The legal frame of hydroelectric development
The hydroelectric plant is the backbone of Georgia's energy system, and its development takes place within the full regime established by the Law on Energy: from state energy policy, through the conditions of generation, to promotion mechanisms. This page explains which norms concern hydroelectric projects, how state policy is formulated and what the law requires of generation objects.
State energy policy
The ministry, in cooperation with the government, the commission and other parties, elaborates the state energy policy for a period of at least 10 years, and after approval and publication by the Parliament ensures its implementation. This document is the frame in which the priorities of hydroelectric development must also be reflected.
The policy must provide for a strategy for the electricity sector for short-, medium- and long-term periods — the strategic development of the generation, transmission, including cross-border transmission, and distribution of electricity; measures serving the safe and reliable supply of electricity to consumers; measures of physical and financial accessibility and the phased overcoming of energy poverty; the planning of long-term balancing of supply and demand; mechanisms for the diversification of primary energy sources and imports; the increase of export opportunities; and the encouragement of investment in infrastructure, including innovative, environmentally safe and smart technologies.
From the hydroelectric perspective two elements of the policy are especially significant: measures serving the use of renewable energy sources for the generation and consumption of electricity from such sources, as well as any incentive measure or support mechanism; and measures aimed at promoting the combined generation of electricity and heat. The policy also includes issues of increasing the efficiency of energy activity and reducing negative impact on the environment.
Conditions of electricity generation
The construction, maintenance, operation and connection to the transmission and/or distribution network of electricity generation objects and associated devices must conform to the technical standards, norms and other mandatory conditions established by Georgian legislation and by the rules of the transmission and distribution networks — including requirements related to the environment, public safety and the protection of property. For a hydroelectric plant this means that technical parameters and environmental requirements are summed up in a single package of obligations.
Generation itself, save for the exceptions provided by law, is subject to mandatory licensing according to the procedure established by the Law on Licenses and Permits, the Law on Energy and the licensing rules approved by the commission. Among the exceptions are generation for one's own consumption not connected to the network, and small or micro-capacity power plants.
Promotion of generation and supply security
Hydro energy is a renewable source, and the law regulates its promotion separately. The promotion of electricity generation is regulated transparently and non-discriminatorily, taking into account economic expediency, the minimal costs of the final consumer and the criteria of influence on the energy balance and on the operation of the country's power system. Generation from renewable sources and high-efficiency cogeneration may be encouraged through support mechanisms defined by established rules and conditions — in order to reach the level established for Georgia by the relevant legislation of the Energy Community. Every incentive measure must be assessed and, where necessary, substantiated in accordance with competition and state-aid law.
The ministry, in cooperation with the commission and other competent state bodies, in elaborating supply-security norms and exercising supervision, aims at: the continuity of safe and reliable supply of electricity to final consumers; the creation of a transparent and stable regulatory framework; the effective functioning of a single market and unrestricted access for cross-border flows; the proper maintenance and renewal of networks; the promotion of renewable sources and combined generation; the existence of sufficient reserve capacity of transmission and generation; the balance between demand and available capacity; and the encouragement of energy efficiency and new technologies, including demand management, renewable energy and smart metering technologies and distributed generation.
For hydroelectric development there are two decisive points here: the reserve-capacity requirement, because the seasonality of hydro plants makes the balance particularly sensitive; and the promotion of renewable sources, which shapes the development of hydropotential at the policy level.
What should hold the developer's attention
When planning a hydroelectric project: study the current state energy policy — it is a public document approved by Parliament; make sure of conformity with the conditions of generation, the technical and environmental requirements; take into account the mandatory nature of licensing and its exceptions; and seek information about active support mechanisms. These four steps are the foundation of the legal map of hydroelectric development.
Remember also that the policy must protect the rights and interests of all participants of the energy sector, including vulnerable consumers — local communities' interests in large hydro projects anchor here.
Frequently Asked Questions
Below are the most frequent questions about hydroelectric development.
How is state energy policy formulated?
The ministry elaborates the policy for at least 10 years with the government and the commission; after parliamentary approval it ensures implementation.
What requirements apply to a hydroelectric plant?
Construction, maintenance, operation and connection must conform to the technical standards and mandatory conditions set by the legislation and the network rules, including the environment, public safety and property.
Does hydro generation require a licence?
Yes, save for the exceptions provided by law: own-consumption generation not connected to the network and small or micro-capacity plants, though such activity must still be declared as established by law.
How does the law encourage hydro energy?
Generation from renewable sources may be encouraged through established support mechanisms to reach the level set by Energy Community legislation; every measure must be assessed against competition and state-aid rules.
How We Help on Legal.ge
The lawyers of Legal.ge chart the legal path of your hydro project: we assess conformity with energy policy and support mechanisms, prepare the licensing and connection documentation, and order the obligations into a single frame. Contact us at the early planning stage.