for renewables such as large-scale wind and solar are still expected. The country has announced plans to hold its first solar PV auction, but when this will take place and how it will be carried out is not yet known. Net metering has been available to small generators since 2016, and the size limit for such facilities was increased from 100kW to 500kW in 2020.
Power policies
Power prices and costs
Households and small businesses are supplied at regulated retail rates, which have been rising over the last three years. Georgia is moving forward with unbundling its electricity sector, and retail customers with consumption in the 35-110V level were free to choose a supplier by 2021. However, with most retail rates set by the Tariff Commission, prices are still regulated. In early 2022, prices went up by 90% for business consumers but only 10% for residential customers. This has led to a surge of interest in rooftop solar systems, as net metering allows commercial consumers to pay back their system costs in around five years.
Power market
Georgia’s power sector is largely made up of hydropower, with some gas-fired generation. The use of hydropower was promoted for several years through guaranteed PPAs (which offered a fixed price of $60/MWh for 8 months of the year), but since 2019, the government has shifted to a feed-in-premium mechanism for small hydro power that caps the amount they can receive. Payment mechanisms for other renewables such as wind and solar are not in place yet. Market monitoring rules for day-ahead, real-time and imbalance settling have been adopted as of January 2021, but will be formally implemented in 2022.
Installed Capacity (in MW)
Electricity Generation (in GWh)
Utility privatisation
Which segments of the power sector are open to private participation?
Wholesale power market
Does the country have a wholesale power market?
Doing business and barriers
As a small country largely dependent on hydro, Georgia needs more firm capacity. A key barrier to further decarbonization remains the speed of government action, and the ability to get public buy-in for projects. The most recent story on most energy sector observers’ minds is the cancellation of the Namakhvani dam. The 430MW project planned by the Turkish company Enka would have been the largest one built by the country after the separation from the Soviet Union, and alleviated the strain on grid supply. However, faced with strong protests by locals, the project was finally canceled. Rumors about the government agreeing to pay the contractor more than they should for the project, as well as the widespread sense that the dam would not benefit locals played a part in building public sentiment against the project. Responses on the cancellation are mixed; there is widespread agreement that the country needs more investment in its energy infrastructure, but balancing the various interests of local and national entities is not easy. The event also highlights the challenge for international investors in Georgia: even if the national government is a willing and supportive partner, local entities need to be brought on board as well, and the national government may be limited in its ability to push for support.
Currency of PPAs
Are PPAs (eg. corporate PPAs and all other types) signed in or indexed to U.S. Dollars or Euro?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel price distortions - Subsidies
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?
Fossil fuel price distortions - Taxes
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes or carbon prices?
Transport
EV market
Georgia currently has a small domestic market for electric vehicles. Nonetheless, Changan Corporation, a Chinese electric vehicle maker, plans to set up an electric vehicle plant with a capacity of 40,000 cars a year. As of 2022, this plan appears to have stalled. Local shared-mobility providers estimate that there are more imports of used electric cars from other countries, than new ones, but official data is not clear.
EV policy
The government has yet to implement any substantial policy support in this sector and the EV market remains at an early stage.
Transport policies
Fuel economy standards
Does the country have a fuel economy standard in place?
Buildings
Buildings market
Most building heat and cooling in Georgia is fueled by natural gas, with electricity powering 16% of the total energy consumed in the sector. With the new bylaws on energy efficiency, more inspections and performance measures are expected. Discussions around energy efficiency usually focus on enabling homes to be heated in winter, which is a particular challenge for rural areas. Some commentators observed that older houses in Georgia, built during the Soviet era when gas was cheap, were large and not necessarily energy efficient since energy prices were controlled and the fuel was abundant. As the country has moved to a more market-based economy, some of the older and larger houses are expensive to heat.
Energy efficiency policy
Does the country have a national energy efficiency plan?
Energy efficiency policy
Are there minimum energy performance standards for buildings?
Energy efficiency incentives
Is there access to loans or grants for energy efficiency measures (i.e. Wall or loft insulation or double glazing)?
Buildings policy
Georgia’s efforts in the buildings and low-carbon heating/cooling space have been focused on energy efficiency. In 2020, the government adopted the law on Energy Performance in Buildings. Since then, bylaws have been prepared that detail methodology for energy performance calculation, certification rules, regulation around the inspection of heating and air-conditioning systems, regulation on minimum energy performance requirements for buildings, reports on heating and cooling systems, and alternative measures of regular compliance inspection.
Buildings policies
Additional insights
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