U.S. DEPARTMENT OF THE TREASURY DEVELOPMENT IMPACT HONORS ENERGY WITHOUT BORDERS THE BLACK SEA TRANSMISSION LINE The Black Sea Energy Transmission Line opens the way to the long-cherished dream of energy flowing freely across the borders of a wider Europe. The 315 km high-voltage line – the first major interconnector between the Caucasus grid and the Western grid – allows electricity to flow between Georgia and Turkey and increases energy security in the region. It is especially significant today, when the energy security issue has taken on even more importance because of a rise in geopolitical tensions. The Black Sea Energy Transmission As other countries and regions Thanks to the opening of the Turkish Line, which runs between east and re-energise their search for new market with its higher wholesale prices, west of Georgia and connects to the energy partnerships – from Moldova coupled with the wealth of Georgia’s north-east of Turkey via a high-voltage where work has already started on hydropower resources, a great number of substation, is one of the largest a similar line to the Baltic states private sector investors started building infrastructure projects in Georgia in which intend to synchronise their new hydropower energy generators in decades, and a major investment by the grids with the EU – the Black Sea line Georgia. Many are co-financed by the EBRD, the European Investment Bank will serve as a blueprint for a more EBRD, the largest renewable energy (EIB), the German development bank secure and open energy market. investor in the region. The first of these KfW, and the country’s government. hydropower plants, the 87 MW Paravani Within Georgia, the Black Sea Electricity It is also part of the EBRD’s support for HPP, came on-stream at the end of 2014. Transmission Line has already improved Georgia on its path to reform, especially the reliability of power supply, enabled during what have been difficult years cross-border electricity trade, and since the global economic crisis brought unprecedented investment and the armed conflict of 2008. into the renewable energy industry. Context Georgia, a small and ancient country This land of beautiful mountains and imports – especially in the crucial in the Caucasus mountains, has 26,000 rivers has vast hydropower winter months when hydropower often played a larger role in the region potential. But this potential was capacity falls. In addition, the Georgian than its size would suggest, and largely untapped and Georgia had electricity supply was highly unreliable pursued ambitious goals. One of those remained a net energy importer. because it depended on a single high goals – to be energy independent voltage line between west Georgia, Its crumbling energy infrastructure had and a regional trading hub – seemed where most electricity is generated, not been modernised in decades, it unachievable just over a decade ago. and the east of the country, where suffered from regular blackouts and most of the demand is located. relied heavily on its powerful neighbour, Russia, for hydrocarbon ransmittingransmitting ransitionransition Georgia has the largest hydropower potential in Attractive Flowing hot and cold Europe and on a per capita basis is believed to investment In the Georgian summer melting snow possess one of the largest hydropower resource Large-scale plants built and and high rainfall provide the raw bases in the world. planned by domestic and materials that power hydro plants. The foreign investors increased flow generates more energy ENGURI than can be used locally. Across the Paravani Dariali Shuakhevi DARIALI border Turks need that energy to keep themselves cool and power businesses. 87MW 100MW 185MW Hot business model Turkey Georgia Huge existing capacity ZESTAPONI With further upgrades Enguri, alone, TBILISI is estimated to be able to host about Winter Winter 3,530 MW of capacity with potential Summer Summer annual production of 10.3 TWh BATUMI SHUAKHEVI Enguri Vardnili PARAVANI GARDABANI 0.1 0.2 0.06 0.048 MW MW 1,320 220 Akhaltsikhe back-to-back substation Average annual tarrif (US$/kWH) BORCHKA enables energy to be traded across borders Watch our video Higher energy tarriffs in Turkey provide The 15-year mission to a strong incentive to invest in this local renovate the world’s energy source and reduce imports of second biggest arch dam. foreign fossil fuels. http://bcove.me/6bljlans Greener power million people live in the Run-of-river plants allow the capacity of Land of opportunity Black Sea region of Turkey 550 MW is currently under construction 8.5 a river to be used many times over, with aimed at supplying Turkey minimised environmental impact. How it works Proposed plants Black Sea Transmission line 4 large Powering businesses Weir Electricity supply is now more reliable City by population size Penstock MW Tiblisi = 1.5 million for everybody – from households to Transports water 1,644 businesses – including these to the powerhouse Hydro plant (existing or planned) EBRD clients. Powerhouse 18 under negotiation 42 small-to-medium Enguri = 1,320 MW Tailrace Left: glass mould maker, Turkey Returns water to river Source: EBRD, USAID, Wikipedia, Right: baker, Georgia MW 644 609MW Hydropower.ge, Imagico.de 1.0 0.8 0.6 0.4 0.2 0.0 Western Europe has The Georgian domestic market was too the former USSR system, was virtually long desired a deeply small to make large-scale investments non-existent. The only exception in the energy sector viable. Among was a limited joint operation where a interconnected power its neighbours – Armenia, Azerbaijan, small part of the Turkish system was transmission network which Russia and Turkey – only Turkey’s operated in synchronisation with the benefits from generators with market was commercially attractive, in Georgian network, but did not allow fact very much so. But trade between trade between the two networks. cross-border capacity and can Turkey, interconnected with the western So what would be the way forward? draw on significant European electricity network, and the renewable energy Caucasus network, still connected to potential. It now has an example to emulate – in Georgia.” Riccardo Puliti EBRD Managing Director for Energy and Natural Resources ransmittingransmitting ransitionransition The Black Sea Transmission Line stabilised Georgia’s Georgia has the largest hydropower potential in Attractive Flowing hot and cold power transmission network, In the Georgian summer melting snow Europe and on a per capita basis is believed to investment improved reliability of power possess one of the largest hydropower resource Large-scale plants built and and high rainfall provide the raw bases in the world. planned by domestic and materials that power hydro plants. The supply to the south Georgian foreign investors increased flow generates more energy ENGURI than can be used locally. Across the regions and significantly Paravani Dariali Shuakhevi DARIALI border Turks need that energy to keep reduced energy losses.” themselves cool and power businesses. 87MW 100MW 185MW Sulkhan Zumburidze Hot business model Chairman of GSE Management Board Turkey Georgia Huge existing capacity ZESTAPONI With further upgrades Enguri, alone, TBILISI is estimated to be able to host about Winter Winter 3,530 MW of capacity with potential Summer Summer The EBRD is the largest BATUMI SHUAKHEVI annual production of 10.3 TWh financial investor in Georgia. Enguri Vardnili PARAVANI GARDABANI The Bank will hold its Annual 0.1 0.2 0.06 0.048 MW MW 1,320 220 Akhaltsikhe back-to-back substation Average annual tarrif (US$/kWH) Meeting in Tbilisi in May in BORCHKA enables energy to be traded across borders Watch our video Higher energy tarriffs in Turkey provide 2015, which further illustrates The 15-year mission to a strong incentive to invest in this local its continued commitment to the renovate the world’s energy source and reduce imports of second biggest arch dam. foreign fossil fuels. success and further evolution http://bcove.me/6bljlans Greener power of the Georgian million people live in the Run-of-river plants allow the capacity of economy, and to the Land of opportunity Black Sea region of Turkey 550 MW is currently under construction 8.5 a river to be used many times over, with development of its aimed at supplying Turkey minimised environmental impact. How it works strategic linkages Proposed plants Black Sea Transmission line to other 4 large Powering businesses Weir Electricity supply is now more reliable countries in City by population size Penstock MW Tiblisi = 1.5 million for everybody – from households to Transports water the region.” 1,644 businesses – including these to the powerhouse Hydro plant (existing or planned) EBRD clients. Powerhouse 18 under negotiation 42 small-to-medium Enguri = 1,320 MW Tailrace Francis Malige Left: glass mould maker, Turkey Returns water EBRD Managing Director for to river Source: EBRD, USAID, Wikipedia, Right: baker, Georgia MW Eastern Europe and the Caucasus 644 609MW Hydropower.ge, Imagico.de 1.0 0.8 0.6 0.4 0.2 0.0 The project As part of its major reform drive, the Georgian government The project, initially expected to cost €300 million and actually developed an energy strategy focused on developing the completed under budget at €276 million, received €260 million country’s hydropower potential, improving reliability of funding from international financial institutions. Of this, the supply and increasing electricity trade with its neighbours. EBRD provided an €80 million loan to the state-owned Georgian State Electrosystem (GSE). €100 million was Early in the 21st century, a number of reports, including a committed by KfW, the German development bank, on behalf regional study by USAID and a feasibility study by USTDA, of the German Development Corporation and including concluded that by linking the Georgian grid to neighbouring the unfunded risk participation from the Development countries, most importantly Turkey, the country’s energy Banreformerk of Austria (OeEB).