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GEORGIA'S ENERGY SECTOR - ELECTRICITY MARKET WATCH | 1Q20

7 May, 2020

Ministry of Economy expects decrease in electricity consumption caused by Covid-19 to continue until Sep-20.  Electricity consumption was down by 7.8% y/y in Mar-20 due to partial lockdown caused by Covid-19 pandemic. Pandemic impact on electricity consumption will be sharper in April 2020, when full lockdown was in place. However, based on the updated annual forecast of the Ministry of Economy and Sustainable Development (adopted on April 24, 2020), the annual decrease in consumption in April is expected at 5.9%, less than actual growth figure for March. The same document forecasts negative growth of electricity consumption to continue until Sep-20, resulting in 0.8% drop in annual electricity consumption in 2020 (to 12.7TWh). 

In order to mitigate the negative impact of coronavirus, the government will cover population’s utility bill for 3 months. This support will affect those subscribers who consume less than 200 kWh of electricity and 200 m3 of natural gas in a month. This consumption is approximately equal to the monthly payment of GEL 37 in the case of electricity and the consumption of GEL 100 for natural gas. Citizens were allowed to leave the support scheme voluntarily and 3,534 subscribers refused this support in March.

Shuakhevi HPP resumed operations in February 2020. The 178-megawatt station was first launched in 2017, but had to undergo repairs due to technical problems with the tunnel. In March 2020, its output was 58.9 GWh, which is 5.4% of the total supply this month and 8.3% of hydropower.

Policymakers are meeting their deadlines set by newly adopted energy law for market reforms.  Government of Georgia has adopted concept design of electricity market; Georgian Energy and Water Regulatory Commission adopted licensing rules for Transmission System Operators and made changes into some legislative acts, including grid code. According to concept design of electricity market: Power trading on day-ahead, intraday, bilateral and balancing markets should start by Jul-21; Public service provider at wholesale level (probably ESCO) will be in charge of price stability on the market and supply of electricity to Abkhazian region.


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Real estate market watch - May 2020

4 May, 2020

The demand for housing accelerated in Jan-Feb 2020 helped by last year’s low base and record low FX mortgage rates, before plummeting again in March due to Covid-19. Notably, apartment sales continued solid growth in 1st half of March 2020, before state emergency and lockdown was announced. In March 2020, real estate fundamentals were sharply affected by Covid-19 outbreak, putting real estate sales under pressure. Increased risks, combined with inflationary pressures and deteriorated consumer sentiments, bring back memories from 2008-2009 crises, when real estate prices and construction activity dropped sharply and it took 3 years to accelerate again.

Please see the full note here, which brings together real estate sale and price analytics for 1Q20, Covid-19 impacts and other statistical information available in the real estate market.

 


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Tourism Market Watch - January 2020

12 Feb, 2020

Total international visitor (tourists and same-day combined) growth accelerated to 19.8% y/y in Jan-20 after growing 16.3% y/y in Dec-19. Out of total 0.52mn visitors, Georgia hosted 0.36mn tourists (up 18.9% y/y) and 0.16mn same-day visitors (up 21.9% y/y) in Jan-20.

Georgia suspended flights to and from China till Apr-2020 to prevent the spread of the coronavirus. Notably, Georgia’s dependence on tourism from China is very limited with just 48K (0.6% of total visitors) Chinese traveling to Georgia in 2019. So direct hit from weaker Chinese tourism on Georgia will be minimal (Chinese spent US$ 3.8mn in 1Q19 or 0.7% of total revenues), and expected arrival growth from other countries will fully compensate this shortfall. Expectations can change if virus is not contained and willingness to travel globally weakens or many avoid Asia and start traveling to other countries. 

Please see the full note here, which brings together tourist arrival data for reporting month, most recent statistical information available in the sector and 2020 forecast


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Electricity Market Watch- Summary of 2019

30 Jan, 2020

Electricity trade deficit widened to US$ 70.5mn in 2019. In 2019, electricity consumption increased by 1.4%, while hydro generation was down by 10.1% due to unfavourable hydrological conditions. Under reduced hydro generation, local demand on electricity was met by increased imports (+7.8% y/y) and thermal generation (+ 34.3% y/y), additionally the exports were down by 58.8% y/y. In overall, cost of imported electricity amounted to US$ 78.3mn (+ 3.4% y/y), while export revenue was mere US$ 7.8mn. Consequently, the electricity trade deficit widened by 24.5% y/y and reached a historic maximum of US$ 70.5mn. 

Electricity consumption in Georgia is expected to grow by 5.0% in 2020. Ministry of Economy and Sustainable Development approved annual forecasted balance of electricity on December 28, 2019. According to the forecasted annual balance, 72.6% of total demand on electricity in 2020 will be met by hydro generation, 18.2% by thermal power plants, 0.6% by wind generation and 8.6% by imports. The forecast defined May, June, July and August as potential export months of 2020.

In 2019 and beginning of 2020, 9 hydro power plants were commissioned, with a total capacity of 72 MW. The largest of them were Mestiachala 1&2 (50MW in total) and the rest were small HPPs with average capacity of 3.5MW. Additionally, 230MW Gardabani-2 thermal power plant was put into operation by end of 2019.  

GNERC made significant tariff modifications for TPPs, Enguri, Vardnili and Georgian State Electrosystem by end of 2019. These changes will also affect the balancing market prices. Moreover, GNERC approved natural gas tariff for residential users.


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