EBRD pioneers private sector investment in Georgia’s hydropower

By David Managadze

EBRD pioneers private sector investment in Georgia’s hydropower

Georgia is believed to be one of the countries with the most hydropower potential  in the world. As the largest renewable investor in the region, the EBRD has a lot of experience structuring and financing projects, both greenfield and brownfield, there.
 In fact, we were instrumental in producing the first project financing structure for hydropower energy generation which enabled the private sector to invest in it.

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Georgia: investing for change

 
Another important component for investors is access to markets. This has now been achieved with the Black Sea Transmission Line project that connects Georgia’s and Turkey’s power networks and came on stream in 2014.Co-financed by the EBRD, other IFIs and the Georgian government, it helped Georgia to fill an infrastructure gap, and to open up the attractive Turkish power market to private investors.
 
Today, we are also beginning to explore the country’s wind potential. Wind is abundant in Georgia and provides clean, renewable energy. The next task is to establish how to make wind power here commercially viable. The Ministry of Energy and the Georgian Energy Development Fund, an entity established with the primary purpose of facilitating investment in and development of the country’s renewable energy sector, are very enthusiastic about developing the country’s first wind park near Gori.
 
Certainly there are number of challenges – for example the regulatory regime is still evolving, while investors like predictability and stability. Some investors prefer to have a partner like the EBRD to mitigate perceived political risk. However, our own experience and the experience of our clients has shown that the government in general and key sector counterparts in Georgian public entities (the Ministry of Energy, state-owned companies and the regulator) in particular are very supportive of investment in the sector and responsive to investors’ concerns.
 
Together with other IFIs and international donors, the EBRD is actively involved in policy dialogue with the government and the electricity regulator, GNERC, to restructure the energy sector and develop appropriate regulatory framework.
 

Georgia: Enguri dam keeps the power flowing

The EBRD’s 15-year mission to renovate the world’s second biggest arch dam – now the Enguri HPP again provides more than 40% of Georgia’s electricity needs.

 

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The country also made its European aspirations very clear when in 2014 it applied to become a fully-fledged member of the Energy Community Treaty and agreed to create a Deep and Comprehensive Free Trade Area (DCFTA) with the EU.
 
Georgia’s ambitious goal of becoming a regional energy hub seemed unachievable just decade ago but it is now becoming a reality. The EBRD is proud to have been one of the key contributors to the achievement of this goal.
 
So, if like many other investors you are thinking about investing in Georgia’s energy sector: what should you do next? We suggest you come at talk to us at the EBRD in Tbilisi or London.
 
David Managadze is a principal banker, Power and Energy, at the EBRD.