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Georgia Security of Supply Statement in Electricity Sector

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Georgia Security of Supply Statement in Electricity Sector 2021 1 Table of Contents 1. Legal Regulation on Security of Supply and Key players in Electricity Sector .......... 3 1.1. Law on Energy and Water Supply ....................................................................................................... 3 1.2. Law on Encouraging the production and use of energy from renewable sources............................. 4 1.3. Establishment of Security of Electricity Supply legislative framework ............................................. 6 1.4. The main players in energy sector and their role: .......................................................................... 10 1.5. Energy Policy ...................................................................................................................................... 12 1.6. Energy Balances .................................................................................................................................. 13 1.7. Network Development Plans ............................................................................................................. 14 1.8. Incentives for Construction of RES Capacities .................................................................................. 15 2. Electricity Sector ...................................................................................................................... 18 2.1.Electricity Market ................................................................................................................................ 18 2.2 Electricity System ................................................................................................................................ 25 3. Scenarios of Georgian Transmission Network Development ..................................... 40 3.1. Generation Adequacy ........................................................................................................................ 41 3.2. Necessity of Thermal Power Plants .................................................................................................. 44 3.3. Opportunities of integration renewable energy sources into the Georgian power system ........... 44 3.4. Transmission System .......................................................................................................................... 51 3.5. Distribution Network ........................................................................................................................ 66 3.5.1 JSC “Energo-Pro Georgia” ......................................................................................................... 66 3.5.2 JSC “Telasi” ................................................................................................................................. 69 3.6. Electricity Demand and maximum load ............................................................................................ 75 3.7. Balancing of Production and Demand in past years ........................................................................ 79 3.8. Forecast of Demand and Generation for the period of 2020-2030 .................................................. 80 4. Conclusions .............................................................................................................................. 82 2 1. Legal Regulation on Security of Supply and Key players in Electricity Sector 1.1. Law on Energy and Water Supply The main law regulating the energy sector of Georgia is the Georgian Law on Energy and Water Supply (hereafter The Energy Law). The Energy law, implementing related EU regulations into Georgian legal framework, was adopted by the Parliament of Georgia on December 20, 2019. The Energy Law incorporates the following EU legislations: (1) Directive 2009/72/EC of the European Parliament and of the Council concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC; (2) Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003; (3) Directive 2005/89/EC of the European Parliament and of the Council of 18 January 2006 concerning measures to safeguard security of electricity supply and infrastructure investment; (4) Directive 2009/73/EC of the European Parliament and of the Council concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC; (5) Regulation (EC) No 715/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No 1775/2005; and (6) Council Directive 2004/67/EC concerning measures to safeguard security of natural gas supply. The Energy Law in relation to the electricity sector establishes: a general legal framework for the generation, transmission, distribution, supply and trade; issues related to governing and organization, regulation, monitoring and supervision of the electricity sectors; open access to the electricity markets; cross-border trade of electricity; the criteria and procedures applicable to calls for tenders and permits for energy activities, the operation of electricity systems and access to them; public service obligations in electricity sectors; customer rights and their protection; measures to ensure an adequate level of security of supply the legal framework for defining of security of supply policies 3 procedures to ensure the reliability of supply, determined in accordance with the requirements of competitive electricity and natural gas markets. The Energy Law purpose is to ensure: establishment of a legal framework for uninterrupted supply of electricity at defined quality standards for the benefit of all categories of customers in Georgia; secure, reliable and efficient operation of electricity system; setting rights and obligations of the Georgian National Energy and Water Supply Commission (THE COMMISSION ) and regulated undertakings; encouraging full opening of electricity market based on the principles of competitiveness, transparency and non-discrimination; establishment of general rules for the organization and functioning of the electricity market, taking into account future relationships with the Parties of the Energy Community, its pan-European integration; setting terms and conditions for the provision of public service obligations and to ensure the protection of interests of final customers; regulation and monitoring of the unbundling of transmission system operators and distribution system operators; adequate conditions for investments, including, interconnections with neighboring systems and in other facilities enhancing the security of supply; regional and international cooperation of system and market operators, THE COMMISSION and other state authorities. 1.2. Law on Encouraging the production and use of energy from renewable sources Georgia has an obligation under the Association Agreement between the EU and the European Atomic Energy Community and their Member States and Georgia (hereafter “Association Agreement”) and Protocol Concerning the Accession of Georgia to the Treaty establishing the Energy Community (hereafter “Protocol”) to harmonize the EU Directive 2009/28/EC on the Promotion of the use of Energy from Renewable Sources. Georgia has fulfilled this obligation and implemented the Law on Encouraging the Production and Use of Energy from Renewable Sources (hereafter “The Law on RES”) on December 20, 2019. The Law on RES establishes: legal framework for promoting the production and use of energy from renewable energy sources; mandatory national targets for the total share of renewable energy in gross final energy consumption and for the share of renewable energy in transport; 4 rules regarding support schemes, statistical transfers between Georgia and the Contracting Parties of the Energy Community, joint projects between Georgia and the Contracting Parties of the Energy Community, as well as between Georgia and third countries, guarantees of origin, administrative procedures, information and training, and access to the power grid for energy generated from renewable sources; sustainability criteria for biofuels and bio-liquids. The Law on RES sets a national target for renewable energy at 35% to be achieved by 2030. It also provides the freedom to choose support schemes to achieve the aforementioned national target. The Law on RES obliges the Government to approve the National Renewable Energy Action Plan (NREAP) submitted by the Ministry of Economy and Sustainable Development (hereinafter “the Ministry”) every 2 years. NREAP sets renewable energy targets and specific regulatory measures to promote the use of renewable energy in the heating and cooling sector. In 2019, the government established NREAP in line with EU Directive 2009/28 / EC to promote the use of renewable energy, even though EU Directive 2009/28 / EC was not being implemented at the time. The goals of NREAP are as follows: 1. Description of the current legislative and institutional framework for renewable energy in accordance with the requirements of the EU Renewable Energy Directive. 2. Offering a number of political and investment measures (indicating their estimated investment value). The Ministry shall adopt Support Schemes in accordance with the Law on RES and submit them to the Government of Georgia for approval. The Government shall, upon
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