The tender for new electricity generation capacity
Developing a renewable energy project in Georgia often begins with the capacity procurement procedure. Under Article 35 of the Georgian Law on Electricity and Gas Supply, the Government of Georgia is authorized, in accordance with Georgian legislation, to conduct a tender — or to apply another selection procedure provided by legislation — for the construction of new electricity generation capacity, including for the increase of existing capacity. The Government approves the rules and conditions of the tender, and they must be executed transparently and in a non-discriminatory manner. This means that the competition for new generation proceeds under procedural guarantees protected by law for potential investors.
Promotion mechanisms for electricity generation
Article 37 defines the general regime of promotion: generation promotion is regulated transparently and non-discriminatorily, taking into account the criteria of economic expediency, minimal costs for the final customer, and impact on the electricity balance and the operation of the Georgian power system. Generation of electricity from renewable sources and high-efficiency cogeneration may be promoted through incentive and support mechanisms established by rules and conditions defined by legislative acts or by normative acts of the Government of Georgia — in order to reach the level established for Georgia by the respective legislation of the Energy Community.
The promotion rules and conditions must include the respective incentive and support mechanisms, the rights and obligations of electricity enterprises, the conditions of promoted generation, and the related regulatory requirements. Moreover, the assessment of promotion — including every incentive and/or support measure — must, where necessary, be substantiated in accordance with Georgian legislation regulating competition and/or state aid. In practical terms this means that a support scheme must withstand not only energy regulation but also competition and state-aid control.