update on realization of gemm 2015: georgian electricity market model 2015
TRANSCRIPT
Update on Realization of
GEMM 2015:
Georgian Electricity Market
Model 2015
Stephen M. Haykin
Mission Director
USAID Georgia
March 27, 2014
USAID’s HYDRO POWER AND ENERGY PLANNING PROJECT
(HPEP)
Main Goals:
• Accomplishment of tasks outlined in the GEMM 2015
• Support developers in receiving financing of new run-of-river HPP projects through non-recourse (project-based) loans
• Facilitate cross-border, competitive clean energy trading
Main Obstacles:
– Insufficient legal and regulatory framework in Georgia for a competitive electricity market
– Low capacity in electricity sector institutions to plan and implement a competitive electricity market
– Lack of tools to operate a competitive electricity market
WHAT ARE GEMM 2015 AND THE ETM
• Georgian Electricity Market Model (GEMM) 2015 and Electricity
Trading Mechanism (ETM) were developed with USAID support in
2012.
• GEMM 2015 will create an enabling environment for development of
Georgian hydro resources and at the same time protect domestic
customers.
• The ETM is an hourly balancing and day ahead process that will
enable electricity trading on the regional competitive power market.
• GEMM 2015 and the ETM are in line with EU competitive market
principles, and will be harmonized with the Turkish power market.
• GEMM 2015 will greatly enhance the regulatory support framework.
NEED FOR A FRAMEWORK FOR CB ELECTRICITY TRADING
• Lending institutions require specificity on the legal,
regulatory and contractual frameworks.
• Laws and regulation must be clear on rights and
responsibilities of parties during the operation of the
new HPPs.
• Contracts for energy and services must specify the
rights and liabilities of all parties.
• Parties assuming liabilities must be creditworthy and
capable of operating the cross border markets.
JANUARY 2012 PUBLIC SIGNING OF PROGRAM
IMPLEMENTATION LETTER FOR GEMM 2015
• USAID and the
Government of
Georgia are
committed to the
development of
GEMM 2015
KEY MILESTONES
Modifications
to E&G Law
Licenses for
New Activities
Grid Code
Market
Regulations
Infrastructure
and IT
Development
Balancing
Market
Competitive
Commercial
Trading
Balancing
and Settlement
Rules
2013 2014 2015
MAIN TASKS OF GEMM 2015 AND ETM IMPLEMENTATION ARE:
• Design and planning of the Electricity Trading Mechanism
• Human and Institutional Capacity Building
• Development of Primary and Secondary Legislation
• Development of Electricity Market Regulations, licensing, tariffs, and
guarantee of origin
• Contractual framework development (domestic and cross border) and
cross-border harmonization of legislation and regulations with Turkey
HUMAN & INSTITUTIONAL CAPACITY
KEY ACCOMPLISHMENTS
• The Electricity and Gas Law was amended in
December 2013 providing for daily planning,
increased responsibility for GNERC and other
aspects of GEMM 2015
• Initial parts of the Uniform System of Accounts will be
adopted by GNERC in June 2014 and full
implementation is expected January 1, 2015
• Day Ahead Planning by the market participants has
commenced and software models are developed
• GNERC has been re-organized to better manage the
electricity sector
• The Transmission Grid Code is in final draft and is
expected to be adopted by May 1, 2014
EU Legislation HPEP Technical Assistance
Separation of production and supply
from networks
Tariff methodology for networks
Regulatory accounting for each license type
Third party access rules
Recognition energy policy’s strategic
importance
Development of white papers on energy policy and energy
strategy
Development of an energy planning process within the MoE
Facilitation of increased cross border
energy trade
Capacity allocation rules
Congestion management rules
Development of a price zone for Georgia on Turkey’s DAM
More efficient national regulators Re-org. of GNERC
Increased role and responsibilities of GNERC via E&G Law
amendments
Promotion of cross-border collaboration
and investment
CBETA
Interconnection Operation Agreement
Harmonization meetings between GNERC and EMRA
Electricity Supply Agreement template
Greater Transparency Regulatory accounting
Regulatory inspection
Website development for TSO and MO
Stakeholder involvement in decision making
Enforcement of national standards to
support regional market
Market surveillance and monitoring procedures
Grid Codes
GEMM 2015 IS CONSISTENT WITH EU REQUIREMENTS
• GEMM 2015 facilitates Third Party Access to
infrastructure to support market competition
• GEMM 2015 implements independent regulatory
authority
• GEMM 2015 implements independent MO and TSO
• GEMM 2015 “fills” the gap between existing Georgian
electricity market regulations and EU directives
• GEMM 2015 is fully compliant with the ‘second
package’ of the EU energy aqcuis
NEXT STEPS
• Hourly Balancing and Settlements
• Price Zone on the Turkish PX
• Day Ahead Market for Georgia
• Cost and Incentive-based network tariffs
• Further Transparent and predictable market for Non-
Recourse financing and an electricity corridor through
Georgia
DRAFT USG GUIDANCE ON LARGE HYDROELECTRIC DAMS
• Consolidated Appropriations Act of 2014 Statement
• Secretary of Treasury Instruction to U.S. Directors in
Multilateral Development Banks
• Large Dams are 15 meters and higher, or dams
between 5-15 meters and more than 3 million m3 of
water reservoir
• Guidance for proper due diligence, including public
consultations, environmental and social impact
assessments with proper mitigation
• USAID places very high value on public consultations
and social responsibility for all infrastructure projects
Contacts:
Sukru Bogut, COR, Senior Energy Advisor, USAID
Michael Jake Delphia, Chief of Party, USAID/HPEP