Promoting the Use of Renewable Energy Resources for Local Energy Supply in Georgia

GEO/01/G31/1G/99
Total budget: USD 12 500 000 (Available from GEF USD 4 500 000; to be additionally mobilised – USD 8 000 000)
UNDP sector: Sustainable Energy and Environment
Starting date: 2002
Duration: 4 years

During the past few decades, the development of the energy sector in Georgia like in many other countries has focused on the construction of big, centralized energy supply systems. With the exception of the big hydro power plants, the development of other, local renewable energy resources has largely been neglected despite the fact that the country is exceptionally rich on these resources, in particular geothermal heat and small hydro power. Since the independence, Georgia has been facing a serious energy crisis. The power supply system is suffering from regular disruptions due to the overloaded distribution system and lack of sufficient generation capacity in an operation condition. This has led, among others, to the i) massive harvesting of trees with serious environmental damages; ii) overloading of the already stretched power system; iii) stretching of the already very tight family budgets due to the high costs of electricity and kerosine; and iv) indoor air quality problems. For overcoming the energy crisis, the following trends can be observed: (i) improving the natural gas supply within the cities, so as to increase the utilization of gas for heating and cooking purposes; ii) rehabilitating the former big hydro power and gas fired condensing power plants; and iii) planning of the construction of new thermal power capacity based on the use of domestic coal.

By far the biggest, long term potential for reducing the greenhouse gas emissions from the heating and hot water supply in Georgia lies in improving the demand side energy efficiency of the buildings, by maximising the use of the geothermal and other renewable energy resources and by promoting co-generation. Georgia has abundant geothermal resources, which to large extent have remained unutilised. The estimated capacity of Georgia’s total geothermal resources is 200-250 million m³ per year at a temperature of 50-100 ^oC. This could provide central heating and hot water for some 500,000 to 1 million people, thus helping to save 1.3 - 1.5 million tons of conventional fuels per year. Less than 0.5 per cent of the existing geothermal resources is currently utilized. There are certain districts in Tbilisi, in which the geothermal wells are already used for hot water supply. The supply system used, however, is a simple open- ended system without any re-injection, which has already led to the decrease of the pressure of the wells. In addition, the insulation of the pipes is quite poor leading to high temperature losses. Georgia is also one of the richest countries in the world in terms of hydropower resources and the country has a significant potential to develop the hydropower sector as an alternative to the construction of new thermal power plants. The technical hydroelectric potential (including large hydropower plants) has been estimated at 80– 85 billion kWh, while the economically feasible potential, has been estimated at 40–50 billion kWh per year

The objective of the project is to remove the key barriers to the increased utilization of local renewable energy resources. The initial focus will be on promoting the use of geothermal resources for heating and hot water supply and the use of small hydro power for local electricity production. After successful implementation of the first demonstration projects in these sectors, also other renewable energy sources can be considered. The overall potential to reduce country’s greenhouse gas emissions within the targeted sectors has been estimated up to 3-5 Mt of CO₂ annually.

1. Long term financial mechanism to support renewable energy development initiatives;

2. Enabling legal, institutional and financial environment for renewable energy development;

3. Long term strategy and action plan for renewable energy development in the country.

1. To operationalize the Pilot Renewable Energy Fund (Revolving Fund) and facilitate otherwise the implementation of the first demonstration projects with the initial focus on geothermal hot water supply and small hydro power;

2. To develop "bankable" investment proposals, to structure financing for the projects and to manage the development of the projects otherwise;

3. To Assist the government in creating a supportive legal, institutional and financial framework for the long term development of Georgia’s renewable energy resources.