Page 39 - Small Stans and Causcasus Outlook 2022

3.1.4 Energy & power

With no or very few natural gas resources and no nuclear plants,
Georgia’s energy sector critically depends on the development of
hydropower plants and other generation capacities based on renewable
resources (photovoltaic, wind). At the moment the country’s energy mix
relies heavily on its existing hydropower plants. This being said, the
failure in developing the planned hydropower plants, fiercely opposed
by environmental NGOs, has had a negative impact on the country’s
economic development in general. Georgia’s power consumption is
supposed to rise sharply in the coming years in line with its economic
development potential, but the energy resources may be a limitation.

Most of the hydropower plant (HPP) projects in Georgia, with up to
$4bn of investments, have by now been suspended due to protests,
according to Giorgi Margebadze, executive director of the Association
of Small and Medium Sized HPPs. In their turn, however, the
small-sized hydropower plants advocated by Margebadze are opposed
by green activists that quote studies revealing that they are more
harmful to nature (in per MW terms).

Turkish construction firm Enka Renewables terminated in September
2021 its contract with the Georgian government to build an $800mn
hydropower plant in western Georgia. The company announced on
September 21 that it had pulled out of the Namakhvani project due to
"breaches of contract" by the Georgian government and force majeure
events.

The project had proved controversial, triggering protests led by the
grassroots Save the Rioni Valley movement since late October, leading
to government promises to revisit the project.

Georgia’s planned Khudoni dam in the country’s northwest is now in
question as an investor agreement is likely to be terminated. The dam,
in the Svaneti region, is one of several controversial rural hydropower
projects (HPPs) in the country, similar to the Namakhvani HPP that has
led to serious protests.

3.1.5 Construction
After mixed performance in 2018-2019, the sector’s output plunged to
the five-year low as the government prioritized funds to other projects
than civil engineering. Residential and commercial segments of the
market are subdued because of the relatively low levels of income and
consumption in the country.

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