ENERGY SECTOR OF GEORGIA 2010

Regional Energy Hub - Net Electricity Exporter • Reliable transit country and regional energy hub     

• •

• •

AGRI

Gas supply contracts with Azerbaijan for 10 years and with Shah Deniz for 20 years Transit role for oil & gas – pipelines and railway 

•

Baku-Tbilisi-Ceyhan (BTC) oil pipeline Baku-Supsa oil pipeline South-Caucasus gas pipeline (SCP) from Shah-Deniz North-South Gas pipeline Georgia-Azerbaijan Southern Gas (GASP)

Circa 1.6% of world oil production

LNG across Black Sea – Azerbaijan-Georgia-Romania Interconnection (AGRI) project initiated by three states together with NABUCCO/White Stream – huge potential to transport gas from the Caspian to Europe The only country in the region (which doesn’t have its own gas resource) that was not effected by gas crises in January 2009 Georgia/Romania MoU for transportation carbon recourses from Caspian via Black Sea

• Net electricity exporter in all four neighboring countries • Construction of 500 and 154 KV power transmission line to Turkey • Additional new 500 KV interconnection to Turkey is negotiated • 5 new HPP projects under Construction with installed capacity of around 170 MW (7MW, 46 MW, 78 MW, 5 MW and 36 MW) • Huge untapped hydro resources • Only 18% of the country’s hydro potential has been utilised • Huge, rapidly growing consumption rate and high tariffs on the Turkish electricity market expandable to Iraq, Syria and EU countries • Once all three electricity lines are operational, total transmission capacity to Turkey will reach more than 2000 MW - 15 times more than current capacity

Electricity Balance Seasonal Asymmetry of Generation and Consumption

Projected

Generation

Thermal & Import Hydro Tw/h

HIGH

HIGH

100%

85%

Summer LOW

Winter

15%

LOW

Current

Consumption

2004

2005

2006

2007

2008

2009

2010

Generation

6.9

7.1

7.6

8.3

8.6

8.9

9.4

Hydro

6.0

6.0

5.4

6.9

7.3

7.7

8.4

Thermal

0.9

1.0

2.2

1.5

1.3

1.2

1.0

-1.2

-1.3

-0.7

0.2

0.3

0.5

1.3

Consumption

8.1

8.3

8.3

8.1

8.3

8.4

8.1

Distribution

5.7

5.9

5.9

5.9

6.0

6.1

6.0

Direct Customers

1.7

1.9

2.0

2.0

2.1

2.1

2.1

Transmission Losses

0.7

0.5

0.4

0.2

0.2

0.2

0.4

Consumption per capita

1.8

1.8

1.84

1.9

1.9

1.95

1.87

Net Import / Export

Source : Ministry of Energy of Georgia

Transmission Capacity Russia Azerbaijan Armenia Turkey

220KV 500 KV Russia

- 900 MW - 1300MW - 600 MW - 2000MW

KHUDONI HPP (750 MW) NAMAKHVANI HPP (450 MW)

ENGURI HPP

ONI HPP (281 MW)

500KV Existing Lines

B

Planned

ZESTAPHONI

DC Link - HVDC

KSANI

BAKHVI HPP (6 MW) AKHALTSIKHE B

MTKVARI HPP (38 MW) MARNEULI GARDABANI PARAVANI HPP (78MW)

220KV

154 KV 500/400 KV

Turkey

400KV

Armenia

330KV 500KV

Azerbaijan

Potential Medium and Small Size Hydro Projects The Cadastre of small hydro power technical potential of Georgia’s rivers includes around 300 potential places for new hydro with total capacity 4000 MW

Information on potential projects available at:

www.minenergy.gov.ge

Oni Cascade (5 HPP) – 282 MW Kheledula Cascade (3 HPP) – 85 MW Magana Cascade (2 HPP) – 42 MW

Potential Medium and Small Size Hydro Projects #

Project Name

River Name

Region

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Magana HPP Leqarde HPP Medani HPP Lebarde HPP I Lebarde HPP II Lesulkhe HPP Tekhuri 1-6 HPP Nakra HPP 1 Nankra HPP Khumpreri HPP Kheledula HPP 1 Kheledula HPP 2 Kheledula HPP 3 Stori HPP 1 Cheshura HPP Samitso HPP Jejora HPP Janauli HPP Alpana HPP Chala HPP Jria HPP Boriti HPP Tsablari I (sairme) HPP Tsablari II HPP Khan-Tsablari HPP III

Magana Magana Chanis Tskali Lebarde Tekhuri Tsachkhuru Tekhuri Nakra Nakra Khumpreri Kheledula Kheledula Kheledula Stori Cheshura Jejora Jejora Janauli Rioni Kvirila Kvirila Dumala Tsablaristskali Tsablaristskali Khani/Tsablaristskali

Samegrelo Samegrelo Samegrelo Samegrelo Samegrelo Samegrelo Samegrelo Svaneti Svaneti Svaneti Svaneti Svaneti Svaneti Kakheti Racha Racha Racha Racha-Lechkhumi Racha-Lechkhumi Imereti Imereti Imereti Imereti Imereti Imereti

Capacity MW 20.6 20.0 4.4 4.56 4.16 5.7 19.2 19.6 29.2 16.37 18.8 21.6 44.3 14.0 7.5 24.3 15.8 13.0 70.6 9.14 9.2 6.4 7.7 12.0 8.3

Regulation Type Reservoir Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Reservoir Reservoir Run-of-the-River Reservoir Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River

Potential Medium and Small Size Hydro Projects #

Project Name

River Name

Region

26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Khani VII HPP Zestafoni HPP I Zestafoni HPP II Zestafoni HPP III Zestafoni HPP IV Tazara Sakhvlari Khunevi Gubazeuli HPP VI Bakhvi HPP 1 Bakhvi HPP 2 Khala HPP Merisi HPP Skhalta HPP Iori HPP Tergi HPP Dariali HPP Samkhuri HPP I Samkhuri HPP II Avani HPP Duruji HPP Uraveli HPP Stori HPP 2 Chelti HPP 1 Chelti HPP 2

Khanistskali Kvirla Kvirla Kvirla Kvirla Shavi Tskali Shavi Tskali Dzirula Gubazeuli Bakhvis Tskali Bakhvis Tskali Chaqvis Tskali Akavreta Skhalta Iori Tergi Tergi Samkhuris Tskali Samkhuris Tskali Avanis Khevi Duruji Uroveli Stori Chelti Chelti

Imereti Imereti Imereti Imereti Imereti Imereti Imereti Imereti Guria Guria Guria Achara Achara Achara Mtskheta-Mtianeti Mtskheta-Mtianeti Mtskheta-Mtianeti Kakheti Kakheti Kakheti Kakheti Samckhe-Javakheti Kakheti Kakheti Kakheti

Capacity MW 6.4 10.0 11.9 15.9 15.9 6.0 5.3 11.3 3.1 15.0 20.0 13.0 11.5 5.3 9.7 14.6 93.0 12.4 22.2 4.6 1.74 5.0 11.4 4.8 4.8

Regulation Type Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Reservoir Run-of-the-River Reservoir Run-of-the-River Reservoir Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River

Potential Medium and Small Size Hydro Projects #

Project Name

River Name

Region

51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70

Ksani HPP 1 Ksani HPP 2 Ksani HPP 3 Ksani HPP 4 Ksani HPP 5 Marelisi HPP Bakhvi HPP 4 Bakhvi HPP 5 Adjaristskali HPP 1 Adjaristskali HPP 2 Adjaristskali HPP 3 Amala HPP Chkheri HPP Juta HPP Khidistskali HPP Kobi HPP Stori HPP 3 Stori HPP Truso HPP Tsdo HPP

Ksani Ksani Ksani Ksani Ksani Bjholis Khevi Bakhvis Tskali Bakhvis Tskali Adjaristskali Adjaristskali Adjaristskali Amala Chkheri Juta Khidistskali Tergi Stori Stori Tergi Juta

Mtskheta-Mtianeti Mtskheta-Mtianeti Mtskheta-Mtianeti Mtskheta-Mtianeti Mtskheta-Mtianeti Imereti Guria Guria Adjara Adjara Adjara Mtskheta-Mtianeti Mtskheta-Mtianeti Mtskheta-Mtianeti Mtskheta-Mtianeti Mtskheta-Mtianeti Kakheti Kakheti Mtskheta-Mtianeti Mtskheta-Mtianeti

Capacity MW 4.2 2.1 3.2 3.6 6.0 4.6 1.0 2.0 26.46 13.76 6.09 14 14.6 8.24 9.3 11 13.7 11.8 8.7 72

Regulation Type Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Run-of-the-River Reservoir

Large-Size Hydro Projects Cascade of Mtkvari HPPs

Cascade of Oni HPPs

 Installed capacity – 180 MW;  Av. annual generation – 0,965 TWh;

 Installed capacity – 282 MW;  Av. annual generation – 1,530 TWh;

(Awarded, MOU under negotiation)

(Announcement of EoI is planned)





KHUDONI HPP

ONI HPP Cascade NAMAKHVANI HPP Cascade



Mtkvari HPP Cascade

 Khudoni HPP

Cascade of Namakhvani HPPs

 Installed capacity – 702 MW;  Av. annual generation – 1,53 TWh;

 Installed capacity – 450 MW;  Av. annual generation – 1,6 TWh

(Under development)

Under Development

On-Going Projects •

•

•

Total of 18 HPP on-going projects  Total installed capacity of 1440 MW and annual generation 4.8 TWH  Investment 2,5 bln USD. 12 HPP projects awarded and MOUs under negotiations  Total installed capacity of 397 MW and annual generation 2 TWH  Investment 650 mln USD. 2 new HPP constructions launched in 2009  Mtkvari HPP  Bakhvi HPP • Capacity - 46 MW  Capacity - 6 MW • Cost - $60 million • Cost - $10 million

•

4 new HPP constructions launched in 2010 Paravani HPP – 78 MW Lukhuni 2 HPP – 12 MW Cost – $100 million Cost - $21 million Zoti HPP – 36 MW Kvirila HPP – 5.2 MW Cost - $80 million Cost - $12 million

•

2 new HPP constructions planned to be launched in 2011 Khudoni HPP – 702 MW Namakhvani Cascade (3 HPP) – 450 MW

Easy Regulatory Framework • Greenfield projects based on Build-Own-Operate (BOO) principle • All new constructions are totally deregulated  No tariff set for the newly built HPPs - investor is free to choose      

the market and the price There is no special fee for the connection to the grid Free third-party access to the grid No license is required to export and no tariff set GoG can offer a guaranteed purchase only for three months in winter Profit increases from selling carbon credits New HPPs has priority access for transmission to Turkey (Long

term contract with TSO)

Necessary permits, licenses and rights Permit or License

Issuing Authority

Acquisition or rent agreement on land

Local authorities

Permit for construction

Ministry of Economy

Generation license (above 13 MW)*

GNEWRC

* Hydro Power Stations less than 13 MW do not need generation license

Structure • Generation  46 power plants under private ownership (Inter-RAO (Russia);

Energo-pro (Czech Republic); EPC (China); German, Ukrainian and other foreign and Georgian companies)

• Distribution  3 private companies  owned by Inter-RAO (Russia), Energo-pro (Czech Republic),

Akhema Group (Lithuania)

• Transmission – HV grid  2 companies  One owned by the State and another 50-50 State/Inter-RAO

(Russia)

WHY the Energy Sector of Georgia? • Large economic HPP Greenfield potential at 32 TWh • Deregulated power sector with very impressive turnaround since 2004 • Distribution companies privatized and operating at a profit • Significant existing private investment in generation assets • Strong government support for developing hydropower resources • Increased simplification of procedures • Increasing export markets

www.georgiahydroinvest.com www.minenergy.gov.ge

Contacts Nika Gilauri Prime Minister of Georgia [email protected]

Alexandre Khetaguri Minister of Energy of Georgia [email protected]

Mariam Valishvili Deputy Minister of Energy [email protected]

www.minenergy.gov.ge