ENERGY SECTOR

 In 1990 annual consumption of energetic resources in Georgia constituted approx. 17 million tons of coal equiv. (TCE). 85% of these resources were imported. This does not mean that the country has no own resources. In the beginning of the 80-s 35% of the energy demand was fulfilled by internal energy production. But afterwards, due to creation of the integrated Soviet economy, orientation was made towards external (for Georgia) energy resources and internal production fell substantially.

17% of all energy resources were consumed in thermal power stations, 21% in district heating systems, 28% in industry and 12% by public transport. Household consumption of energy resources, including supply of natural gas, heat, hot water, electricity, and also fuel for private use, including petrol for private vehicles, constituted 20% of the whole country consumption.

Annual consumption of electricity in 1990 constituted 13,621 GWh. If net loses are taken into account, the whole consumption comes to 17,154 GWh. 44% of this amount were produced in hydropower stations, 36.5% in thermal power stations and the remaining 19.5% of electricity was imported. The main consumer of electricity was industry with a share of 43.5% of the whole consumption, metallurgy alone took 15% of all electricity. Household consumption constituted 17% of the whole consumption.

The electricity network covered the whole country. The natural gas supply system was well developed. Unlimited supply was provided for in main towns and also for settlements and villages in the non-mountainous areas. In main towns, district heating systems were providing the public and industry with heating and hot water. Prices of energy resources were very low. An average urban family spent on electricity, natural gas and district heating about 5% of its income. Energy prices for industry were low too.

Post-Soviet period

From above it seems obvious that the post-Soviet crisis in Georgia was inevitable. The country met its independence with an energy sector oriented towards import, a well-developed distribution system of energy resources, and with producers and public accustomed to careless use, actually to wasting energy. In this situation the introduction of world market prices for energy carriers was disastrous.

The government tried to protect the population from the shock by introducing subsidies to the sector, mainly for guaranteed gas supply. As a result huge debts to Russia and Turkmenistan were accumulated. In 1993 natural gas supply decreased significantly, and subsequently practically stopped. This paralyzed the district heating system. The only network in function was the electricity supply. It must be noted that in 1990 only 12% of the energy demand was fulfilled by electricity. Once more the interests of the public were taken into account and the lion’s share of this resource was directed to households while the state was “closing its eyes” to the non-payments. People, being left without any other possibilities for heating and food preparation, started to use electricity for these purposes also. As a result, household consumption of electricity increased in terms of its absolute amount, as well as in terms of its share in the whole consumption. In 1995 annual household consumption of electricity reached 67% of the whole consumption. Municipal electricity networks that had not been designed for such loads started to frequently come out of order, the frequency of fires caused by short circuits was increased.

Meanwhile problems arose with fulfillment of the electricity demand. Electricity import from Russia and Azerbaijan decreased. Russia had its own problems with electricity supply. Internal production also dropped. One of two large thermopower stations, Tkvarcheli station, stopped because of damage of the transmission system during the Ethnic war. Another one, Gardabani station, is operating only at part of its capacity . The giant hydropower station Engurhess also appeared to be partly within the territory affected by the Ethnic war. This makes its maintenance very difficult. As a result, currently the country has to meet its demands with a capacity 2 times less than in 1990 (in 1995 the electricity consumption figure was 8,500 GWh, 91% of this was produced within the country).

The total installed capacity of the electropower system in Georgia comes to 2,595 MW for high-capacity hydropower stations, 56.6 MW for low-capacity stations and 2,088 MW for thermopower stations. Thus if the whole installed capacity was used the total electricity production would be about 4,74 MW. Today Georgia produces only one third of this figure. The reasons are the bad technical conditions of the power stations, the fuel shortage, etc.

Attention should be paid also to the very low efficiency of thermopower stations. Produced electricity is equivalent to only 26% of consumed fuel. Additionally, 13% of fuel energy is used as heat. The actual capacity of the Gardabani power station is only 712 MW, while installed capacity is 1850 MW.

The unevenness of functioning of hydropower stations during the year should also be taken into account. In winter, when demand for electricity is maximal, the hydropower stations utilize only 25-30% of their installed capacity.

The Thermopower station in Tkvarcheli closed due to damage of the local transmission system during the war in Abkhazia. Initially designed to use domestic coal, it was later modified into using mazoot. At the end of its functioning the station reached a capacity of 80-100 MW instead of the normal 220 MW. At the moment the station does not work and it needs fundamental repair.

Gardabani thermopower station, the largest in the country, with an installed capacity of 1,850 MW, consists of 10 units. Units I-VIII have an installed capacity of 150 MW each, units IX and X of 300 MW each. A mixture of mazoot and natural gas is used as fuel. The whole condition of the station is unsatisfactory. The table shows loading indeces for Gardabani thermopower station for the years 1988-1996.               

 

The old units, installed in 1962-1972, are in bad condition. The main problem is bad quality of the chemically purified water. It has inappropriate chemical characteristics. During boiling deposits are made on the internal surfaces of the thermoshield which results in a decrease of thermoconductivity and reduced efficiency of the boilers. It causes also corrosion of the turbine wings which leads to reduction of turbine efficiency. Due to the current technical condition, only four units can be brought into operation. Actually only two units work, the other two need to be repaired. Units I, II, V, VI, and VII are brought out of exploitation due to severe damage. Unit X stopped after an accident. Since January 1997 it has been rehabilitated with assistance of the World Bank. Calculations of emissions have been done assuming units III, IV, VIII, IX, and X operate. It was concluded that mazoot with sulfur content no more than 1% should be used so that possible emissions to the air do not exceed existing permitted concentrations of pollutants in ambient air. It is important to note that this plant is placed near such large polluters as the Metallurgical plant of Rustavi, a Chemical plant, and a Cement Plant.

Hydropower stations. The number of rivers in Georgia comes to 26,000. Most of them are shorter than 10 km in length. The total technical potential of these rivers amounts to 88,500 GWh annually. Only 8.5% of this capacity is used today.

There are six large stations with reservoirs: Lajanuri - installed capacity 111 MW, Vardnilhess - 340 MW, Engurihess - 1300 MW, Jinvalhess - 130 MW and Wartsikhe - 184 MW (with two cascades). Their total installed capacity constitutes approx. 64% of the overall installed hydropower capacity. Most of the stations are out of date, maintenance is inappropriate and they need reconstruction.

District heating system. The district heating system in Georgia has been malfunctioning for the last several years. The main reason is severe fuel deficit, i.e. natural gas and mazoot. There are 47 boiler units with a total thermal capacity of 3,510 Gcalh. Their technical condition was surveyed and it was concluded that 12% of the boiler units could be rehabilitated by means of small investments. 8-9% of the boilers are in an extremely poor condition and need rather sufficient amount of money for rehabilitation, what is considered not to be proper in the current situation. Reconstruction of the distribution network is pretty problematic as well. It is known that when this network is empty, it undergoes intensive corrosion and thus becomes useless.

Electricity sector restructuring. The Committee on Restructuring the Georgian Power Sector (CRGPS), set up in October 1995, presented its proposals for reform and restructuring of the sector. On the basis of the proposals the President established a Ministry of Fuel and Energy (MFE) to define and coordinate the energy policy. The Ministry of Economy was charged with setting up an Electricity Regulation Commission which would regulate wholesale and retail tariff structures set in conjunction with MFE.

The key features of the reform were to split up the State-owned electricity company Sakenergo into three parts to facilitate some degree of competition in the electricity supply. Electricity generation would be split up into separate generation plants organized as joint-stock companies (JSCs) suitable for privatization.

Transmission and Dispatch of electricity would remain in the hands of a state owned enterprise but would be commercialized to operate as a financially independent activity supervised by MFE. This enterprise would retain the Sakenergo name. Distribution of electricity would  be split up into regional distribution joint-stock companies and regulated by the relevant local authorities. Distribution of power to large consumers would  remain the responsibility of Sakenergo.

In the longer term it was proposed that the generation and distribution companies would be sold to the private sector.

The proposed restructuring of the electricity sector was certainly ambitious and required large flows of domestic and foreign investment for its implementation.

In 1996 the sector restructuring began and now it is in a progress.