Andria Gvidiani: Black Sea Underwater Transmission Cable will Transform Georgia into Transcaucasia Electricity Hub

The Black Sea underwater high-voltage transmission cable as the new Baku-Tbilisi-Ceyhan project and Georgia as Transcaucasia electricity hub – Economic Analyst Andria Gvidiani analyzes these issues for Commersant LIVE.

-The World Bank has affirmed its readiness to fully fund the feasibility studies of the project that calls for arranging the Black Sea underwater high-voltage transmission line. Do you think this project will be really implemented to connect Georgia’s electricity grid with the EU energy system?

-The World Bank’s engagement in this global project confirms the seriousness of the intention and excellent prospects of the project. This idea for building the high-voltage transmission line was proposed many years ago, but certain factors, including high expenditures, suspended the process. Now, this crucial and ambitious project for laying a 1,200-km high-voltage transmission line in the Black Sea Bed and connecting Georgia’s and EU electricity systems is starting.  

-Several years ago, this project was estimated to be worth several billions of EUR. Today, innovative technologies have cheapened implementing similar projects. How much will the project cost and where the financial resources should be mobilized from?

-About 7-8 years ago, this project was estimated to be worth EUR 2 billion, but many years have passed since then. New technologies have been developed during this period and these technologies provide many novelties to interested parties. Nonetheless, making specific estimations would not serious, at this stage. The World Bank’s decision to fund the project’s feasibility studies signifies that the new realities require a full-cycle and full-scale examination. Naturally, the project’s real value will be outlined after these studies.

As for the project financing structure, we expect various governments, international financial institutions, and major energy companies to express huge interest and participate in funding the project. We expect interesting processes in terms of economic, geo-economic, and even geopolitical issues.

-How can this project stimulate the Georgian economy and bring specific benefits to Georgia’s electricity sector?

-Our high-voltage electricity grid will be connected with the 500-kilowatt transmission network with a 1,000-megawatt transmission capacity and this will be a serious breakthrough in terms of energy independence and energy security, in terms of reduction of energy dependence on Russia. The Black Sea underwater cable will enable Georgia to connect the region’s energy system to EU energy networks and the reverse.

From the very beginning, this project provides the great opportunity for Azerbaijan (thanks to the existing 500- and 300-kw lines and the coming 330-kw line) that over the past years has been trying to export its resources on foreign markets, including the power generated by the existing and coming steam power pants and the wind power stations to be built in the near future.

Naturally, this project will be of crucial importance to export Georgia-generated electricity to EU market. Furthermore, Georgia will generate incomes through electricity transit.

This line will also comprise optical-fiber cable to arrange additional telecommunication /internet channel. This factor will be another breakthrough to shape an additional direct channel for telecommunication traffic in southeastern Europe and South Caucasus/Central Asia.

-Will this new transmission line supply renewable energy to Europe at competitive tariffs, or this line should be considered just as a new additional reliable transmission channel?

-The new transmission line will provide interesting opportunities for both Georgia’s electricity grid and EU energy network in terms of both energy reception and supply. Today, everybody seeks cheap and green energy supply sources. EU officials even plan to label products to indicate which type of energy is used in production process.  This is an irreversible tendency and this is a very good project.

Therefore, this project will open a guaranteed exports market for both Georgia’s energy sector and Azerbaijan’s coming power facilities. As for new imports opportunities, naturally, imports diversification is one of the key objectives of our energy policy.

-What about eastern expansion of this project? I mean a construction of analogical underwater high-voltage transmission cable in the Caspian Sea to connect this line with Kazakhstan’s electricity grid. How ambitious prospects can this expansion plan generate for Asia and EU?

-The project remain in the egg, but it is correct and right to talk and discuss the future expansion directions. Indeed, both European and Asian countries will be interested in shaping new strong and extensive energy relations and naturally, the Black Sea underwater high-voltage network will play its crucial role and simplify similar undertakings. We should think of arranging the same infrastructure in the Caspian Sea too. Probability of connecting Azerbaijan’s and Kazakhstan’s energy grids seems very attractive. This additional aspect will further grow attractiveness of this very interesting project for all energy sector players. However, before, the Black Sea underwater high-voltage transmission cable should be built. Undertaking this project will stimulate Georgia’s energy development and this project will transform Georgia into Transcaucasia electricity hub. We should also remember that Georgia is participant of the Silk Road project. Consequently, as part of One Road- One Belt project, Georgia has unique transit function too boost electricity transit on the global level. Consequently, we can say, that besides logistics importance, Georgia will also grow into an electricity hub between Asia and Europe.