Giorgi Margebadze, executive director of the Association of Small and Medium Hydroelectric Power Plants declares, that the government is considering a change in the energy incentive mechanism for investors.
As he points out, the current financing model Feed-in-Premium tariff, does not work, because European financial institutions refuse to finance new hydropower plants in Georgia under this tariff policy.
According to him, the government is considering to restore PPA (Power Purchase Agreements) tariffs, which provides guaranteed purchase of electricity. Under this agreement, the investor receives revenue of 6 cents per kilowatt-hour of electricity. As he explained PPA tariffs will be valid for the first 5 years.
“This is a simple question and I do not know why we are surprised. Our consumption is growing by 450 million kilowatt hours every year.
There is talk to restore the 6-cent PPA tariff. We see that the Feed-in -Premium tariff does not work. International organizations such as the EBRD and ADB do not fund projects through this mechanism.
In the case of PPA tariff, there are two options: investor will have guaranteed tariff for the first five-year and after it, a five-year contract will be offered. As of the contract, if per kilowatt-hour electricity is sold in excess price, it will remain with the state, and if the price is below 6 cents, the state will cover it. Talks are held about that and supposedly we will set 6 cents tariff, which is a positive signal for the Western investors. To reduce the heat in the buildings by one degree will assist to cut dependence on Russia and save 10 billion cubic meters of gas," Margebadze said.
The state has restricted the signing of Power Purchase Agreements with investors in energy projects from 2017.
