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New Support Mechanism May Be Introduced For Wind And Solar Power Plants

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Natia Taktakishvili
24.01.22 12:00
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Government offers financial support mechanism to the investors working on renewable energy (solar, wind, hydro) in Georgia.

As of this mechanism, government offers to the investors interested in the Georgian Energy Sector a Feed-in-premium tariff. According to this model the government pays 1.5 cent additional for per kw/hr electricity and this is a maximum. Investors and everyone say that this is not enough.

Investors interested in the development of Wind and Solar Power Plants explain that they cannot launch projects with current Feed-in-premium tariff.

As all investors will have to sell electricity on the Georgian energy stock market, BMG asked Irina Milorava, Head of Georgian energy stock market, if it is planned to change current financial support mechanism in favor of the investors.

"The acting support mechanism obliges the investors to trade on the energy stock market, while on the other hand, the government undertakes to give it 1.5 cents addition on per kw/hr electricity, but not more than 5.5 cents. The investor often demands to set the minimum margin, which is logical, as they need to guarantee a minimum income. According to this model, the minimum income is 1.5 cents, but this may not be enough to finance the generation facilities.

The second challenge is that this mechanism may not respond to the development of renewable energies such as solar energy because it is a summer energy and therefore, they need more support during the summer months. So, I do not rule out the possibility of choosing different models for sun and wind power plants. At least I think we will definitely come to this decision.

In order to make the right decision, we have to run the market, because we have to see what the market gives us. Then we have to assess if adding 1.5 cents on per kw/hr electricity is enough for investors and then make a decision," Irina Milorava explained.

According to the Ministry of Economy, within the framework of the government financial support mechanism, 6 memorandums are signed with the state on the feasibility study and further construction of various HPPs. Their total installed capacity is 67.22 MW, while investment value amounts to USD 86 million 577 thousand.