The legal contour of a hydroelectric project
The realization of a hydroelectric project depends on those norms of the Law on Energy which regulate the commissioning of the object, the planning of its network integration, and access to the transmission system. This page explains these four components: the trial run, the ten-year development plan, the third-party access regime, and the distribution network development plan.
Commissioning — the trial run
An undertaking that has built a generation object or reconstructed it — including increasing its capacity — and connected it to the transmission or distribution network in accordance with the legislation and technical requirements, must apply to the operator of the system to which the object is connected for a trial run and/or complex testing for commissioning. Representatives of the transmission system operator participate in the process.
The operators conduct the trial run and/or complex testing and give consent to commissioning according to the network rules. Where the rules do not provide otherwise, the system operator must announce consent or refusal within no more than 90 calendar days from the trial run. During this period the owning undertaking is not obliged to obtain a generation licence, while the purchase and sale of the electricity generated is regulated by the market rules. Generation by an object accepted into operation is permitted only on the basis of a licence, save for the cases provided by law, where a document confirming commissioning issued by the authorized body suffices.
Planning of network integration
The placement of a hydroelectric object in the network is decided by ten-year planning: the transmission system operator annually elaborates the ten-year transmission network development plan for the next 10 calendar years. The plan contains information on demand and supply, on the main infrastructure to be built or improved over the next 10 years, on decided investments and those to be implemented over the next 3 years, and — most important for hydro projects — information on the integration into the network of new generation objects, including renewable energy sources.
The procedural deadlines are also clear: after consultations with stakeholders, the draft plan is submitted to the ministry and the commission no later than 1 October of the relevant year. The commission examines the draft, checks whether it covers all investment needs, and submits its remarks to the ministry within 2 months of receipt. The ministry, with the government's consent, ensures approval of the plan no later than the end of the year. For a hydro developer this plan is precisely the document that determines on which horizon his object will have network capacity.
Third-party access to the transmission system
The transmission system operator, in compliance with the network rules, ensures non-discriminatory and unrestricted access of users to the transmission system; the access fee is accounted for and set by the commission according to the relevant methodology. The same service must be offered to different users on equal contractual conditions. The conclusion of long-term contracts is allowed, provided they conform to the competition rules.
The operator publishes on its website the access procedure, rules and conditions. In a case provided by a legal act of the commission, access-related service may be rendered to a user only after the submission of a financial guarantee — the guarantee must be non-discriminatory, transparent and proportionate, and must not create an unjustified barrier to market entry. Access to the networks of operators of neighbouring countries is possible on the basis of bilateral or multilateral agreements, for cross-border transmission.
For hydroelectric objects the dispatch rule is especially significant: the transmission system operator is entitled, in dispatching generation objects, to give priority to objects that generate energy from a renewable source — a hydro plant belongs precisely to this category.
The distribution network development plan
If a hydro object targets the distribution network, it is covered by the development and investment plan of the distribution system operator, drawn up in accordance with the network rules and territorial planning documents. The plan includes a description of the existing infrastructure, an assessment of capacity-related needs, forecast demand and supply, the investments to be implemented, and quality target indicators.
The legal contour of a hydroelectric project consists of four pillars: commissioning protected by the 90-day limit; the integration horizon determined by the ten-year network plan; the non-discriminatory access regime with a fee set by the commission; and the priority of renewable sources in dispatch. Knowing these four is the precondition of realistic planning of a hydro project.
Note additionally that in elaborating the plan the operator makes reasonable assumptions on generation, supply, consumption and cross-border flows, taking into account the investment plans of neighbouring networks — the network perspective of a hydro project depends on them as well.
Frequently Asked Questions
Below are the most frequent questions about hydroelectric projects.
Within what period is commissioning decided?
Where the rules do not provide otherwise, the operator announces consent or refusal within 90 calendar days from the trial run; no generation licence is required during this period.
Where is the integration of new objects reflected?
In the ten-year development plan of the transmission network, elaborated annually by the operator for the next 10 calendar years, which contains information on the integration into the network of new generation objects, including renewable energy sources.
What are the rules of access to the transmission system?
Access is non-discriminatory and unrestricted; the fee is set by the commission; a provided case may require a proportionate financial guarantee that creates no unjustified market-entry barrier.
Does a hydro plant have priority in dispatch?
Yes — the operator is entitled, when dispatching generation objects, to give priority to objects that generate energy from a renewable source.
How We Help on Legal.ge
The lawyers of Legal.ge check whether the ten-year plan declares your object, guide you through commissioning and access procedures, and translate the conditions of access into contract language. Contact us before construction begins.