Georgia 2020

Energy Policy Review of Georgia (2020)

Executive Summary

Since the 2015 review, Georgia has made significant progress in enhancing the security of its energy supply and transitioning towards a more sustainable energy system. The energy sector has played a crucial role in establishing a liberal economic policy framework, contributing to Georgia's reputation as a "star reformer." The government has undertaken ambitious reforms to implement the EU acquis for electricity and gas markets, security of supply, renewable energy, energy efficiency, and statistics.

Key Areas and Challenges

1. Energy Supply and Demand

   • Supply: Georgia has improved its energy supply security through diversification and increased imports.
   • Demand: The country faces challenges in balancing growing energy consumption with sustainable practices.

2. Natural Gas

   • Overview: Georgia relies heavily on natural gas imports from Russia and Azerbaijan.
   • Supply and Demand: The demand for natural gas is increasing, but infrastructure needs improvement.
   • Gas Sector Structure: The sector is characterized by a mix of state-owned and private companies.
   • Infrastructure: Existing infrastructure is inadequate; new pipelines and storage facilities are needed.
   • Prices: High gas prices pose a challenge for consumers and industries.

3. Oil

   • Overview: Oil demand is driven by transportation and industry.
   • Supply and Demand: The market structure is complex, with limited domestic production.
   • Emergency Response Policy: The current emergency response policy needs enhancement.
   • Prices and Taxes: Oil prices and taxes need adjustments to ensure affordability and competitiveness.

4. Hydrocarbons Exploration and Production

   • Oil and Gas: Exploration activities are ongoing, but production remains low.
   • Coal: Coal production is minimal and faces environmental concerns.

5. Electricity

   • Overview: The electricity sector is facing challenges related to infrastructure, market reforms, and cross-border trade.
   • Supply and Demand: Demand is growing, necessitating investments in generation capacity.
   • Sector Structure: The market is undergoing reforms to improve efficiency and competition.
   • Cross-Border Trade: Enhanced cross-border trade is necessary to balance supply and demand.
   • Security of Supply: Ensuring reliable supply requires modernization of the grid and integration of renewable energy sources.

Recommendations

1. Enhance Energy Security: Improve infrastructure, diversify supply sources, and strengthen emergency response mechanisms.
2. Promote Sustainable Practices: Encourage energy efficiency and renewable energy adoption.
3. Strengthen Market Reforms: Implement comprehensive reforms to align with EU standards and improve market efficiency.
4. Invest in Infrastructure: Develop new pipelines, storage facilities, and grid modernization projects.
5. Ensure Affordability: Adjust gas and oil prices and taxes to make energy accessible to consumers and industries.
6. Foster Regional Cooperation: Enhance cross-border trade and regional energy integration.

Dr. Fatih Birol, Executive Director, International Energy Agency