Gov’t slashes hydropower plant construction guarantee by 90%

The Georgian government has decided to lower the amount of hydropower plant construction guarantees from $100,000 to $10,000 per proposed megawatt of electricity generation potential for investors which do not require guaranteed purchase agreements and guaranteed tariffs. 

The decision was made at the government meeting yesterday.

This is another step taken within the framework of energy market reform…on the one hand to opening up the electric market and make it competitive, is an incentive for investors to not to require guaranteed purchase agreements…Also, we lowered required construction guarantees and let them keep their resources which will accelerate the building process”, said Natia Turnava.

A guaranteed purchase agreement of electricity is one of the components of a memorandum of understanding (MoU) between the Ministry of Energy and privately owned hydropower plants.

According to the electricity guaranteed purchase component, the government undertakes to purchase a certain amount of electricity at a certain price within a specified period of time.

A construction guarantee is a bank guarantee based on the total installed capacity of a power plant or power plant cascade.  

Before the change to the requirements, hydropower plants of 100 megawatts or less used to need construction guarantees of $100,000 per megawatt.