Energy storage projects in Georgian law
An investor wishing to store energy must first know one thing: no separate statute on electricity storage exists in Georgian legislation. Of the regulatory framework in force, the only sphere of storage regulated in detail is natural gas storage, which is governed by the law on energy. So if your project concerns a gas storage facility, the norms described below apply directly; electricity battery storage projects remain outside this framework, and no special licensing or permitting regime exists for them — this must be said plainly and taken into account in planning.
In planning, note also that relationships connected with storage are divided into two levels: on the one hand, the operator's activity — the operation and management of storage objects; on the other, the users' relationship with the operator — obtaining access, participating in capacity allocation and demanding compliance with the contractual conditions. The law governs both levels, and the investor's position depends precisely on which side it occupies in this relationship.
The natural gas storage system operator
Natural gas storage activity is carried out by the natural gas storage system operator, which conducts this activity under the procedure established by the law on energy and by other legislative and sub-legislative legal acts of Georgia. The status of the operator is the precondition for such activity: the operation and management of a storage object fall within its competence, and its functions are exercised under rules defined by law.
Access to the storage object and pipeline
For organizing access to the storage object and the pipeline for the purpose of gas storage, a negotiated or regulated access procedure is used, where this is technically or economically necessary in order to ensure effective access to the system and the availability of auxiliary services for supplying consumers with gas. The commission defines and publishes the criteria on the basis of which it is decided which procedure applies; the procedures must be applied in an objective, transparent and non-discriminatory manner. The storage system operator publishes information about which storage object or its part is offered under the different access procedures, while the transmission system operator publishes which part of the system used for gas storage is offered under the different access procedures.
In the case of negotiated access, the commission takes all necessary measures so that gas enterprises and final consumers within the territory of the interconnected system or beyond it have the possibility to agree on access to the storage objects and the pipeline. The parties are obliged to conduct the negotiations related to access and to auxiliary services in good faith — this obligation is imposed directly by law, and its breach becomes the subject of dispute.
The natural gas storage rules
The operation and management of a storage object are carried out in compliance with the provisions established by the natural gas storage rules. These rules define the technical parameters of the object, the requirements for safe operation, the third-party access procedure, the capacity allocation mechanism and congestion management procedures, the procedure for measuring capacity and accounting for the gas injected into and supplied from the object, the criteria for planning the operation and development of the object and infrastructure, the rights and duties connected with its use, the general conditions for providing services, and the procedure for considering disputes. Such detail means that for an investor every stage of a storage project fits into a framework known in advance.
The norm of informational transparency deserves note as well: the rules also define the procedure for publishing the data held by the operator, including the publication schedule, and the method of exchanging data with the operators of interconnected systems. A user can therefore assess the system's stability and availability in advance and plan its storage strategy accordingly.
Capacity allocation and congestion management
The maximum storage capacity must be available to all market participants, taking into account the integrity and effective operation of the system. The operator develops and publishes non-discriminatory and transparent capacity allocation mechanisms that provide appropriate economic signals and encourage investment in new infrastructure, are compatible with market mechanisms — including spot markets and trading hubs — and are flexible enough to adapt to market conditions. The contract must provide measures to prevent cases where the acquired right to use capacity is not used or is used inefficiently: the operator is obliged to offer unused capacity on the primary market, and the user has the right to resell contractual capacity on the secondary market. This offer must be made in the form of interruptible service and at least 1 day before the service.
Frequently Asked Questions
Below we answer the questions most frequently asked about energy storage projects.
Does a separate regulation on electricity storage exist?
No. Georgian law regulates only natural gas storage in detail; no special statute exists for electricity storage, and this must be taken into account directly when planning a project.
Who carries out gas storage activity?
The natural gas storage system operator, under the procedure established by law and sub-legislative acts. The operation and management of the object take place in compliance with the storage rules.
How is access to storage organized?
Through a negotiated or regulated procedure, where technically or economically necessary. The commission defines and publishes the criteria; the procedures must be objective and non-discriminatory.
What happens with unused capacity?
The operator is obliged to offer it on the primary market as interruptible service, at least 1 day before the service; the user may resell contractual capacity on the secondary market.
How We Help on Legal.ge
The lawyers of Legal.ge assist in the legal assessment of a gas storage project, in negotiations with the operator on access and contracts, in assessing capacity allocation mechanisms, and in the assessment of the legal vacuum surrounding electricity storage projects. Contact us at an early stage of the project.