Namakhvani’s HPP will allow Georgia to reduce its dependence on Russia

Social and environmental concerns about a hydropower plant in Namakhvani in Georgia are valid, but broader economic and geopolitical considerations are also at play.

In 2019, the Georgian government signed a 15-year agreement with the ENKA Renewables consortium to build and manage the Namakhvani hydropower plant in the west of the country.

Providing foreign direct investment of US $ 800 million, this 433 MW power plant is expected to revolutionize Georgia’s power system, reduce its energy dependence and help the country meet its commitments under the Paris Agreement.

Electricity consumption in Georgia has been on an upward trajectory over the past decade and levels are expected to reach 20 billion kWh by 2030, nearly double the country’s current consumption.

Hydropower plays an indispensable role in Georgia’s electricity supply, accounting for 72% of the country’s electricity. Deprived of fossil fuel resources and rich in mountains and rivers, hydropower plants have become a natural solution to meeting the country’s demand for electricity. There are over 80 large and mini power plants across the country.

As with other hydropower plants built in Georgia, Namakhvani has raised concerns among local people and environmental activists. Although hydropower is considered a renewable energy source, hydropower plants can have a direct and indirect impact on local populations and aquatic and wildlife ecosystems.

Local Georgian associates of the NGO Green Alternative led protests against the project, arguing that proper environmental and social impact assessments had not been carried out before the government announced the deal.

Wider considerations

These social and environmental concerns are valid and should be addressed by the Georgian government. But there are also broader economic and geopolitical considerations at play.

First, the majority of the country’s energy is produced at the Enguri hydropower plant in Abkhazia – an internationally recognized region of Georgia but over which Tbilisi does not currently exercise sovereignty. Tbilisi struck a deal with the Russian-backed breakaway region to receive 60% of the electricity produced by the plant, but this situation prevented Enguri from reaching its full potential.

Georgia is also affected by the seasonality of its hydropower plants. While 52 percent of its electricity is produced by power plants year round, the country depends on seasonal power plants for the remaining 20 percent. This dynamic has led to an unprecedented increase in electricity imports from abroad, mainly from Russia and Azerbaijan. In fact, Georgia’s electricity imports hit a four-year high in February-March 2021 – accounting for half of its total imports.

Protesters against the Namakhvani project called on the government to revoke the permit granted to the ENKA Renewables consortium on the grounds that legal procedures were not followed adequately. However, the government insisted the bidding process was fair and transparent, with the consortium outbidding 25 other companies for the rights to build, own and operate the plant.

According to the International Energy Agency, Georgia has made solid progress in improving transparency in its electricity sector. Georgia became a contracting party to the Energy Community Treaty in 2017 and has since stepped up efforts to implement legal and institutional reforms aimed at aligning its energy sector with EU regulations for electricity and gas markets.

A step towards energy independence

The Namakhvani project is a step towards energy security and Georgia’s independence. Faced with growing demand for energy, exacerbated by the seasonality of hydropower plants, Georgia has been forced to increase its imports of electricity from abroad, especially from Russia. Namakhvani is expected to supply 12 percent of domestic demand, which will go some way to reducing this dependence on Russia while generating new sources of economic income.

Namakhvani can also strengthen Georgia’s position as an energy exporter. Neighboring Armenia has long been a prime energy corridor in the region, but its conflict with Turkey and Azerbaijan has left the country hostage to Russia. Georgia has the potential to serve as an alternative energy transit country, connecting Caspian oil and gas resources to European markets.

By strengthening its national production capacity in the electricity sector, Georgia can also become an exporter to neighboring countries, thus contributing to the regional integration of energy markets.

Russia believes that the countries of the region should remain within its sphere of influence and struggle to tolerate their economic and democratic development. Namakhvani is crucial in realigning some of this power imbalance while thwarting Russia’s ambitions for domination, but the social and environmental concerns around the project must be addressed first.

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