Energy Policy of Georgia

1. Energy Policy of Georgia Ministry of Energy of Georgia January 2010

2. Energy Strategy of Georgia: • To ensure energy security of the country through diversification of energy sources and transit routs; • To provide energy safety through the construction of new hydro power plants; • To rehabilitate existing and construct new infrastructure for electricity transmission and natural gas transportation; • To attract foreign investment in the energy sector in order to develop energy infrastructure of the country;

3. Main Principles in Energy Sector • Diversified natural gas provision • 4 suppliers – 3 pipelines • North-South pipeline • GASP • BTE • Reliable transit country • Baku-Supsa oil pipeline • North-South Gas pipeline • Baku-Tbilisi-Erserum (BTE) Gas pipeline • Georgia-Azerbaijan Southern Gas Pipeline (GASP) • “Nabucco “ and “White Stream” – huge potential to transport gas from Caspian and “Euro-Asian Oil Transportation Corridor” project supporting transporation of oil products; • “Black Sea Regional Transmission” Project ; • Export opportunity • The Georgian power grid is connected to the grids of all neighbouring countries

4. Hydro Potential of the Country • Georgia is the second richest country in the world by means of hydro recourses; • Only 18% of hydro resources are utilised for electricity production; • 76 prospective greenfield HPP sites has been identified with small and medium scale capacity;

5. Georgia’s HPP potential among the largest/least developed in Europe Source: World Energy Council 2005 figures * Georgia capacity including full rehabilitation of all existing facilities • Georgia has one of the largest and least developed hydro resources in Europe • In mature market based electricity systems, (Scandinavia, Continental Western Europe) typically 70-85% of the economic potential has been developed, in Georgia 10-20%

6. Huge Potential in Hydro Resources • 85% of electricity is generated by hydro power plans vis-à-vis 15% of thermal generation; • Government of Georgia intends to: • utilize most of renewable energy and • evolve into a major regional exporter of electricity • From 2009, Georgia is a net exporter of the electricity in all neighboring countries: • Armenia • Azerbaijan • Russia • Turkey

8. Existing Lines Planned 220/330 Kv. Lines DC Link - HVDC B Transmission Capacity of Georgia Russia 500; 220 Kv - 900 MW Azerbaijan500; 330 Kv - 1300MW Armenia400; 220 Kv - 600 MW Turkey500/400; 220 Kv - 1400MW 220KV Russia KHUDONI HPP NAMAKHVANI HPP ENGURI HPP ONI HPP 500KV ZESTAPHONI KSANI AKHALTSIKHE 220KV GARDABANI B PARAVANI HPP 500/400KV 500KV 330KV 400KV Turkey Azerbaijan Armenia 400KV Iran

9. Investment Opportunity - Standard Offer Program • Easy , transparent and fast procedures of evaluation and approval • BOO principle based offer • Government support through whole process of investment • Guaranteed purchase of electricity for the first 10 years of operations • Direct Contracts and Deregulated Market Price • Licence free exporting

10. Potential Large-Size Hydro Projects KHUDONI HPP  NAMAKHVANI HPP Cascade ONI HPP Cascade   Cascade of Oni HPPs • Installed capacity – 282 MW; • Average projected annual generation – 1,530 TWh; Khudoni HPP • Installed capacity – 750 MW; • Average projected annual generation – 1,66 TWh; Cascade of Namakhvani HPPs • Installed capacity – 450 MW; • Average projected annual generation – 1,6 TWh.

11. Potential Medium and Small Size Hydro Projects

12. Wind Power Potential Potential Wind Farms In Georgia Total capacity ~ 2000 MW Total output ~ 5000 GWh Some of the potential windfarms: Likhi 630 MW 2000 GWh Kutaisi 150 MW 340 GWh Gori 200 MW 480 GWh Tskhratskaro 100 MW 260 GWh Djvari 30 MW 75 GWh Jvari Poti Likhi Kutaisi Chorokhi Tbilisi Paravani Rustavi Wind Atlas of Georgia at:www.minenergy.gov.ge

13. Useful Links: • www.minenergy.gov.ge • www.gogc.ge • www.georgiahydroinvest.com

14. THANK YOU