Domestic consumption increased 6.2% y/y in 2016. The main contributor was Telasi (+15.3% annually), which doubled its 2015 annual growth rate (+7.5% y/y). The Abkhazian region, which led the growth in 2015, continued steady growth (+7.0% y/y) in 2016. Energo-Pro subscribers increased their consumption by 3.3% y/y in 2016, slightly lower than the growth in 2015 (+4.3% y/y). Consumption by Kakheti Energy Distribution subscribers increased by only 1.9% in 2016, following much larger increases in previous years (8.4% in 2015 and 8.1% in 2014). Consumption of eligible consumers decreased 1.0% y/y from the low base in 2015 (-21.4% y/y), but the decrease was the result of Rustavi Water Company giving up its eligible consumer status in 2016 (it accounted for 3.4% of direct consumption in 2015). Consumption of Georgian Manganese, the largest direct consumer, was up 4.4% y/y from the 2015 low base (-20.3% y/y).
The increased level of consumption was satisfied almost entirely by domestic generation sources. Domestic generation increased 6.8% y/y and comprised 96.0% of total electricity supply. HPP generation increased 10.4% y/y, while TPP generation decreased 6.0% y/y in 2016. Growth of hydro generation was mainly driven by regulated HPPs, with generation up 7.8% y/y by Enguri and Vardnili and 11.9% y/y by other regulated HPPs. Generation by deregulated HPPs was up by 16.6% y/y. 91.3% of total electricity supply was consumed by domestic consumers, 4.6% was exported, and 4.1% was consumed by power plants or lost during transmission.
Georgia became a net exporter of electricity in 2016 with 80.1gWh of net export. Electricity import decreased dramatically (-31.5% y/y) to 478.9gWh in 2016 and accounted for only 4.0% of total electricity supply. 77.1% of imported electricity came from Azerbaijan, the rest from Russia. Exports in 2016 were down 15.3% y/y to 559.0gWh. Exports to the main export market, Turkey (52.7% of 2016 export), decreased 29.8% y/y, largely due to the fewer export months for Paravani HPP, per the amended MoU with Georgian Urban Energy. There was a significant increase in export to Armenia (+57.4% y/y), while export to Russia declined 13.0% y/y and accounted for 26.4% of exported electricity. Total amount of electricity transit from Azerbaijan to Turkey reached 849.6 gWh in 2016.
Wholesale market prices in Georgia decreased 23.3% y/y to USc 4.2/kWh, 35.2% below the Turkish market clearing price in December 2016. Turkish electricity prices increased 12.6% y/y to USc 6.5/kWh from a significantly low base in December 2015 (-24.5% y/y). 22% of total electricity supplied to the grid in December 2016 was traded through the market operator, with the rest traded through bilateral contracts.
HPPs commissioned in late 2016 (164.9MW) are expected to account for 5.7% of total hydro generation in 2017. Generation of deregulated HPPs already posted a significant increase in Dec-16 (+27.5% y/y). An estimated US$ 733mn will be spent on the construction of the Namakhvani HPP cascade in the next 5 years. Number of Solar and wind projects are increasing.
