Unbundling of transmission and distribution system operators is ongoing. According to the new Law on Energy and Water Supply, it has to be finalized by the end of 2020.
Access to the system
Access to the system
Connection fees and network tariffs are published. The Connection Network Codes and the Transparency Regulation are transposed and their implementation has started.
The wholesale market is based on bilateral contracts. Excessive public service obligations still apply to all thermal power plants and a large portion of hydro power capacity. According to the Electricity Market Concept Design of April 2020, day-ahead, balancing and ancillary services markets are to be launched by 1 July 2021. The Georgian Energy Exchange has been established and the organized markets are in the testing phase. REMIT is not transposed.
All consumers are still supplied at regulated prices, except for customers consuming more than 5 mil. kWh per month and connected to 35-100 kV or 6-10 kV. The Electricity Market Concept Design defines gradual retail market opening, starting with large and medium voltage customers on 1 July 2021.
Georgia is not interconnected with other Contracting Parties nor EU Member States. Thus, no regional integration at the Energy Community level is taking place at present.
State of compliance
Georgia has made significant progress during the last reporting period. A landmark development in the reform of Georgia’s electricity market was the adoption of the Law of Georgia on Energy and Water Supply on 20 December 2019. The Law transposes obligations on unbundling, third party access, wholesale trade, retail trade and regional cooperation and defines concrete timelines for their implementation.
The Law includes the obligation to finalize transmission system unbundling until the end of 2020. The national regulatory authority, GNERC, has submitted an ownership unbundling plan to the Government of Georgia, where it is currently discussed. According to the Law, the unbundling of distribution system operators also has to be finalized until the end of 2020. The distribution system operators submitted their unbundling plans to the regulator GNERC in October 2020.
Non-discriminatory, published, transparent and cost reflective connection tariffs are ensured by the network rules, setting the standard fees for connection based on the voltage of the connection and requested capacity. Transmission and distribution tariffs are adopted and published by GNERC.
The Connection Network Codes incorporated in the Energy Community so far were transposed and will enter into force in July 2021. General principles on congestion management including the use of congestion revenues have not been implemented yet. The Transparency Regulation was transposed and publication of data started on the ENTSO-E Transparency Platform.
Gradual liberalisation of the wholesale and retail markets is defined by the Government’s Electricity Market Concept Design adopted in April 2020 and the electricity market rules, which will enter into force on 1 July 2021. According to the Electricity Market Concept Design, day-ahead, balancing and ancillary services markets will be operational from 1 July 2021 and the intraday market from 1 July 2022. The operation of the dayahead and balancing markets are currently being tested by the Georgian Energy Exchange and the transmission system operator.
On the retail side, all customers connected to the 35 - 110 kV voltage level and consuming not less than 0,4 mil. kWh per month will be obliged to choose their supplier by 1 July 2021. All medium voltage customers as well as customers connected to 6 - 10 kV, consuming not less than 1 mil. kWh, will have to choose their supplier by 1 July 2022. All remaining customers except households and small enterprises will have to choose their suppliers until 1 July 2026.
The newly adopted electricity market rules contain day-ahead, intraday and balancing market rules, including imbalance settlements. According to the Law, GNERC will conduct market monitoring in line with the terms and conditions defined by the market monitoring rules, which are to enter into force on 1 January 2021. REMIT is yet to be transposed. GNERC has adopted retail electricity market rules, which comprise specific provisions to support the supplier switching process, regulate the retail electricity market and allow for the enforcement of competition rules. Furthermore, GNERC adopted several resolutions determining rules on dispute resolution, market monitoring, quality of service, etc. The Law on Energy and Water Supply also includes provisions on vulnerable customer protection that enable public authorities to develop and implement mechanisms for the protection of vulnerable customers. GNERC carried out a smart metering system cost-benefit analysis which proved positive for the electricity market. At present, GNERC is working on a regulatory strategy for the implementation of smart metering systems.
As Georgia has no physical interconnection with the EU or Energy Community electricity markets, a derogation from cross-border cooperation is granted to the country until this happens. At this stage, there is no coordinated capacity allocation of cross-border capacities with neighbouring countries, except bilateral cross-border capacity allocation on the interconnection with Turkey.