Electricity consumption was down by 4.9% y/y in 2020, caused by lockdowns and related reduction in economic activity due to Covid-19 pandemic. Despite reduced electricity consumption, import of electricity and thermal generation remained flat, needed to fill the winter deficit and compensate the drop in hydro generation caused by bad hydrological conditions.
Electricity consumption was up by 3.1% y/y in 1Q21, reflecting gradual recovery in economic activity and last year’s low base. Supply mix of 1Q21 was mainly dictated by closure of Enguri HPP for maintenance works for 3 months. Reduced hydro supply was mainly balanced by doubled volume of electricity imports (+93.2% y/y). To satisfy the need of Abkhazian region, traditionally satisfied from Enguri’s generation, additional import from Russia through Salkhino interconnection line was made.
The government subsidized population’s utility bills to mitigate the negative impact of Covid-19 during March-May 2020 and November 2020 – February 2021. This support covered those subscribers who consumed less than 200 kWh of electricity and 200 m3 of natural gas in a month. This consumption translates into monthly payment of GEL 37 in case of electricity bill and GEL 100 in case of natural gas. The subsidy covered bills for a total amount of GEL 167.7mn during March-May period and GEL 267.8mn during November-February period.
Installed capacity of Georgia increased by 432MW in 2020 and by 19MW in 1Q21 to 4.5GW. Capacity additions of 2020 included 230MW thermal power plant in Gardabani, 178MW Shuakhevi HPP in Adjara region and six small HPPs with total capacity of 23.4MW. In 1Q21, three small HPPs were commissioned. Notably, Shuakhevi HPP was in testing regime from 2017, technical issues were resolved and station started operation from February 2020. The HPPs commissioned in 2020 satisfied 2.2% of electricity demand of 2020, out of which 2.0ppts fell on the Shuakhevi HPP. Total installed capacity of Georgia was 4.5GW by end of 1Q21, including 7 TPPs (1.2GW), 1 wind farm (0.02GW) and 97 HPPs (3.3GW).
GNERC approved new tariffs for all regulated activities from January 2021, including subscribers of Telasi and Energo-pro Georgia. Electricity tariffs for end-users increased on average by 19% for residential consumers and by 70% for commercial subscribers. The rise in tariffs mostly reflect increase of the cost of electricity due to increased share of electricity import and thermal generation and FX effect. Effect of lockdowns was also important factor – as consumption of 2020 was lower than expected, the regulated companies saw significant losses. According to tariff methodology, compensation of this loss had to be considered in tariff of 2021-23. The end-user tariff is effective till 1 July 2021, due to expected market reforms. Importantly, we do not expect any further growth of the tariff in 2021.
Other components of end-user tariff also increased. Tariffs for electricity transmission and dispatch were approved for 2021-25 period. As a result, total service fee (transmission, dispatch and ESCO’s service fee) increased from 2.102 tetri/kWh in 2020 to 2.739 tetri/kWh in 2021 (+30.3% y/y). Notably, transmission licensee Energo-trans merged with parent company Georgian State Electrosystem, therefore, currently Georgia has only two transmission system operators.
