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Georgia Hydropower Investment Promotion Project

2010-2012 || U.S. Agency for International Development

Abstract

Georgia is blessed with enviable water resources that are well suited to hydropower generation. Understandably, the Government of Georgia’s energy policy is to leverage the electricity generating potential its many rivers offer to increase energy security, and to enhance electricity exports into neighboring and regional markets. To support these objectives, and building on its previous work in the local energy sector, the United States Agency for International Development (USAID) created the 3-year Hydropower Investment Promotion Project (HIPP) to provide technical assistance to the Government of Georgia. As HIPP promotes private investment in small and medium sized run-of-river type hydropower plants that require insignificant impoundment of water, USAID has been able to help Georgia meet its energy security goals with minimal social and environmental impacts.

By October 2012, the Deloitte team had identified and enabled the development of 15 new hydroplant projects, with a combined capacity of over 500 MW, and worth an estimated $800 million in capital investment. In addition to surpassing the 400 MW target USAID set for the project, Deloitte has also exceeded its goals on five other key metrics. In recognition of these achievements, as part of a 2012 project review, USAID assessed Deloitte’s performance as “exceptional” in all areas, including our ability to effectively manage a range of complicated relationships with multiple governments, electricity sector entities, developers, investors and other energy sector stakeholders.      

The Challenge

USAID created HIPP to work with local and international partners to secure investment in Georgia’s renewable energy resources. The project’s objectives include:  

  • Producing detailed studies to facilitate investment in clean energy deals developed in conjunction with the Government of Georgia, donors, and/or international financial institutions;
  • Deepening the promotional, technical, and legal capacity of the Government to reach, engage, and support private hydro investors;
  • Developing investment-grade marketing collateral and implementing an effective and broad investor and industry outreach plan;
  • Resolving implementation hurdles for investors through risk sharing, innovative financing, and upfront analytical work;
  • Generating investor returns while simultaneously conserving the environment and reducing climate impact.

How We Helped

High Quality HIPP Projects:
HIPP’s engineering team has analyzed over 150 potential run-of-river sites across Georgia, ranging from 5 MW to 120 MW in generating capacity. HIPP has carried out specific analysis of hydropower projects on 8 river basins and, to date, has published dozens of high quality pre-feasibility and specific project assessment studies. Although run-of-river plants do not require large dams or water storage, HIPP’s prefeasibility studies still work to promote increased environmental awareness by analyzing environmental receptors around each site in a level of detail that goes beyond industry norms.

Civil Society Involvement:  
Through HIPP, Deloitte is committed to developing hydro projects in a way that is socially responsible. To this end, the project holds public awareness workshops (PAW) to encourage public involvement in the decision making process for selecting, siting and designing new plant.  By mid-2012, HIPP had conducted 6 PAWs covering 25 hydropower sites.  The most recent PAW, dedicated to the Upper-Enguri River Basin, was held in Ushguli, the highest inhabited placed in Europe. By building awareness of particular environmental and social issues related to new hydro plants in this way, HIPP has found that local residents often wish to take part in the planning and implementation process for proposed new units.  The Deloitte team has made significant changes during the project planning phase as a result of local community interest and suggestions.  

Solution

USAID’s HIPP is also helping the Government of Georgia to design and develop an Electricity Trading Mechanism, to provide transmission paths, trading tools and risk mitigation options to clean energy project developers so they can sell their electricity into regional electricity markets. Under this component of the project, which will establish the rule of law within the power sector, Deloitte is building the capacity of the Regulator, the Market Operator and the Transmission System Operator, while simultaneously helping Georgia to harmonize with EU power markets.

As used in this document, “Deloitte” means Deloitte Consulting LLP, which provides strategy, operations, technology, and human capital consulting services, Deloitte Financial Advisory Services LLP, which provides financial advisory services, and Deloitte & Touche LLP which provides governance and risk oversight and reporting advisory services. These entities are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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