Usaid Energy Program Quarterly Report October 1, 2018 – December 31, 2018
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USAID ENERGY PROGRAM QUARTERLY REPORT OCTOBER 1, 2018 – DECEMBER 31, 2018 USAID ENERGY PROGRAM 15 January 2019 This publication was produced for review by the United States Agency for International Development. It was prepared by Deloitte Consulting LLP. The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. USAID ENERGY PROGRAM QUARTERLY REPORT OCTOBER 1, 2018 – DECEMBER 31, 2018 USAID ENERGY PROGRAM CONTRACT NUMBER: AID-OAA-I-13-00018 DELOITTE CONSULTING LLP USAID | GEORGIA USAID CONTRACTING OFFICER’S REPRESENTATIVE: NICHOLAS OKRESHIDZE AUTHOR(S): USAID ENERGY PROGRAM STAFF LANGUAGE: ENGLISH 15 JANUARY 2019 DISCLAIMER: This publication was produced for review by the United States Agency for International Development. It was prepared by Deloitte Consulting LLP. The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. USAID ENERGY PROGRAM USAID ENERGY PROGRAM QUARTERLY REPORT i ACRONYMS AA Association Agreement ADB Asian Development Bank AYPEG Association of Young Professionals in Energy of Georgia B2B Back-to-Back CNG Compressed Natural Gas CoP Chief of Party COR Contracting Officer’s Representative DCoP Deputy Chief of Party DM Deputy Minister EBRD European Bank for Reconstruction and Development EC Energy Community ECS Energy Community Secretariat EEC Georgia Energy Efficiency Centre Georgia EMWG Electricity Market Working Group EnCT Energy Community Treaty ENPARD European Neighbourhood Programme for Agriculture and Rural Development EPSO Electro Power System Operator ESCO Electricity Market Operator ETM Electricity Trading Mechanism EU European Union EUGBC European Union - Georgia Business Council G4G USAID Governing for Growth in Georgia GCF Green Climate Fund GEDF Georgian Energy Development Fund GGI Georgia Good Governance Initiative GGTC Georgian Gas Transportation Company GIS Geographic Information System GNCOLD Georgian National Committee on Large Dams GNERC Georgian National Energy and Water Supply Regulatory Commission GoG Government of Georgia GOGC Georgian Oil and Gas Company GRDS Georgian Resource Development Service GSE Georgian State Electrosystem GTU Georgian Technical University HICD Human and Institution Capacity Development HPP Hydro Power Plant IDP Infrastructure Development Project IFC International Finance Corporation IFI International Financial Institution ISET International School of Economics at Tbilisi State University ISU Ilia State University KfW German Government-Owned Development Bank MoESD Ministry of Economy and Sustainable Development of Georgia MoHLSA Ministry of Health, Labour and Social Affairs of Georgia USAID ENERGY PROGRAM USAID ENERGY PROGRAM QUARTERLY REPORT ii MRDI Ministry of Regional Development and Infrastructure of Georgia NARUC National Association of Regulatory Utility Commissioners NEA National Environmental Agency NGO Non-Governmental Organization NTC New Technology Center OPCOM Romanian Gas and Electricity Market Operator OPIC Overseas Private Investment Corporation PMP Performance Monitoring Plan PPD Public Private Dialogue PPP Public Private Partnership PSO Public Service Obligation PV Photovoltaic RDP Regional Development Project RIA Regulatory Impact Assessment RIWG Regional Informative Working Group RoAID Romanian Agency for International Development SAOG State Agency of Oil and Gas SC Steering Committee SME Small and Medium-Sized Enterprise SOCAR State Oil Company of Azerbaijan Republic SoLR Supplier of Last Resort TEİAŞ Turkish Electricity Transmission Corporation TSO Transmission System Operator TYNDP Ten-Year Network Development Plan UGS Underground Gas Storage UK United Kingdom UNDP United Nations Development Program US United States USAID United States Agency for International Development USAID United States Agency for International Development USEA United States Energy Association VRE Variable Renewable Energy WB World Bank WEG World Experience for Georgia WG Working Group USAID ENERGY PROGRAM USAID ENERGY PROGRAM QUARTERLY REPORT iii CONTENTS INTRODUCTION ..................................................................................................................................... 5 SUMMARY .............................................................................................................................................. 6 PROJECT HIGHLIGHTS DURING REPORTING QUARTER ............................................................... 7 MANAGEMENT AND OPERATIONS .................................................................................................. 11 WORK PLANNING ...................................................................................................................... 11 COMMUNICATION ..................................................................................................................... 11 PERFORMANCE MONITORING PLAN ..................................................................................... 11 ENVIRONMENTAL EVALUATION ............................................................................................. 11 GENDER EQUALITY .................................................................................................................. 12 YOUTH SKILL DEVELOPMENT AND CIVIL PARTICIPATION ................................................. 12 COLLABORATION WITH OTHER DONOR FUNDED PROJECTS ........................................... 12 CROSS CUTTING ....................................................................................................................... 13 PROGRESS OF ACTIVITIES BY TASKS ............................................................................................ 14 ENERGY MARKET DEVELOPMENT (TASK 1) ......................................................................... 14 Energy Markets Development Action Plan for Electricity and Gas Sectors ...................... 14 Electricity and Gas Markets Transition Plans .................................................................... 14 Regional Energy Cooperation ........................................................................................... 15 Public Outreach ................................................................................................................. 15 Action Plan and Transition Plan Implementation............................................................... 16 Uniform System of Accounts ............................................................................................. 17 INSTITUTIONAL STRENGTHENING AND CAPACITY BUILDING (TASK 2) ........................... 18 Regulatory Impact Analysis Tools ..................................................................................... 18 Capacity Building ............................................................................................................... 19 ENERGY INVESTMENT OPTIMIZATION (TASK 3) .................................................................. 20 Investment Advisory Group ............................................................................................... 20 Renewable Energy Support Scheme ................................................................................ 20 Supporting Energy Investment Projects ............................................................................ 21 Off-Grid Solar PV System for High Mountain Households in Georgia .............................. 21 GRID INTEGRATION OF VARIABLE ENERGY RESOURCES (TASK 4) ................................. 24 STRATEGIC ADVISORY ASSISTANCE TO THE GOG TO INCREASE ENERGY SECURITY (TASK 5) ............................................................................................................................... 24 CHALLENGES AND OBSTACLES ..................................................................................................... 27 USAID ENERGY PROGRAM ORGANIZATIONAL CHART ............................................................... 28 USAID ENERGY PROGRAM USAID ENERGY PROGRAM QUARTERLY REPORT iv INTRODUCTION In October 2016, Georgia signed the Energy Community Treaty (EnCT) signaling the country’s commitment to direct future energy planning and market development towards approximation with the European Union (EU). This step commits Georgia to enhance the security of energy supply by promoting the development of relevant infrastructure, increase market integration and gradual regulatory approximation towards key elements of the EnCT, and promote the use of renewable energy sources. In order for Georgia to meet its strategic commitments in the energy sector, the United States Agency for International Development (USAID) is providing technical assistance and policy advice on legal, regulatory and institutional reform issues, including facilitating investment and deal structuring, engineering and environmental analyses, financial planning, and outreach support (collectively, the USAID Energy Program). The objective of USAID Energy Program is to support Georgia’s efforts to facilitate increased investment in the power generation capacity as a means to increase the national energy security, facilitate economic growth, and enhance the national security. The project will have a significant impact on the energy market reform efforts of the Government of Georgia (GoG) to comply with the country’s obligations under the EnCT. The investment objective will be achieved through the