Overview of the Georgian Wholesale Electricity Market
May 2020
This report aims at presentation and basic analysis of the available data/information related to
Georgian wholesale electricity market with focus to May 2020 (or ‘reporting month’). The input
data/information has been collected from the internet, mostly using the websites of ESCO and
GSE, as well as other internet based sources. The general limitations relevant to use/reliability
of the third parties’ data shall apply.
Electricity Consumption
In May 2020, the total local monthly electricity consumption (mainly composed of electricity
consumed by Abkhazia, customers of the distribution companies and direct customers)
amounted to about 891 GWh that is c. 9.3% lower comparing to May 2019. Similar to March
and April 2020, such reduction was mainly provoked by contracted economic activities
provoked by worldwide outbreak of novel virus. In result, the local consumption in May 2020
also was the smallest among the previous 2020 months. The following figures illustrate local
consumption trends, showing in addition percentage shares of the main consumption clusters in
the total local demand.
Y/Y Local Monthly Consumption Dynamics
MAY 2017-2020
1 000
800
857
11%
24%
GWh
984
963
19%
32%
22%
22%
25%
Direct Customers
19%
600
400
892
35%
48%
49%
37%
Telasi
Energo-pro
Abkhazia
200
15%
10%
12%
19%
2017
2018
2019
2020
0
Local Monthly Consumption Mixes
January-May 2020
1 400
1 200
GWh
1 000
800
1 191
19%
23%
1 124
18%
23%
1 050
941
21%
25%
21%
600
400
200
35%
35%
19%
35%
37%
892
Direct Customers
25%
19%
37%
23%
24%
22%
19%
19%
Jan
Feb
Mar
Apr
May
0
Telasi
Energo-pro
Abkhazia
1
During May 2020, distribution demand reduced in y/y terms by about 10.5%, and amounted to
about 497 GWh. Remarkably, Energo-pro’s customers showed y/y aggregate monthly
consumption reduction of only 3.3%, while Telasi’s monthly demand dropped by 21.8%.1
In the reporting month, the total consumption of Direct Customers amounted to about 225 GWh,
i.e. 28% less than in May 2019. It should be noted that the major ‘contributors’ of such reduction
were bitcoin miners, whose total y/y demand in the reporting month shrank by more than 93%
(from c. 95 GWh to 6.5 GWh), while total consumption of other eligible customers remained
almost same. Moreover, the ‘oldest’ members of the direct customers’ group – Georgian Water
and Power and Georgian Manganese showed y/y increase of the total monthly consumptions
by 4.8% and 8.3% respectively.
In May 2020, Abkazia’s consumption increased on surprising 43.5% in y/y terms (to 167,6 GWh
vs. 115 GWh as forecasted for May 2020 in the original national balance approved in late
December 2019), probably in result of intensified operations of bitcoin miners (and/or illegal
electricity export from Abkhazia to Russia?).
No new entities entered the group of direct customers during reporting month.
Normally, May and June are considered to be the main months for abundant hydropower
export, although the novel coronavirus here also provoked significant reduction. Specifically,
during May 2020, the total monthly export amounted to about 65 GWh only, i.e. 51.5% less
comparing to already law export in May 2019. The electricity export was distributed among
Turkey (33.9 GWh), Armenia (24.8 GWh) and Azerbaijan (6.6 GWh). The following chart shows
changes in exported electricity volumes from Georgia in May 2017-2020.
Electricity Export in May (2017-2020)
250
200,11
199,97
GWh
200
134,46
150
100
65,25
50
0
2017
2018
2019
2020
The electricity export to Azerbaijan was compensating the matching import from this country
during the parallel synchronous operation of two national power systems (from May 1st to May
26th), and involving involving daily electricity exchanges. So, above electricity export to
Azerbaijan had been compensated with matching import from the same country.
While operating in parallel with Azeri power grid, Georgia exported electricity to Armenia in the
island mode. Beginning from May 27th, the parallel operation with Azerbaijan was replaced by
synchronizing with Armenian power network.
1
Beginning from May 2020, y/y changes in monthly consumption of distribution companies, as well as of the
direct customers are no more affected by mandatory eligibility threshold set forth year ago (ref. to the previous
Market Overview reports).
2
The electricity export to Turkey was implemented through the asynchronous parallel operation,
via back-to-back station in Akhaltsikhe and Akhaltsikhe-Borcka cross-border line.
Electricity Supply
In May 2020, the total monthly gross generation, including hydro, thermal and wind power
amounted to about 986 GWh, i.e. about 14.6% less than year ago.
In year to year terms, during reporting month total hydro generation (965 GWh) composing
almost entire in-country electricity production (965 GWh) reduced by 16%, while thermal and
wind energy generation were minor (12.9 GWh and 8.1 GWh respectively).
As explained above, in the reporting month, about 6.6 GWh was imported from Azerbaijan that
was the only electricity import to Georgia.
The following figure shows dynamics of the total generation and import in May of 2017-2020,
and percentage shares of the local hydropower in the total monthly electricity supplies.
Total Generation and Import
May 2017-2020
1 161
1 200
1 093
1 155
986
GWh
1 000
800
600
Import
99%
90%
99%
Hydro
97%
400
Thermal
200
0
2017
2018
2019
2020
No new generation facilities were commissioned during reporting month.
The following figure illustrates y/y changes in total monthly hydro generation for the first five
months of 2017-2020.
Hydro Generation
1 200
GWh
1 000
800
2017
600
2018
2019
400
2020
200
0
Jan
Feb
Mar
Apr
May
The reduced monthly hydro generation was a result of lower overall demand (local consumption
and export), and, as mentioned above, was mostly on the account of artificially lowered outputs
of Enguri and Vardnili HPPs. Although, GSE had in addition to restrict electricity production of
other hydro plants as well. For this purpose, GSE referred to the applicable clause of the
effective Market Rules, and required the plants to follow restricted hourly schedules issued for
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specific days, from May 22nd to May 26th of 2020 that indicated the reduced generation
capacities for certain plants.2
Electricity Trade
In May 2020, from the total marketed electricity of about 979 GWh, the energy traded through
the direct (bilateral) contracts amounted to 729 GWh, while the remaining 250 GWh was
purchased/sold as a ‘balancing electricity’ (BE) by ESCO.
As usually, the balancing electricity mainly comprised the net outputs of ‘expensive’ power
plants holding long-term guaranteed PPA’s with ESCO extended over May (about 229 GWh in
total), added by the imported electricity (6.6 GWh). In addition, the portion of cheaper outputs of
the fixed tariff Enguri and Vardnili HPPs (22 GWh in total) was blended with above expensive
constituents with the aim of reduction of the weighted average balancing electricity price.
However, the lowered demand as in Georgia so in the neighboring countries negatively affected
May’s outputs of the said fixed tariff plants. Normally, in May, if no system-wide accidents occur,
monthly generation of Enguri and Vardnili HPPs should cover Abkhazia’s consumption, along
with the needs of distribution companies and exports, and besides these, sufficient portion shall
still remain for BE blending purposes. Although, this was not a case in May 2020, when net
generation of Enguri and Vardnili HPPs amounted to 259.5 GWh only (at least 50% y/y drop), to
maximize as much as possible unrestricted base load operation of the ‘seasonal’ and small
hydros. In result, in May 2020 comparing to May 2019, the balancing electricity (BE) volume
almost doubled mostly on the account of increased generation of ‘expensive’ energy, and the
weighted average price of BE for May amounted to almost 13.21 Tetri/kWh.
Other plants having no guaranteed PPAs with ESCO extended over May, almost fully supplied
their net outputs under bilateral contracts (to Direct Customers and/or Wholesale Suppliers).
The following figure illustrates monthly wholesale market volumes in May 2016 to 2020, along
with percentage shares of different type electricity, and weighted average BE prices (BEPs). For
information, the higher BEP fixed for May 2018 was a result of several days forced outage of
Enguri HPP necessitating replacement of its cheap output by much more expensive thermal
generation and import.
Wholesale Electricity Trade in May 2016-2020
1 200
1 188
1 061
1 082
7%
7%
1 000
14,00
1 143
11%
979
12,00
10,00
GWh
800
8,00
600
98%
93%
93%
6,00
89%
400
74%
200
Tetri/kWh
26%
BE
Direct Contracts
BEP
4,00
2,00
0
0,00
2016
2017
2018
2019
2020
2
Reportedly, when applying restrictions, GSE applied ‘equalizing’ approach, meaning that capacity was reduced in
almost equal proportion for all plants (despite having or not the guaranteed PPAs with ESCO or registered Direct
Contracts) other than ones contractually involved in electricity export.
4
The total energy traded in reporting month by five active Wholesale Suppliers (the fifth one –
Keystone Consulting Ltd entered the wholesale electricity market in May 2020) amounted to
about 39.5 GWh showing almost 34% growth comparing to the previous month, and composing
up to 5.5% of the total electricity traded through the direct/bilateral contracts.
In the pool of Direct Customers, about 82.7% of the total purchased electricity (224.9 GWh) was
acquired using bilateral contracts (with power plants and Wholesale Suppliers), while the
remaining 17.3% was purchased from ESCO as a balancing electricity.
For May 2020, GSE held several export right/capacity auctions (as for full month so for its
parts), resulting in allocation of 145 MW for electricity export to Turkey to Achar Energy Ltd
(allocated export energy amounted to 38 GWh), and 85.5 MW (25.3 GWh) to GIEC for
exporting electricity to Armenia. One export right auction was cancelled due to absent of
bidders. In fact, as indicated above, exports amounted to 33.9 GWh and 24.8 GWh to Turkey
and Armenia respectively. In addition, about 6.6 GWh was exported by ESCO to Azerbaijan in
course of synchronous parallel operation, actually constituting electricity exchange.
The estimated prices (gross) in May 2020 were 3.3 Usc/kWh for Turkish export and 3.67
Usc/kWh for Armenian one. Calculated net export prices, and assuming that all thermal plants
sources of guaranteed electricity were available during entire May, the estimated net export
prices should not exceed 7 Tetri/kWh. With Azerbaijan, electricity export (and import) price at
the border was 5.5 Usc/kWh.
Major legislative/regulatory events
On May 18th of 2020, the second amendment to 2020 Annual Electricity (Capacity) Balance
Forecast (“Balance) was approved. Such updated Balance incorporated the actual data for the
first month, and projected estimated figures for the rest of year. In comparison to the first
amendment, in the updated summarized version of the Balance the only considerable change is
about 11% reduction in annual electricity export, while changes in other bulk items deviate
maximum within 2% range.
When observing the detailed sheets, the second Balance amendment shows about 1.2% less
value for annual generation of ‘seasonal’ hydro plants than indicated in the first one, while for
Khadori HPP such reduction amounts to 2.9%.
In May 2020, GNERC issued licenses to the operators for the planned new wholesale electricity
markets. Namely, Energy Exchange of Georgia got the license as operator of the Day-Ahead
and Intraday Markets, and GSE as operator of the Balancing and Ancillary Services Market.
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