Investor Guidebook
The courtesy of USAID and GEDF
RENEWABLE ENERGY INVESTOR GUIDEBOOK
On May 4, 2018, the Government of Georgia (GoG) adopted the Law of Georgia on Public-Private Partnerships (PPP), which defines a PPP as an agreement between a public sector institution or municipality and a private developer, in which the private developer assumes substantial financial, technical, and operational risk to design, finance, build and operate the project. The law admits the selection of a private partner through direct negotiations only in the energy sector.
01 Preliminary Development
In the first stage of the project development, the Ministry of Economy and Sustainable Development of Georgia (MoESD) or the Public-Private Partnership (PPP) Agency (the “Agency”) identify potential renewable energy projects. A developer may also submit an initiative proposal on the concession in the energy sector. The identification stage is followed by the project initiation. The MoESD prepares the project concept note on which the Government of Georgia (GoG) issues a decision. If the decision is positive the MoESD undertakes the project preparation work in cooperation with the Agency and the Ministry of Finance of Georgia (MoF) See Details >>
02 Development
At the project development stage, the Ministry of Economy and Sustainable Development of Georgia (MoESD) or the private developer (initiative proposal) starts with the project preparation stage that entails the preparation of a Feasibility Study (FS). The FS should include information on project costs, expected social and economic results, authorized body’s access to financing project implementation, in case the state is co-financing the project with the private developer and social and environmental impact of the project, including mitigation measures to address any negative impact. If, as a result of the FS, the MoESD decides to proceed with the project development it assesses the most preferable method- Public-Private Partnership (PPP) or the public procurement, for implementing the project. The Government of Georgia (GoG) makes a decision on the approval of the proposed project based on the submitted FS, supportive studies, project-related documents and the conclusion of the Ministry of Finance of Georgia (MoF) on the project. Once the project is approved by the GoG the MoESD starts the selection process. In the case of an initiative proposal, the MoESD decides which method to apply. MoESD may start direct negotiation with the developer or invite the developer to participate in the selection process. The selection process is based on the assessment of qualifications against the set qualification criteria and terms and conditions of the submitted proposal. The GoG along with the Selection Commission makes the decision on the best proposal. After the process, the terms of an agreement are negotiated and an agreement on concession is concluded. In this phase, the project developer should apply the Ministry of Environmental Protection and Agriculture of Georgia (MEPA) for Environmental Decision in case the Proposed Project is subject to Environmental Impact Assessment (EIA). See Details >>
03 Implementation
After agreeing with the Government of Georgia (GoG), the developer proceeds with the actual implementation of the project. In that phase, the developer prepares the project final design and obtains the right to use the land. The next stage is to apply for the construction permit. One of the preconditions for considering an application for the construction permit is a positive environmental decision. Once the permit is granted the developer may seek approval of the Georgian State Electrosystem (GSE) to connect the power plant to the transmission grid. The next stage before starting the operation of the power plant is getting a generation license from the Georgian National Energy and Water Supply Regulatory Commission (GNERC). See Details >>
04 Operation & Maintenance
In the operation phase, the developer proceeds with commercial commissioning. For that, the developer is to be registered as a qualified entity by the Electricity Market Operator (ESCO). The registration may take place once the power plant undergoes the testing period successfully and in confirmation of that the Georgian State Electrosystem (GSE) issues the appropriate acts (i.e., the dispatcher licensee). See Details >>
05 Decommissioning
When the useful life of the renewable energy power plant is expired, the developer must obtain a permit for decommissioning works. See Details >>
06 Development under build-own-operate legislation
Power generation projects that do not meet the Public-Private Partnership (PPP) criteria, but are initiated by private developers, are subject to Government of Georgia (GoG) Resolution No. 515 on “Rules and Conditions for Submit to the Ministry of Economy and Sustainable Development and Reviewing the Proposals on Conducting Construction Feasibility Studies, Construction, Ownership, and Operation of those Power Plants that Are not Public-Private Partnership Projects,” enacted on October 31, 2018. See Details >>
