Energy Distribution Licensing — the General Picture
The distribution of electricity and natural gas in Georgia is regulated through mandatory licensing under the Law of Georgia on Electricity and Water Supply. This page explains which activities require a license from the commission, what conditions an applicant must satisfy, how a license is issued, and how the status of distribution system operator connects to the distribution activity license. If your company plans to operate a distribution network, knowing these rules is decisive for preparing the license application correctly.
It is worth noting at the outset that distribution is not the only licensed activity in the energy sector, and when preparing an application you see the whole system of which the distribution license is a part. Without it, operating the network is unlawful, while a correctly prepared application clears the path to a decision — refusal being possible only on grounds established by law.
Which Activities Are Subject to Mandatory Licensing
Under the law, the commission issues licenses for the following activities: in the electricity sector — the generation of electricity, except for the cases provided for by law, the transmission of electricity, the distribution of electricity and the operation of the electricity market; in the natural gas sector — the transmission of natural gas, the distribution of natural gas, the operation of the natural gas storage system, the operation of liquefied natural gas devices and the operation of the natural gas market; as well as water supply. It is prohibited to carry out these activities without a valid license issued by the commission, which gives the enterprise the right to carry out the respective activity.
The exceptions are precisely formulated. No license is required for: the generation of electricity solely for one's own consumption, where the object of both generation and consumption is not connected to the transmission or distribution network; the generation of electricity at the moment the object is commissioned, in the manner established by law; the generation of electricity by small and micro capacity power plants; and the closed distribution system operator, which has been granted that status by decision of the commission. In addition, a small capacity power plant or an energy enterprise carrying out an activity that does not require a license — such as supply, trading or the administration of a bilateral contracts platform — is obliged to notify the commission accordingly in the manner established by law. This notification obligation operates alongside, not instead of, the licensing rules.
License Conditions — What the Applicant Must Substantiate
The commission issues a license to an enterprise that satisfies the conditions established by the Law of Georgia on Licenses and Permits, the electricity and water supply law, and the licensing rules approved by the commission. Through the documentation provided for by law, the applicant must substantiate the technical, economic, financial and operational — that is, human resources — capabilities of the enterprise, which are necessary for performing the functions related to the licensed activity under Georgian legislation.
The applicant must also demonstrate the capacity to take all measures necessary to ensure the quality of the services to be provided, and the capacity to duly perform other obligations established by legislation; in the case of an energy activity, the capacity to perform public service obligations as well. These are mandatory license conditions: if the applicant cannot substantiate the capacity to meet them, the commission will not issue the license. Nor do these requirements expire with issuance — the licensee must ensure due fulfilment of the license conditions throughout the entire period of validity of the license. During its supervision of the licensed activity, the commission is entitled to request from the licensee documents confirming compliance with the license conditions, and failure to comply with such a request is deemed a violation of the license conditions entailing liability.
The Issuance Procedure and Application Documentation
A license is issued in a transparent, objective, legally substantiated and non discriminatory manner. In addition to the general requirements of the Law on Licenses and Permits, the applicant for an energy or water supply license must submit to the commission together with the application: documents confirming ownership of the devices necessary for the activity or the right to use them; documents confirming the commissioning of those devices or their compliance with technical requirements; a single line diagram and plan of the electrical or natural gas network in the enterprise's ownership; the technical condition for connection to the network, or information on the technical parameters of the connection point confirmed by the respective network operator; and an environmental decision where it is mandatory — with effect from 1 September 2026, an environmental decision or the integrated environmental permit provided for by the Law of Georgia on Industrial Emissions.
The application is also accompanied by a list of operational assets with their values, an audit report on the financial statements, and information on the organizational structure confirming the existence of human resources with the qualifications and competence needed for the professional functions. An applicant for a transmission license must additionally meet the requirements concerning the unbundling and certification of the transmission system operator. The issuance of the license is confirmed by a license certificate, which must indicate, among other data, the license holder, the licensed activity, the services to be provided by the licensee, the location of the principal assets, the area of validity of the license and the date of issue. Refusal is possible only on grounds established by law, must be legally substantiated and duly explained, and is subject to appeal; every refusal, with its reasons, is notified to the Secretariat of the Energy Community.
Authorization of the Distribution System Operator
The authorization of the distribution system operator is carried out by the commission through the issuance of the distribution activity license. This means that the status of distribution system operator is not an alternative to the license but its form and consequence. The distribution activity license is issued in accordance with the Law on Licenses and Permits, the relevant chapter of the energy law and the licensing rules approved by the commission.
The unbundling requirement is particularly important here: the distribution activity license is issued only where the unbundling requirements established by law are met, and the applicant must submit to the commission confirming documentation. Unbundling ensures that the distribution function is independent of other activities, and it is one of the conditions without which the license cannot be obtained — which is why preparing the application is best started precisely from the unbundling documentation.
Practical Recommendations for Applicants
The practical milestones of the licensing process are: first, determine the exact type of activity, because the type of license and its conditions follow the substance of the activity; second, start in good time to obtain the environmental decision and the technical condition for connection to the network, since these documents are mandatory annexes to the license application; third, prepare the financial and organizational substantiation to the standard required by the commission's licensing rules.
Bear the calendar factor in mind as well: from 1 September 2026 the form of environmental substantiation changes, with the integrated environmental permit regime being added alongside the environmental decision. If the timetable of your project crosses that date, the strategy for the environmental documentation must be calculated for both regimes. The commission publishes on its website the complete list of documents to be submitted and the standard forms — this resource is the starting point of application preparation.