Overview of the Georgian Wholesale Electricity Market

April 2021

This report aims at presentation and basic analysis of the available data/information related to
Georgian wholesale electricity market with the focus to April 2021 (or ‘reporting month’). The
input data/information has been collected from the internet, mostly using the websites of ESCO
and GSE, as well as other web based sources. Therefore, general limitations relevant to
use/reliability of the third parties’ data shall apply.

Electricity Consumption

In April 2021, the total in-country monthly net electricity consumption amounted to about 1.05
GWh that is nearly 11.5% more than in April year ago, as well as by about 11.6% exceeds the
the average daily consumption in the previous month. The following two figures illustrate
dynamics of the monthly local consumption in April of 2017-2021 broken down by major
consumption groups, both in percentages of the total consumption and absolute values.

Y/Y Local Monthly Consumption Dynamics

April 2017-2021
1,400

1,200 941
1,010 1,049
981 Totals for December
1,000 934
109.3 143.6 249.4 Direct Customers
127.9
800 222.8 Telasi
236.7 221.2
216.3 Energo-pro
GWh

207.6
600 170.4 Abkhazia

400 417.3 484.5 457.0 324.3 353.0

200
171.2 187.1 221.5 236.4
148.6
0
2017 2018 2019 2020 2021

Y/Y Monthly Consumption Dynamics

April (2017-2021)
600

500 485
457
417
Direct Customers
400 353 Telasi
324
Energo-pro
300
GWh

237 249
236 Abkhazia
216 221 223
221 208
200171 187 170
149 144
128 109
100

0
2017 2018 2019 2020 2021

1
During reporting month, electricity consumption of all major consumption groups increased in
y/y terms, with Telasi being a leader. Although, the different trend was evident in mo/mo
consumption dynamics, where only Direct Customers showed the moderate growth, while other
groups consumed less electricity than in the previous month. Notably, Abkhazia’s electricity
consumption that during almost all months of the last year reflected the highest y/y growth
rates, in April 2021 showed the least y/y growth, and even the biggest reduction percentage
comparing to March 2021. At the end of the previous month, Enguri HPP resumed operation
after about three and a half month long rehabilitation outage. Consecutively, electricity supply of
Abkhazia shifted from Russian import to Enguri HPP (in tandem with Vardnili HPP) generation.

Y/Y Percentage Change of Consumption

45.0% April 2021 vs. April 2020
35.0% Abkhazia
25.0% 21.8% Telasi
15.0% 11.9% Energo-pro
0.1 8.9%
Direct Customers
5.0%
-5.0%

Percentage Change of Consumption

April 2021 vs. March 2020
20.0% Abkhazia

10.0% Telasi
4.6%
-8.2% Energo-pro
0.0%
-10.0% Direct Customers

-20.0% -15.9%
-30.0% -24.7%

In April 2021, monthly consumption of the most of industrial Direct Customers grew or remained
stable in y/y terms, with exceptions being Georgia Manganese and Rusalloys. About 250% y/y
consumption growth evidenced the largest cryptominer - BFDC.

2
 Consumption of Direct Customers in April
2020 - 2021

100

80

60 2020
2021
40

20
GWh

wer ese teel oys teel rgia up rgia zot per rp. line rgia wer nce LAB ub
n ll s o A o l a IT H
Po nga avi S usa eo Geo Gr Geo avi Cop M C eta Geo k Po tan ata
& a t R G M t st G RS M C c in D
er M Rus nu
m GT en
Ru RM
o
FD Bl Ma
at tal a em B o
W To g gc
ian an er Ge
g r m lb
or iat
u e
Ge h Heid
C

In April 2021, one new Direct Customer – Metalline Ltd was registered by ESCO.

During reporting month, about 4.5 GWh was exported to Azerbaijan by ESCO, in course of
parallel operation of Georgian and Azeri power systems.

Electricity Supply

In April 2021, the total in-country gross electricity generation (sum of the gross outputs of hydro,
thermal and wind power plants) amounted to about 825 GWh. This figure is about 12.5% less
than monthly generation year ago, although points to 29% increase of the average daily
generation of the previous month. The favorable hydrology conditions prevailed in the reporting
month allowed boosting of the hydro generation, even without Enguri HPP that, as noted above,
remained stopped for the most of the month. In result, hydro power dominated in the total
monthly electricity supply mix, and it’s share grew to 69% of the total supply volume. The hydro
generation was followed by electricity import (c. 260 GWh, or 24% of total monthly supply) and
the total output of thermal power plants (c. 65 GWh, or 6%). As usually, the share of the only
wind farm in overall supply mix remained minor (less than 1%).

The following two figures show dynamics of the total electricity supply in April of 2017-2021,
broken down by types of electricity sources, including run-of-the-river (so called ‘seasonal’ and
small) and regulated (with water storage capacity) hydros, thermal plants and import).

3
 Monthly Generation and Import
April 2017-2021
1,400
1,200 980 1,045 964
1,075
1,085 Total_Local_Supply&Import
1,000 8084% 259.60
Import
146.54
800 Wind
GWh

Hydro
600 799.07 Thermal
1,019.00 787.13
400 722.16 753.30

200
85.66 158.56 148.26 65.30
0
2017 2018 2019 2020 2021

Y/Y Monthly Electricity Supply Dynamics

April 2017-2021
147 773
1000 Import
544 539
86 Thermal
705 475
800 Blank 3
Blank 2
600
GWh

Total Hydro
400 RoR HPPs
81 260 Regulated HPPs
36
200
159 148
11
35 65
0
2017 2018 2019 2020 2021
Imported electricity came from Azerbaijan, Russia and Turkey, with volumes indicated on the
following chart.

Electricity Import - April 2021

200
180
160
140
120
100
GWh

80
60
40
20
0
Azerbaijan Russia Turkey

During entire reporting month, Georgian power system was synchronized with Azeri one, and
during the limited time also operated in parallel with Russian high voltage grid.

Electricity Trade

In March 2021, the total traded electricity volume amounted to about 1,071 GWh. From this,
743 GWh (69%) was supplied/consumed under bilateral contracts, while remaining 328 GWh
(31%) was purchased/sold by ESCO as a ‘balancing electricity’ (BE). In the reporting month, the
balancing electricity was composed of the net output of ‘expensive’ renewables (almost 262

4
GWh or 80%) followed by imported electricity (about 53 GWh or 16%) and net generation of
hydro plants without firm price PPAs (13 GWh or 4%). The weighted average selling price of the
balancing electricity (BEP) for April 2021 amounted to about 16.95 Tetri/kWh – the highest rate
for April ever. Notably, the BEP for April 2021 denominated in USc/kWh was 2% lower than
year ago, and remained almost same as for March 2021. The figure below illustrates monthly
wholesale market volumes in April from 2016 to 2021, along with percentage shares of the
different type supplies (DC or BE), weighted average BEPs in Georgian and US currencies, and
average monthly exchange rates.

Wholesale Electricity Trade in April 2016-2021

1,200 18
1,060 1,071
1,029 963
949 16
1,000 191
883

BEP / USD Exchange Rate

237 328 14 Total Supply inc. Import
211
800 155 280 BE
12
Direct Contracts
600 10 BEP (Tetri/kWh)
GWh

BEP (USc/kWh)
870 8
400 729 792 752 743 USD/GEL
669 6
200
4
0 2
2016 2017 2018 2019 2020 2021

Similar to other ‘winter’ months, in April 2021, all marginal tariff thermal/hydro plants and
deregulated hydros almost fully sold their net monthly outputs exclusively under the direct
contracts and, thus, had very limited influence on the balancing electricity volume/price.
Exception was Vartsikhe HPP (cascade of four plants) that surprisingly attributed almost 12
GWh to ESCO as a balancing electricity for cheapest regulated tariff (1,25 Tetri/kWh), while
additional 3 GWh was needed for covering demand of its traditional buyers operating under the
common ownership umbrella (in the reporting month, Georgian Manganese split into two Direct
Customers – Zestaponi Ferroalloy Plant and Georgian Manganese).

As in the previous month, in April 2021 the major consumers of the balancing electricity were
distribution companies. Namely, from the total monthly consumption of Energo-pro’s customers
(c. 353 GWh) about 225 GWh (64%) was purchased under direct contracts and almost 128
GWh (34%) was procured from ESCO as a balancing electricity. Telasi consumed the balancing
electricity more extensively – from its total monthly consumption (almost 208 GWh), only about
41 GWh (20%) was acquired under direct contracts, while balancing electricity constituted the
remaining 167 GWh (80%). Notably, rough estimations show that, in the reporting month, both
companies sold certain electricity volumes (Energo-pro - at least 30 GWh, and Telasi – more
than 14 GWh) due to unknown reasons, although these could be used for reducing dependence
on the balancing electricity.

In the reporting month, similar to March 2021, the share of balancing electricity consumed by all
Direct Customers was very low – about 5.5%, and their total demand (c. 249 GWh) was almost
fully covered by bilateral contracts. Among industrial direct customers, the only bulk user of the
balancing electricity was GTM Group (4.5 GWh or about 39% of the total monthly consumption).
Among cryptominers, balancing electricity was purchased by BFDC (4.2 GWh or about 13%),
Geo Maintenance (3.3 GWh or 63%) and Data Hub (1.5 GWh or 100%). Besides the split of
Georgian Manganese, the pool of Direct Customers was replenished by Metalline Ltd.

5
The following figure illustrates electricity import during April 2021 broken down by importers.

Detailed Electricity Import - April 2021

200 Totals
173
#REF!
150 GSE (BE)
Energo-pro (DC)
100 ESCO (BE)
GWh
170.6
50 Abkhazia (DC)
50 36 ESCO (BE)
27.52
23.05 Tb_Invest_Group (DC)
0
Azerbaijan Russia Turkey

In April 2021 the average import price (don’t counting for import from Russia to Abkhazia)
amounted to 4.94 Usc/kWh. The estimated average DAP in Turkey was 3.84 Usc/kWh.

Monthly Average Spot Electricity Prices in Georgia and Turkey

2020-2021
6.00
5.00
4.00 Georgia (BEP)
Usc/kWh

Turkey (DAP)
3.00
2.00
1.00
0.00
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

During reporting month, electricity traded by Wholesale Suppliers amounted to about 53 GWh,
i.e. 7.2% of the total monthly electricity volume traded under direct contracts. The leaders were
GIEC, (24.7 GWh), which mainly sold net output of its own small hydros, Tbilisi Investment
Group (14.5 GWh) – importer of electricity from Azerbaijan, and Georgian Trading Company
(10.1 GWh) that sold the surplus energy remained after covering demand of Georgian Water
and Power.

In April 2021, no new wholesale suppliers were registered.

Major legislative/regulatory events

In April 2021, the Ministry of Economy amended Electricity (Capacity) Balance Forecast for
2021 (“Balance”). Amended Balance reflects the actual figures for the first 3 month of 2021, and
estimated data for the rest year. Comparing to the original 2021 Balance, updated estimates for
the total monthly local consumption are increased in 7%-10% range on the account of Abkhazia
(7%-15% growth) and Direct Customers (30%-35%). The estimated monthly demands of
distribution companies are not changed. The forecasted monthly exports are decreased in May
by 72%, June by 32% and July by 43%. No export has been planned for other months.
On electricity supply side, comparing to the original 2021 Balance, the amended total monthly
hydro generation stays almost unchanged during May-July, September and October, while 10%
growth is estimated for August, and 5% growth for November and December. Amendment
implies removal of thermal generation in May (50 GWh was forecasted originally), and 8%
increase in August and October. As about total consumption of Direct Customers, the amended
figures for September-December are considerably (more than 50%) higher than indicated on

6
the original Balance. The forecasted monthly generations of Khadori HPP in April-December
2021 have not been changed.