Page 28 - Caucasus Outlook 2024

The overall business sector in Georgia also saw changes. In Q3 2023, the total business turnover increased by 8.8% from the previous year, reaching GEL51.7 billion. The production value in the business sector increased by 5.2% to GEL19.9 billion.
In terms of turnover by sector, the trade sector (including motor vehicle and motorcycle repair) had the largest share at 36.3%. This was followed by arts, entertainment, and recreation (32.4%), manufacturing (8.2%), construction (5.9%), and transportation and storage (4.9%).
Manufacturing led in production value with a 20.3% share, followed by trade (19.8%), construction (17.3%), and transportation and storage (9.4%). The rest of the sectors combined for a 33.2% share.
In summary, while Georgia experienced a significant drop in FDI in Q3 2023, its business sector continued to grow, with notable increases in turnover and production value across various sectors.
3.1.4 Energy
Over 80% of Georgia's electricity is generated from hydropower plants. According to TBC Capital, in the first nine months of 2023, generated electricity reached 11.2 TWh, a 2% annual increase. Thermal generation continued to grow, meanwhile, hydropower posted a minor 0.2% decrease and wind power increased by 2.6%.
Georgia's electricity consumption hit a record 14.2 TWh in 2022, rising by 3.1% YoY. However, in the first nine months of 2023, consumption dropped by 8.3% YoY due to reduced demand from direct consumers, notably in the metallurgical and cryptocurrency sectors.
During the first months of 2023, exports increased to 1.5 TWh, with the Turkish market remaining the primary destination, generating revenues of USD 103.3 mln.
Prime Minister Irakli Garibashvili announced plans for the development of four large-capacity hydropower stations, including the construction of the largest thermal power station in Georgia, "Gardabani 3," with a planned capacity of 350-430 MW. Additionally, a new renewable energy support scheme will back 15 hydro, two wind, and 10 solar power plant projects, the PM said.
The results of a study on the Black Sea submarine electric cable project, connecting Georgia and Europe, are anticipated in H1 2024. The 1,195-kilometre cable aims to enhance export opportunities and facilitate electricity trading based on market prices.
The regulatory changes aligning with the EU legislation have led to significant market reforms in Georgia. The unbundling of distribution system operators has been a major achievement. Further changes in the form of transitioning the electricity market to a new model has been postponed numerous times due to market readiness, with the final date set to be in July 2024.
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