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ELCOM CAUCASUS 2014 POWER SECTOR FOR SUSTAINABLE DEVELOPMENT

On November 12 ELCOM CAUCASUS 2014, the second international power sector exhibition, was unveiled at the Expo Georgia exhibitions center. Along with the exhibition, another international traditional conference Power Sector for Sustainable Development was also held.

The Power Sector for Sustainable Development conference makes focus on the most important problems and relevant issues for the Georgian power sector development, as well as on stimulating public discussions in this direction. At the conference, representatives of the Georgian government, international organizations, financial institutions, the field experts, investment funds and investors discussed such relevant issues of the Georgian power sector as the energy sector priorities and investment environment, finished, planned and ongoing energy projects, provision of the sustainable development of Georgia and environmental and economic regulations, Georgian energy system development strategy, tariff policy, new perspective projects in the renewable wind energy, energy efficiency and the existing sharp problems and perspectives in this respect, determination of a long-term policy of Georgia’s energy sector after conclusion of  the EU associated membership agreement.

The final stage of the conference was dedicated to a discussions panel to talk about vitally important reforms for developing the Georgian economy and its infrastructural ground energy field, as well as implementation ways, implementation efficiency and the significance of the EU associated membership agreement for the energy sector.

Deputy Energy Minister Ilia Eloshvili made focus on hydro power development and noted at this stage 81 projects are being processed with installed generation of 2.800 megawatts and annualized generation of 11 tWt/hours, including 17 HPPs are being constructed with total installed generation of 629 megawatts, 12 HPPs are waiting for permits with 1.225 megawatts and 52 HPPs with 929 megawatts are being projected at the stage of feasibility studies. Forecast investment value of these projects makes up 3 billion USD and the construction works are expected to end in 2014 to 2015.

“Development and construction of HPPs is a main strategy for overcoming the poverty. The construction of these HPPs in almost all regions of our country will assist in taking considerable steps for overcoming the poverty. At the same time, we will employ and use our main wealth”, the conference moderator professor David Mirtskhulava, a technical manager for TransElectrica Georgia, noted.

Maia Bitadze, Deputy Minister for Environment Protection and Natural Resources, also delivered her speech to the conference.

“The Environment Protection Ministry is an instrument that owns regulatory mechanisms to, on the one hand, maintain environment protection standards, and, on the other hand, promote the economic development. The most efficient mechanism to manage all this process is related to the legislation on environment affect permission. The Ministry provides due conclusions on the activities that are assessed in terms of environment affect and ecological expertise. This conclusion becomes a ground for starting construction works or modeling activities and further continuation”.

A major part of environment affect permissions and ecological expertise conclusions the Ministry has issued in 1998 to 2004 refer to HPPs. In this period the Ministry has issued permissions on placing 66 HPPs, Bitadze noted.

Mikheil Nibladze, a managing director of the US private investments fund Schulze Global Investments, also attended the conference. He talked about investment commercial perspectives of Georgia’s hydro energy sector. The American Fund plans to take part in construction of small and medium sized HPPs in Georgia and today several perspective projects are under discussion, Nibladze noted. Investments will be made in the form of both private capital and loans.

“Our strategy is to make investments in small and medium sized HPPs. Similar players are very few on the market. Therefore, our experience will enable us to search proper projects. I believe similar HPPs are very attractive and environment protection principles will be respected”, Nibladze said.

At this stage Schulze Global plans to invest 100 million USD to co-finance the construction of small and medium-sized HPPs in Georgia.

Giorgi Cherkezishvili, a director for the investments department of the Partnership Fund, has also talked about involvement and interests in the energy sector. In autumn 2015 Gardabani steam power plan construction works will end. The asset is being constructed by the Partnership Fund and its subsidiary Oil and Gas Corporation. At this stage, 65% of the construction works have been completed.

“This is a steam power plant with 230 megawatt installed generation. Total value of the project is 220 million USD. Our contractor is Turkish company Calik Enerji”, Cherkezishvili said.

Another major project with the Partnerships Fund involvement is Nenskra HPP with 210 megawatt installed generation.

“The Fund will be represented in the project by about 10% of total capital that is about 18 million USD. 10 million USD has been already spent. 60% of the roads have been constructed and the construction works will be resumed in spring. In whole, the project is valued at 760 million USD”.

Giorgi Bezhuashvili, a director for the Georgian Energy Development Fund (GEDF), comprehensively discussed the fund activities. The Fund explores target rivers in their certain sections for conducting feasibility studies of HPPs. The fund explores geological, topographic, hydrologic issues. Moreover, the company assumes the responsibility for developing a preliminary report on environment, if necessary. The Fund also develops pre-project exploration report on the ground of which the company provides detailed exploration of technical and economic indicators of the project and provides all other additional services in case of consent from stakeholders and an investor.

If the investor shows interest, a memorandum is concluded between the investor and GEDF to determine obligations of the investor and the company. At this stage, the Fund works on projects for constructing small and medium sized HPPs, a new steam power plant project and Georgia’s first wind power station.

Giorgi Bezhuashvili stressed the importance of Oni Cascades and Namakhvani HPPs. Installed generation of Oni cascade is 170 megawatts with total investment value of 589.9 million USD. And Namakhvani project has been discussed and processed by Polish HydroProject, Stucky Caucasus, and Studio Pietrangeli. Namakhvani HPPs parameters are as follows: 420 megawatt installed generation with 1580 million kilowatt/hour annualized generation.

Giorgi Abulashvili, a head for Georgian Energy Efficiency Center talked about problems with Georgia’s energy efficiency, deficiency of necessary state regulations in this direction. He also made focus on perspective European project named as Mayors Agreement that involves 8 cities in Georgia and calls for developing energy efficiency action plan  for the citizens and implementing this plan by 2020.

The panel passed in sharp discussions and debates with the participation of experts in economy and energy fields, representatives of the Energy Regulatory Commission. The panel speakers professor Emzar Jgerenaia, Teimuraz Gochitashvili, Gia Arabidze, Murman Margvelashvili and moderator professor Davir Mirtskhulava, as well as economic expert Mikheil Jibuti, energy system expert Liana Jervalidze, Expo Georgia head Kakha Gvelesiani unanimously proved “suspension of energy reforms in all countries, including, in Georgia will lead us to frustration of economic development and halt of economic growth and this may cause serious social and political challenges. Thus, timely completion on Georgia’s membership into European Energy Union represents the first important and fundamental step as an evident signal for full support and inevitability of energy reforms, as a direct indicator of western development of our society and the country in whole”.