Hydropower Investment Promotion Project (HIPP


Six Month Assessment DRAFT

Monday, February 13, 2012 This publication was produced for review by the United States Agency for International Development. It was prepared by Deloitte Consulting in collaboration with Black & Veatch and Pierce Atwood Attorneys LLC.

. FEBRUARY 13. USAID/CAUCASUS OFFICE OF ENERGY AND ENVIRONMENT MONDAY.HIPP MONITORING AND EVALUATION REPORT Six Month Assessment USAID HYDROPOWER INVESTMENT PROMOTION PROJECT (HIPP) CONTRACT NUMBER: EEM-I-00-07-00005-00 DELOITTE CONSULTING LLP IN COLLABORATION WITH BLACK & VEATCH AND PIERCE ATWOOD ATTORNEYS LLC. 2012 DISCLAIMER: The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

List of Acronyms Acronym GoG HIPP HP HPP ICG IFI IM IPD IR M&E MoE MOU MW TNA TWh USAID USG USTDA Term Government of Georgia Hydropower Investment Promotion Project Hydropower Hydropower Plant / Hydropower Project Investment Coordination Group International Financial Institutions Information Memorandum Investment Projects Department Intermediate Result Monitoring & Evaluation Ministry of Energy Memorandum of Understanding Megawatts Training Needs Assessment Terawatt Hours US Agency for International Development US Government US. Trade and Development Agency HYDROPOWER INVESTMENT PROMOTION PROJECT (HIPP) 1 .

and thereby increase Georgia’s energy security. at least 20 site-specific HPP studies cost shared with investors. in collaboration with Black and Veatch. This IR has two Sub-IRs: 1. investment companies and private investors exposed to hydropower opportunities. etc. evaluations and/or assessments (including cost-shared). (7) promotional materials. trade fairs. at least 3 energy agencies undertaking capacity strengthening. (10) cost-sharing agreements between USAID and investors. among others. Outputs of the activity include: (1) detailed database of small and medium sized hydropower plant sites available for private investment (2) web site for the Ministry of Energy (MoE). leverage. (6) investment promotion plan detailing schedule and locations for road shows.2 – Improved availability of quality data and analytical tools. a minimum of $3 million leveraged to conduct HPP studies. (5) Investment Coordination Group (ICG. resulting in private sector commitment to construct run-of-river hydro power leading to increased generating capacity and locally produced energy.4 Terawatt Hours (TWh) of newly available energy (projected and/or actual). Cross cutting elements of IR5 – Strengthened Energy Management Capacity.1 – Investment opportunities in Georgia promoted. etc. at least 500 financial institutions. research/analytical papers conducted. The goal is to identify. Additional results of the Project include: at least 20 partnerships (Memorandum of Understanding/MoUs) initiated between the Government of Georgia (GoG) and private sector. (8) MoUs signed between GoG and investors. at least 15 types of promotional materials developed detailing HPP investment opportunity. about 2. (9) partnerships between USAID and donors/International Financial Institutions (IFIs) for cluster development. HIPP’s activities will not directly increase generating capacity because it will work at the pre-feasibility and promotion stage in order to stimulate private sector investment in hydro power. approximately $500 million in public and private resources ($) leveraged by the US Government (USG) for energy infrastructure projects under development by project end. feasibility studies. at least 15 studies. and Pierce Atwood Attorneys LLC presents its six month Monitoring and & Evaluation (M&E) report under the United States Agency for International Development (USAID) Hydropower Investment Promotion Project (HIPP). Project Background and Progress Background Implementation of the HIPP in Georgia fits under USAID’s Enhanced Energy Security Assistance objective in Intermediate Result (IR) 1 – Facilitated Hydropower Investment. (11) database of HYDROPOWER INVESTMENT PROMOTION PROJECT (HIPP) 2 . also contribute to this IR. The principal result of the Project will be securitized deposits of at least $70 million for the development of approximately 400 MW of new run-of-river Hydro powerplant (HPP) capacity. (4) white papers. now Investment Projects Department/IPD). at least 30 analyses. and 1. including using modern modeling and planning tools. studies. research and analytical papers. and incentivize investment opportunity. The purpose of this 3-year Project is to support increased hydro power generating capacity in the winter to decrease dependence on imports and thermal energy. at least 30 promotional activities conducted.Deloitte Consulting LLP. (3) deal book(s).

Progress The first year work plan of the Project has several activities related to the review and assessment of: HPPs. Recommendations on the organization of the MoE’s Investment Projects Department (IPD). the signing of MoUs by strategic investors for at least 400 Megawatts (MW) of new HPPs. among others. the Project completed several key tasks that support the promotion of Georgian HPPs during the 4th quarter of 2010 including: Development of 4 hydropower clusters. At the time of this report. (12) assessment report of potential markets. Transmission expansion in Georgia and eastern Turkey. talking points. In addition. The GoG was considering the formation of a Renewable Energy Fund and nominating a Fund Manager to coordinate all activities related to the Renewable Energy Fund. Information Memorandum (light).potential investors. Draft Treaty on Cross-Border Energy Trading. 6 Month Assessment ~Highlights Project Launch Event. etc. The initial 6 months of the Project were focused on due diligence of the proposed small and mediumsized power plants. including Turkey. Legal and regulatory environment in Georgia and Turkey for future HPPs constructed in Georgia. HYDROPOWER INVESTMENT PROMOTION PROJECT (HIPP) 3 . Initial analysis of past transmission studies and visits to several transmission substations First IFIs event. First Georgia Hydropower Development Conference. The MoE suggested that the Fund Manager with a full staff to support the Fund may perform some or all the functions that were intended to be performed by the MoE’s IPD. Program for supporting a series of 4th quarter road shows including revisions to the MoE’s generic presentation to investors. After a meeting with the MoE. Training Needs Assessment (TNA) for the personnel within the MoE that participate in HPP Investment Promotion. Preliminary assessment of proposed HPP sites. Turkish Power Market Legal and Regulatory Review including multiple meetings with Turkish power sector personnel. the transmission network and the legal and regulatory framework. Note that the main goal of the project. HIPP is supporting the MoE in establishing a long term promotional strategy and initiating that strategy with some promotional collateral. That work progressed very well even though in August 2010 the MoE requested that HIPP focus on new HPP cascades with new sites not included on the MoE website. Numerous HPP site visits including a site visit to the proposed Alpana HPP with USAID. proposed modifications to the Charter of the MoE and draft job descriptions for each staff position in the Department. the MoE was considering eliminating their Projects Investment Department (IPD). will not occur in the first year of the project.

The table below provides an evaluation of the progress of HIPP against the first year targets. HYDROPOWER INVESTMENT PROMOTION PROJECT (HIPP) 4 . Evaluation of key indicators As part of the first annual work plan for HIPP. a monitoring and evaluation matrix was created for the life of the Project. Proposal for energy trading to Turkey by small HPPs Initial Market Sounding of Turkish developers. Providing extensive comments on the MoE’s MoU for HPPs of less than 100 MW. Georgian developers and USG institutions supporting overseas investment. including revisions to the text on both legal and technical issues.

project verification 1. project verification 20% 0 N/A 6 Crosscutting MoE calculations. project verification Life of Project $70 million Year 1 $0 Actual Months 1-6. project verification 30 % 26% N/A Statistics are not available on partial years.4 TWh . with project verification 400MW 0 0 MW No new capacity is expected until after the tenders are completed in 2011 or 2012 No new energy production is expected until after the tenders are completed in 2011 or 2012 New energy production (operational) is projected no earlier than 2011/2. Year 1 $0 # 1 Key Indicator / Program Result Bonds (in $) on deposit to secure rights for new HPP site development Public and private resources ($) leveraged by USG for energy infrastructure projects New capacity (in MW) under construction as a result of USG assistance Amount of newly available energy. Work Plan Task Linkage Crosscutting TARGETS Source of Data MoE contract records (to be maintained within ICG).03 0 TWh 5 Ratio of newly available energy produced during winter months consumed domestically Ratio of self-generated energy (projected) to total amount of gas and Crosscutting MoE records. 4 Crosscutting MoE records. only for calendar years. projected (in TWh) Comments on results No security deposits are expected until after the tenders are completed in 2011 or 2012 No resources are expected until after the tenders are completed in 2011 or 2012 2 Crosscutting $500 million $0 $0 3 Crosscutting MoE records. HYDROPOWER INVESTMENT PROMOTION PROJECT (HIPP) 1 . project confirmation MoE records.Assessment of Progress to Date Against Each Indicator The table below indicates the progress made to date for each of the indicators specified in the HIPP Monitoring and Evaluation Plan approved by USAID.

GSE. GNEWSRC 11 Task 3 ICG/IPD Records. project verification 80 20 10 10 Task 2 Project records 3 3 3 ESCO. project verification Yes Yes No On hold pending MoE re-staffing of the IPD. MoE. project confirmation 15 5 5 1) 2) 3) 4) 1) 2) 3) Project Launch IFI Event 1 IFI Event 2 Brussels Conference HPP 1-pager Market Sounding Presentation Georgian Energy Sector Presentation 4) Transmission Brochure 5) Hydro Investment Opportunities 13 Number of financial institutions. analytical papers produced Number of sites validated as suitable for investment promotion Number of energy agencies undertaking capacity strengthening Number of promotional activities conducted Task 1 ICG (IPD). research. project confirmation 30 5 4 12 Variety of promotional materials detailing HPP opportunity produced and disseminated Task 3 ICG/IPD records. 8 Task 1 Project records 15 15 15 9 Task 1 ICG (IPD). meetings not less than once/quarter Number of studies. companies and investors exposed to HPP opportunities Number of site-specific Task 3 ICG records. project confirmation 500 100 49 14 Task 4 Project / USAID records 20 3 0 Investors are not expected to request HYDROPOWER INVESTMENT PROMOTION PROJECT (HIPP) 2 .electricity consumed (projected) 7 ICG [now ‘IPD’] active.

HYDROPOWER INVESTMENT PROMOTION PROJECT (HIPP) 3 . Investors are not expected to request feasibility studies for HIPP identified clusters until 2011 or 2012 HIPP assisted Peri Group in establishing a relationship with USTDA re request for assistance on a feasibility study.000 0 feasibility studies for HIPP identified clusters until 2011 or 2012.HPP studies cost shared with investors 15 Resources leveraged to conduct HPP studies Task 4 Project / USAID records $3 million $500. HIPP also provided PERI with assistance in completing the application for assistance from USTDA.

HIPP 36 a Lado Asatiani Street Tbilisi.USAID Hydropower Investment Promotion Project (USAID-HIPP) Deloitte Consulting Overseas Projects . Georgia . 0105.

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