Will the Caucasus soon be another source of green electricity for Europe? If the European Commission has its way, the answer is “Yes.” Plans to lay a submarine cable in the Black Sea recently materialised. The transmission line is to transport electricity from renewables produced in Georgia to Romania and thus put it on the EU system. This undertaking is part of an extensive programme in support of the energy transition in the former Soviet nation. Germany is investing in hydrogen infrastructure as well.
At present, Georgia is a net electricity importer. Based on IEA data, the country recently sourced some 1.5 terawatt hours (TWh) more electricity from neighbouring nations like Azerbaijan and Russia than it exported. This represented about twelve percent of total consumption of 11.7 TWh.
Nevertheless, the self-proclaimed “balcony of Europe” is a potential supplier of green energy. The domestic electricity mix is already dominated by renewables. According to IEA figures, hydropower accounted for 74 percent of it in 2020. Natural gas took a share of just 25 percent, with the remainder being contributed by the country’s sole wind farm to date. In addition, the expansion plans for the next ten years are ambitious. State-owned power utility GSE (Georgian State Electrosystem JSC) wants to more than double generation capacity to 9.8 gigawatts by 2033. This would put all the requirements in place to export green energy.
Due to Georgia’s favourable geological constellation, the focus will lie on hydropower, as 87 percent of the country covered by mountains. Caucasian glaciers already feed the huge power plant fleet, which is projected to grow by nearly another 4 GW. Furthermore, GSE plans to install 0.9 GW and 0.2 GW in new wind and solar capacity.
These plans also seem to appeal to investors. The latest auction organised by the Georgian Economics Ministry that invited bids for 300 megawatts (MW) of renewable capacity in March 2023 was significantly oversubscribed. A total of 78 bids for more than 900 MW were placed. In the end, the government awarded contracts for 24 projects, including 150 MW of hydropower capacity, with wind and solar each winding up with 70 MW.
Building hydroelectric power stations and wind turbines alone will not suffice. Infrastructure is also in need of a massive build-out in order to handle the rise in energy volumes. The EU has been supporting the Black Sea nation since 2017 under the Energy Network Improvement Programme (ENIP) (Link in German). A total of 234 million euros had been dedicated to infrastructure projects by 2022.
The second project phase envisages an additional 270 million through to 2026 – for 561 kilometres of new transmission lines and the construction and expansion of five substations. KfW and the European Bank for Reconstruction and Development (EBRD) are co-financing the programme. The funds are intended to help Georgia strengthen its national network to facilitate integration of renewables and increase security of supply. A further objective is to build transmission capacity for electricity exchange with neighbouring countries.
Direct neighbours such as Turkey, Armenia and Azerbaijan are among the potential beneficiaries, but the EU also seeks to import electricity from Georgia – via a 1,195-kilometre high-voltage cable connecting the coastal town of Anaklia in west Georgia to Constanta in the southeast of Romania. December 2022 saw European Commission President Ursula von der Leyen attend a meeting with government officials from both countries as well as from Azerbaijan and Hungary, at which a letter of intent on the development of the Black Sea submarine cable was signed.
This project could bring Georgia great benefits. It could transform the country into an electricity hub and integrate it in the EU internal electricity market. Finally, the Black Sea electric cable could also help bring electricity to our neighbours in Moldova and the Western Balkans, and of course to Ukraine. Ursula von der Leyen, President of the European Commission
Back in April 2022, Italian consultancy CESI (Centro Elettrotecnico Sperimentale Italiano) was commissioned to prepare a feasibility study. “We have already selected the route and the location of the converter stations. In the future, within the framework of the project, environmental and social impact assessment and geophysical and geotechnical studies of the Black Sea bottom will also be carried out.” Stefano Malgarotti, CESI Engineering Consulting Director
The new interconnector would be much longer than the world’s longest submarine cable to date. At present, the record is held by the 724-kilometre North Sea Link between Denmark and the United Kingdom. The cost of the Georgia transmission line to the tune of an estimated 2.3 billion euros would make it much more expensive to boot. These funds could also come from EU coffers. According to the Council of Europe, up to 17 billion euros could be obtained for the six partner countries including Georgia within the framework of the Eastern Partnership (EaP).
In addition to financing, the link’s proposed routing is also cause for some head -scratching. It would run less than 150 kilometres from the southern cape of the Crimean Peninsula that is currently occupied by Russia. US-based Middle East Institute (Wash.) recently issued a cautionary statement about risks to data cables running under the Black Sea. According to the warning, increased naval operations during the war in Ukraine are elevating the danger of accidents, and attacks targeting critical infrastructure are conceivable. These findings also apply to the planned submarine cable.
One alternative transit route would go through Turkey. However, Georgia still belongs to the Russian electricity alliance, whereas Turkey is a member of the European one. The two interconnected power systems have different voltages. This means that the electricity would have to be fed through substations. The border town of Akhalzikhe already has such a station. However, infrastructure would have to be expanded significantly to accommodate bigger electricity volumes.
Green electricity could also be converted to green hydrogen directly on site. At the end of June 2023, the German Ministry pledged 23 million euros to Georgia (Link in German) for the construction of an electrolyser with a hydrogen storage facility and wind turbines. According to the ministry, this is the first investment project dedicated to green hydrogen in the region. In theory, excess hydrogen could be exported – in tanks instead of via pipelines.
It would be speculative to claim one knew how much electricity would flow into Europe in the end. The oversubscribed auction was a positive signal, but hydropower production has recently been on the decline. This is because the glaciers in the Caucasus which feed the power plants are melting due to global warming. Sedimentation is already being washed into the water reservoirs, curtailing wind turbine operation.
By contrast, the investments should really have a positive impact on Georgia’s economy. The funds could help the country become less dependent on Russian energy imports. Furthermore, a stable market economy is a prerequisite for the nation acquiring the status of EU accession candidate. This means that both the EU and Germany are paying into this proposition as well.