June 27, 2022

Georgia Plans to Exploit Hydro-Electric Resources

Hydro-Electric Plant

Georgia Plans Major Hydro-Electric Power Projects

The country of Georgia hopes to take advantage of its abundance of towering mountains and rapidly-flowing waterways to transform itself from a country that endured recurring blackouts into a hydro-electric power exporter .

The former Soviet republic’s authorities believe the nation’s huge hydro-electric power potential will result in their development as a crucial regional energy provider, raising its gross domestic product by 100% over the next ten years while creating at least 10,000 new jobs.

But some skeptics are questioning the government’s plans, cautioning that obtaining the six billion dollars investment capital will be tough for the country that in 2009 saw international direct investments decline by more than 50 percent.

Hammered by economic turmoil after becoming an independent country following the Soviet Union’s collapse in 1991, Georgia endured severe power shortages throughout the 1990s and the early 2000s.

After assuming power in 2003, President Mikheil Saakashvili declared energy industry reform a national priority. Over the past few years, Georgia has benefited from stable energy supplies and has even started to export approximately one billion kw hours per year.
Georgia plans to develop the capability for exporting 10 to 15 times as much electricity, primarily to neighboring Turkey.

Several essential measures have already been undertaken. The 2009 start of constructing a modern high-voltage transmission line will enable Georgia to deliver 10 times more electrical power to Turkey. Financing from foreign investors, totaling 380 million dollars, is behind the  construction of the transmission line which should be activated in 2012.

After linking to Turkey’s power grid, Georgia should have the ability to further export electrical energy to other markets in eastern Europe and the Middle East.

The Georgian government also signed a one billion dollar agreement in 2009 with a South Korean-Turkish investment consortium to construct three massive hydro-electric power plants tied to the Rioni river. Construction is scheduled to start in 2011 and is planned for completion in2017.  Altogether, five hydro-electric power plants currently are being constructed while contracts to build sixteen more power generating plants have been signed.

Low production costs should give Georgia a competitive advantage. Georgia can produce one kw-hour of electrical power at a cost of only five or six US cents while it can be sold in Turkey for 10 US cents.

However, analysts believe that Georgia will have to prevail over investors’ scepticism if it hopes to be successful with its ambitious plan. At one time, Georgia was thriving as a result of  foreign investment. But many of Georgia’s investors fled the country following its devastating 2008 conflict with Russia and the global economic recession.

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