Levan Vepkhvadze, Executive Director of the Business Association of Georgia, says that if a third CFD auction is announced, it is essential to separate power plants below and above 2 MW in capacity.
Vepkhvadze was responding to concerns from hydropower developers who argue that the current auction model disadvantages larger projects.
“The connection cost for plants under 2 MW is significantly lower. Larger projects that entered the auction with higher rate feel disadvantaged because the lower tariffs offered by sub-2 MW plants impacted the final median rate,” he explained.
He added that companies with projects above 2 MW face higher administrative and merger-related costs, including environmental impact assessments (EIA), which are not required for smaller projects. “It’s reasonable to hold separate auctions for small and large plants. I see no issue with that,” said Vepkhvadze.
For context, the government introduced the CFD auction model in 2022 to support renewable energy development. Under the scheme, auctions are held for specific capacities, with participants required to submit feasibility studies, pay a participation fee, and provide a bank guarantee.
