The Energy Sector of Georgia
Renewable Energy in Georgia: Unlocking the Country’s Potential
The energy sector of Georgia, located at the crossroads between Europe and Asia, is emerging as a regional energy hub. With over 70% of Georgia’s electricity generated from hydroelectric power and an increasing share from solar and wind, the country holds significant potential to become a leader in sustainable energy. These resources position Georgia to play a key role in the region’s energy future, offering both challenges and opportunities for growth.
The Importance of Renewable Energy in Georgia
For Georgia, future investments in renewable energy, energy storage solutions, and efficient infrastructure are crucial to enhancing energy security. As the country continues to develop, its renewable energy potential—especially from hydroelectric, solar, and wind—is a major factor in strengthening its energy independence.
Since the 1990s, the energy sector of Georgia has undergone significant changes. It has shifted from energy shortages to seasonal energy exports. Despite this progress, Georgia remains highly dependent on hydroelectric power, especially during winter months. During this time, when water flows are low, the country must still import energy from neighboring countries such as Azerbaijan and Russia.
Energy Security and Government Policy
The goal of Georgia’s energy policy is to strengthen energy security and ensure a stable, diverse supply of energy products. This includes maintaining sufficient quantities and quality of energy at reasonable prices. To achieve this, the government focuses on attracting private investments, expanding hydroelectric capacity, improving infrastructure efficiency, and reducing dependence on fossil fuels.
However, challenges remain. Georgia must continue to improve internal energy efficiency and fully tap into its renewable potential. By doing so, it can solidify its position as a key player in energy trade across the Caucasus and Black Sea regions.
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The full version of our Georgia Energy Report 2025 includes:
The energy context of Georgia – sector evolution and energy security goals
Renewable sources – hydroelectric, wind, solar, and their development potential
Investments and future prospects – government policies, the role of the GEDF, and market opportunities
The Energy Sector of Georgia: Key Opportunities and Challenges
Renewable Energy Potential: Wind and Solar
The energy sector of Georgia holds considerable potential in renewable energy. The country has about 25,000 rivers and vast hydroelectric resources. Additionally, the country enjoys favorable conditions for wind and solar energy production. Yet, according to the International Energy Agency, only about 20% of this potential is currently utilized.
Wind Energy: A Complement to Hydroelectric Power
Wind energy has great potential in Georgia, especially during the winter months when hydroelectric power production decreases. Current projections suggest that wind could supply up to 10% of Georgia’s total electricity generation by 2030. Furthermore, offshore wind projects in the Black Sea could offer even more potential due to higher wind speeds, enabling greater and more efficient generation.
Solar Energy: Growth Prospects in Eastern Georgia
Solar energy is another promising frontier for Georgia. Eastern Georgia, which enjoys around 250 sunny days per year, is ideal for solar power generation. Investor interest in solar energy is growing rapidly. However, the country faces challenges such as limited grid capacity and regulatory hurdles. Expanding transmission infrastructure, improving balancing mechanisms, and updating connection limits could position Georgia as a regional leader in solar energy development.
The Dominance of Hydroelectric Power in the Energy Sector of Georgia
The government has taken significant steps to attract investments and liberalize the energy market in line with EU legislation. By opening the sector to competition, Georgia aims to moda
Hydroelectric Power: The Backbone of Georgia’s Energy Supply
Hydroelectric power remains the dominant force in the energy sector of Georgia. It accounts for the majority of the country’s renewable energy production. Hydroelectric plants not only provide clean electricity but also contribute to system stability through the flexibility of their reservoirs. Additionally, they help with water supply, flood control, and irrigation.
Despite the current reliance on hydroelectric power, only about one-fifth of the country’s total hydroelectric potential is being fully exploited. Foreign investments have already transformed the sector, attracting billions of dollars. However, large-scale hydroelectric projects often face public opposition due to environmental and social concerns. This highlights the importance of careful planning and community engagement.
Hydroelectric Potential: Realizing the Full Capacity
According to the Norwegian Water Resources and Energy Directorate (NVE), Georgia’s theoretical hydroelectric potential could meet, or even exceed, the national electricity demand. Most of this potential lies in the western mountainous regions, which are rich in rivers and elevation differences. Unlocking this potential requires addressing environmental concerns, social acceptability, geological suitability, and technical feasibility.
By 2034, Georgia’s installed electricity capacity is expected to reach 10,336 MW, with hydroelectric power still accounting for around 70% of total capacity. This infrastructure will help reduce Georgia’s reliance on energy imports and fossil fuels.
ernize its infrastructure, diversify sources, and reduce dependence on imports.
The Georgian Energy Development Fund (GEDF), a state-owned joint-stock company managed by the Ministry of Economy and Sustainable Development, plays a central role in sector development. Its mission reflects both economic and strategic priorities: enhancing Georgia’s natural resources, securing financing, and ensuring proper project implementation. In essence, the GEDF is more than a development fund – it is the government’s strategic tool to unlock renewable potential, attract global investments, and align the energy sector with long-term sustainability and climate goals.
A key instrument is the Contract for Differences (CFD), which guarantees developers a fixed price for the electricity sold for a period of 15 years. This mechanism ensures stability and predictability for investors, accelerating the addition of new renewable capacity. It is part of a broader strategy to unlock Georgia’s immense potential, which goes far beyond hydroelectric power.
Investments in the Energy Sector of Georgia: Open Doors for Growth
Liberalizing the Energy Market
The government of Georgia has taken significant steps to attract investments and liberalize the energy market, in line with EU regulations. By opening the sector to competition, Georgia aims to modernize its energy infrastructure, diversify energy sources, and reduce its dependence on imported energy.
The Georgian Energy Development Fund (GEDF), a state-owned joint-stock company managed by the Ministry of Economy and Sustainable Development, plays a central role in sector development. The GEDF’s mission focuses on promoting Georgia’s natural resources, securing financing, and ensuring proper implementation of energy projects. The fund is not only a development tool but also a strategic vehicle for unlocking the country’s renewable potential and aligning its energy sector with long-term sustainability goals.
Support for Renewable Energy Projects
A key tool for development is the Contract for Differences (CFD). This mechanism guarantees developers a fixed price for the electricity they sell for 15 years, providing stability and predictability for investors. By offering such incentives, the CFD accelerates the addition of new renewable energy capacity, helping Georgia unlock its full energy potential.
Conclusion: The Future of the Energy Sector of Georgia
Georgia’s abundant hydroelectric resources and growing renewable energy sources position the country as a key player in regional energy markets. By modernizing its transmission networks, integrating renewable energy sources, and attracting strategic investments, Georgia can ensure a stable energy supply and expand its role in regional energy trade.
With careful planning, community engagement, and support from international partners, Georgia is well on its way to achieving energy security, sustainability, and long-term economic growth. International partners can help by providing technical assistance, funding, and best practices in environmental protection and public participation. Strategic investments, coupled with regional cooperation and electricity exports, will strengthen Georgia’s role as an energy hub in the Caucasus and ensure a reliable energy supply.
This article was written by Mariam Modebadze, ITAGEO Analyst.
The ITAGEO Chamber of Commerce
A Reference Point for Economic Relations Between Italy and Georgia
In recent years, Georgia has become a true example of modernization in the Caucasus. Through the DCFTA (Deep and Comprehensive Free Trade Area), Georgia has improved the quality of its exports and attracted foreign investments, while legislative and institutional reforms have made the country more competitive internationally. These advancements present an opportunity for Italian businesses, especially in sectors such as infrastructure, renewable energy, and agribusiness, among others.
The Italy-Georgia Chamber of Commerce is committed to supporting and facilitating these opportunities, aiding the expansion of Italian businesses in the Georgian market and vice versa. The synergies created by access to the European market and Italian investments in Georgia serve as a catalyst for both countries’ economic and cultural growth.