Will clean energy pollute Georgian prosperity?
02 October, 2014
Will clean energy pollute Georgian prosperity?
Georgia must tailor its energy policy to the refreshed international focus on cleaner energy policy. This trend took a new and bigger start at the recent UN Summit gathering leaders of 125 countries this past week to find a solution on the impeding climate change puzzle. Leading businesses have approved the Summit initiative to reduce carbon emissions and even leading gas and oil companies made their pledges to sell off their fossil energy assets and reinvest the raised money in
clean renewable energy resources.


Georgia as a country of highlands offering ample hydro resources for Hydro Power Plant [HPP] construction sites hopes to attract more investments in hydro as well as in alternative energy sources based on wind and solar. The points is that developed European and American countries like Norway, Switzerland, Brazil famous for rich hydro potential have already utilized their potential by almost 100 percent while Georgian potential is largely untouched.
According to Revaz Arveladze, President of the Georgian Energy Academy, hypothetically the hydro potential of Georgia is estimated at 200 billion kilowatt/hour, but just 80 billion kilowatt/hour is technically available and only 40-45 billion is economically feasible. Officially, only 20 percent of this potential is used at the moment, which makes the hydro sector attractive to new investments.
The potential wind resources account for 4 trillion kilowatt/hour exceeding the hydro potential by 100 times. But only 3-4 billion kilowatt/hour is technically available at the moment, which is quite a significant volume if we take into account that Georgia consumes just 8 billion kilowatt/hour per year. And if we utilize even one billion out of wind energy it will be quite a relief.
On the other hand, Georgia is an important geopolitical chain in international energy projects like Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum [largely known as Shah-Deniz] pipelines transporting oil and gas to European markets bypassing Russia. Georgia as a transit country has big expectations from both geopolitical and economic points of view.
The Shah Deniz Stage 2 project is set to bring gas directly from Azerbaijan to Europe starting 2018 tentatively for the first time, opening up the Southern Gas Corridor. This corridor is projected to neutralize the 35-year gas supply monopoly of Russian Gazprom to Europe particularly to its South-Eastern countries and enhance the geopolitical importance of transit countries.
On the economic side, the Georgian government expects 400-700 USD million investments in the country from implementation of the Shah-Deniz second phase that will add further 16 billion cubic meters of gas (bcm) per year to approximately 6-7 bcm of the currently operational first phase. Europe has already contracted 10 bcm per year through 25-year contracts and Turkey takes 6 bcm. The project also entails the construction of the Trans Anatolian Gas Pipeline (TANAP) across Turkey and construction of the Trans Adriatic Pipeline (TAP) across Greece, Albania and into Italy.
The contract on transit also allows Georgia to buy 5 percent of gas transported through the pipeline at a preferential price. According to energy sector researchers, if the pipeline will be loaded with the expected 16 bcm, then Georgia will get a cheap 800 million cubic meters of gas. If the first stage capacity varying around 6 bcm is also maintained, in total Georgia may take 1.1 bcm of cheap gas. Implementation of Shah-Deniz 2 requires around 45-48 billion USD and attracting that much money has already staggered the project launch. Now the shift in focus on cleaner energy may complicate the situation even further and put the Shah-Deniz 2 at risk. But Georgian analysts expect no problems to this end. They believe that carbon-based gas and oil energy will be irreplaceable for the near 20-30 years as long as solar and wind are not stable sources: they need back-ups that are normally balanced by hydro and gas power stations while the hydro potential is almost 100 percent utilized in the developed world. Although Georgia has larger room for hydro plants they frequently face fundamental environmental problems.
Liana Jervalidze, an energy analyst, believes that renewable energy can be an alternative to gas and oil only of there is a breakthrough in technology that allows the storage of solar and wind generated energy. Therefore she believes that the Shah-deniz project will not lose importance and Georgian geopolitical position remains as important as ever. Jervalidze indicates the increasing risks of forest devastation in Georgia that poses problems to hydro resources.
“Hydro power is very important to Georgian energy security for the country cannot depend on gas and oil import completely, but hydro includes certain risks. The recent research of Deloitte sends alarming signals that the amount of forest cut down in Georgia is five-times higher than was officially reported. The point is that people in highlands cannot afford gas for heating and still rely on firewood. If forests are devastated, the hydro resources will also shrink,” She elaborated.
Jervalidze believes that Georgia must keep its focus on gas and oil exploration works too as the EU Association Membership unfolds new prospects for the country to become an outer gate of the EU energy community from the Black Sea side. Georgian territory especially its Black Sea shelf is believed to include significant gas and oil deposits. Based on the latest research of American-based Anadarko [aiming to explore oil deposits in the Black Sea territory of Georgia] carried out in the late 1990s, the estimated prognosis available in Georgia equals 2.4 billion tons of oil and 180 billion cubic meters of gas. About 1.2 billion tons of oil is commercially available out of that figure.

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