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Georgia's Energy Sector - Electricity Market watch - June 2018

14 Aug, 2018

Adjar Energy 2007 finished construction of run-of-river Kirnati HPP with installed capacity of 51.3MW, and projected annual generation of 226GWh. The HPP currently operates in test regime and expected to move to full capacity by September 2018. In addition to above mentioned HPP, there are three other small HPPs already commissioned in 2018: 1) Kasleti HPP - 9.0 MW, 2) Kheori HPP - 1.3MW and 3) Shilda 1 HPP - 1.2MW.  Total capacity of these four HPPs is 63MW. As of July 2018, there are 80 operational HPPs in Georgia. Out of these, 57 are small HPPs (capacity below 13.0 MW) and 4.6% (190.1 MW) of combined installed capacity.

Domestic electricity consumption increased 12.6% y/y in June 2018 and 8.4% y/y in 1H18. The eligible consumers and distribution licensees drove this growth. Eligible consumers’ increased their consumption by 34.7% y/y, accounting for 18.0% of total domestic consumption. This growth can be explained by addition of 2 new companies (GFDC Georgia and Geo Servers) to the group of eligible consumers. This was in line with legal changes effective since May 2018 as their average monthly consumption of electricity was above 15MWh. Consumption by distribution licensees was up by 10.2% y/y in June 2018, as consumption of new commercial subscribers fully compensated the reduced consumption caused by reallocation of 2 above mentioned large companies into different category.

Electricity exports were down 15.4% y/y in June 2018, while exports were up 5.8% y/y in 1H18. Electricity exports accounted for 16.0% of electricity supplied to the grid in June 2018. A 78.6% out of 194.6MWh total exports were directed to Turkey (+134.6% y/y), while the rest was exported to Russia, Armenia and Azerbaijan in June 2018. A 76.2% of electricity export to Turkey was conducted by ESCO in exchange of electricity imports planned during October- December 2018.

Electricity generated by domestic sources increased by 6.2% y/y in June 2018 and by 14.8% in 1H18. Hydro generation (+6.4% y/y in June 2018) drove the domestic supply growth supported by good hydrological conditions and commissioning of new HPPs. Enguri/Vardnili generation was up by 16.7% y/y and satisfied lions share (56.5%) of electricity demand in June 2018. In 1H18 generation of Enguri/Vardnili increased by 30.5% y/y and reached 2.3TWh, highest number since 2010. Thermal generation and imports accounted for 0.8% of total electricity supply and were intended only for system’s balancing and stability purposes. 


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Georgia's Energy Sector - Electricity Market Watch | May 2018

17 July, 2018

Domestic electricity consumption increased 12.3% y/y in May 2018 and 7.7%y/y in 5M18. The main drivers of consumption growth were the consumption of eligible consumers and distribution licensees. Eligible consumers’ almost doubled (+89.9%y/y) their consumption in May 2018, accounting for 18.7% of domestic consumption. This growth can be explained by: 1) Georgian Manganese electricity consumption growth by 54.0%y/y; 2) Addition of 2 new companies (GFDC Georgia and Geo Servers) to the group of eligible consumers. Consumption by distribution licensees was up by 8.2% y/y in May 2018, as consumption of new commercial subscribers fully compensated the reduced consumption caused by reallocation of 2 above mentioned large companies into different category.

Electricity exports were interrupted by the emergency situation on Enguri HPP. As a result, total exports in May 2018 were 23.4% below the planned level, but remained flat y/y. A 82.3% out of 200MWh total exports were directed to Turkey (+95.5%y/y), while the rest was exported to Armenia (13.5% of total exports) and Azerbaijan (4.2% of total exports). Electricity exports accounted for 16.6% of electricity supplied to the grid.

Electricity supply mix differed from historic trend in May 2018 due to the accident on Enguri HPP, which caused unplanned deficit in the system compensated by imports, thermal generation and abolished exports.


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Georgia's Energy Sector - Electricity Market Watch | April 2018

31 May, 2018

Electricity consumption expected to increase by 6.9% y/y in 2018. The updated annual forecast of 2018 electricity balance was issued on May 16, 2018. Main modifications are related to export and import amounts, hydro generation and 4M figures (forecasted replaced by actuals). According to the modified annual forecast for 2018: Electricity consumption expected to reach 12.7TWh (growth revised down to 6.9% y/y from 7.1%y/y in previous edition); Import expected to reach 1.3TWh, which is 12.4% y/y reduction compared to initial forecast of 30.8% y/y increase; Export planned at 0.5TWh. GSE should define the exporter companies and export directions by the public auctions. So far, the most popular direction within exporters remains Turkey and Armenia is second most popular market.

Electricity consumption increased by 6.7% y/y to 4.3TWh in 4M18. The increase was mainly driven by the 8.4%y/y growth in consumption of distribution licensees due to addition of new commercial subscribers (Energo-pro’s consumption was up by 9.7% y/y and Telasi’s was up by 6.1% y/y). Consumption by Eligible consumers and Abkhazian region was down respectively by 8.5% y/y and 5.0% y/y in 4M18. 

Domestic generation was up by 20.6% y/y in 4M18, mainly driven by 39.8%y/y increase in hydro generation. This dramatic increase in hydro generation can be explained by last year’s low base and by the good hydrological conditions.  Surplus in hydro Generation (19.5% over the planned level) in 4M18 reduced thermal generation (-16.8%y/y) and imports (-38.9%y/y), both being significantly below the planned levels (17.8% and 40.6% respectively). 

Electricity imports stood at 0.5TWh (US$ 27.9mn) in 4M18. The 88.6% of total imports came from Azerbaijan, while the rest came from Turkey (6.7%) and Russia (3.3%). Unexpected surplus in hydro generation also resulted in unexpectedly early exports of electricity. Export of electricity started in second half of April and reached 61.7GWh (US$ 1.8mn) in 4M18.


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Georgia's Energy Sector - Electricity Market Watch | March 2018

4 May, 2018

Draft law on electricity and natural gas, sets the new threshold for mandatory registration as direct consumer at 15.0 GWh of average monthly consumption from May 2018. This law is expected to be approved by the parliament by mid May 2018. The current law requested mandatory registration as direct consumers from all companies connected to the high voltage (35kV+) transmission grid from May 2018. After approval of the law, eligible companies for registering as direct consumers will be reduced from expected 60 to 4 following companies: Georgian Incorporation, BFDC Georgia, Tsekhi-1, and Block Power. Other companies will retain the option to be registered as direct consumers, with the exception that they will no longer be able to go back to the distribution companies’ services. Notably, BFDC Georgia and Geo Servers already voluntarily registered as direct consumers on 30th of April, before the enforcement of the law.

Consumption growth in 2017 was mainly driven by the consumption of non-residential sector: 1) The direct consumers increased their consumption by 18.1% y/y, due to increase of Georgian Manganese’s production level and 2) the non-residential subscribers of distribution licensees increased their consumption by 8.4% y/y, in line with the average growth rate over 2012-2017. New commercial entities added to the distribution grid are the main drivers of the growth. Electricity consumption by residential subscribers of distribution licensees was down by 2.0% in 2017 and accounted for 20% overall domestic consumption. Notably, the average growth rate of residential consumption is 1.9% over 2012-2017 and we do not expect significant changes to this trend in nearest future.

Domestic electricity consumption increased 9.3% y/y in March 2017. The sole contributors to consumption growth were distribution licensees: 1) Energo-Pro Georgia subscribers’ consumption increased by 18.8% y/y. The growth can be explained by addition of new commercial subscribers; 2) Telasi consumption was up 10.2% y/y. There were no Electricity export and transit in March 2018 although the annual balance envisaged the export of 28.0 GWh. Georgian Urban Energy - owner of Faravani HPP has long-term transmission and dispatch agreement, enabling company to export predetermined volume of electricity from March to November of each year in Turkey. Three years in line, Georgian Urban Energy voluntarily sells electricity to ESCO instead of exporting it. In 2018 Georgian Urban Energy will export only in May, June and July.

Electricity generated by domestic sources increased by 34.5% y/y in March 2017. Hydro generation showed significant increase (+42.4% y/y) in March 2018 from a very low base (-21.7% y/y) in March 2017: Enguri/Vardnili generation almost doubled increasing 87.5% y/y from last year’s low base when Enguri had low generation due to its halted operation in February 2017. Abkhazian region consumed 87.4% of electricity generated from Enguri/Vardnili. Generation of other regulated and deregulated HPPs also increased significantly by 20.4% y/y and 42.8% y/y, respectively, due to high water flow and addition of new HPPs (Dariali and Khelvachauri) to the group of deregulated HPPs.

The surplus in hydro generation reduced electricity imports by 48.4% y/y from last year’s high base, when interruption in Enguri increased demand for imports drastically. Most of the imported electricity came from Azerbaijan (77.3% of total imports of Mar-18), while the rest came from Turkey. Notably, it was first time since 2008 when Turkey served as import country. This import was reflection of ESCO’s tender on barter of electricity won by Aksen Enerji in February-2018.


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