Comparative Analysis of the Developed Concepts for the New Electricity Market in Georgia

Market participants and institutions include generators, eligible consumers, traders, suppliers, including the universal supplier, wholesale public service entity, balancing service provider, balancing responsible party, transmission system operator, distribution system operator, and market operator. The Ministry of Economy and Sustainable Development of Georgia (MoESD) Concept defines the roles assigned to the MoESD, which should be extended according to the draft Law on Energy (December 2018). The MoESD is responsible for establishing and operating the Day-Ahead Market (DAM) and Intraday Market (IDM) of electricity markets in line with the Law and the Electricity Market Rules. Additionally, the MoESD is responsible for registering and keeping records on electricity market participants, publishing and exchanging information required for the unhindered organization of the Market and performance of electricity activities, receiving orders from balancing responsible parties for DAM and IDM, and maintaining and updating a trading calendar. The Electricity Trade Mechanism proposed in the USAID Energy Program White Paper and the MoESD Concept are identical and include contractual trade, Day-Ahead Market (DAM), Intraday Market (IDM), and Balancing Market (BM). The USAID Energy Program White Paper contains some details of the tools for the implementation of trade segments. The Nord Pool Concept, on the other hand, proposes a different Electricity Trade Mechanism, which includes a regulated segment and bilateral physical contracts at free negotiated prices. The regulated segment in the Nord Pool Concept involves the reorganization of the existing structure into a form of market to allow the co-existence of the deregulated and regulated sectors. As an interim measure, state-owned generation will be used to serve non-eligible customers through a defined group of plants to the regulated segment. Electricity provided to non-eligible customers will be priced at the capped tariffs set by the Georgian National Energy and Water Supply Regulatory Commission (GNERC). The concept of Partial Pool is proposed as a transparent mechanism for allocating generation to wholesale buyers. Prices cannot be higher than the capped tariffs set by GNERC, and the optimal structure of Partial Pool must be determined based on simulations and appropriate rules should be created. The MoESD Concept and the USAID Energy Program White Paper propose the elimination of the regulated segment and the use of bilateral physical contracts for any period, including domestic market, export, and import. The USAID Energy Program White Paper contains some details of the tools for the implementation of trade segments, including the use of a Contract for Difference (CfD) and a Power Purchase Agreement (PPA). The Georgian National Energy and Water Supply Regulatory Commission (GNERC) plays a crucial role in the Electricity Market, as it sets the capped tariffs for electricity provided to non-eligible customers in the regulated segment. The GNERC also has the authority to revise the Market Rules and propose improvement measures. The Ministry of Economy and Sustainable Development of Georgia (MoESD) has approved the Concept Design for the Georgian Electricity Market, which includes the Electricity Trade Mechanism proposed by the USAID Energy Program White Paper. The MoESD Concept defines the roles assigned to the MoESD, which should be extended according to the draft Law on Energy (December 2018). The MoESD is responsible for establishing and operating the Day-Ahead Market (DAM) and Intraday Market (IDM) of electricity markets in line with the Law and the Electricity Market Rules. The USAID Energy Program has provided numerous recommendations for a smooth transition to the target market model and has identified a list of transitional issues that remain challenging in need of a solution. The USAID Energy Program has published a White Paper on Market Concept Design of Georgia, which outlines the proposed Electricity Trade Mechanism and the roles assigned to the MoESD. The Nord Pool Concept, on the other hand, proposes a different Electricity Trade Mechanism, which includes a regulated segment and bilateral physical contracts at free negotiated prices. The Nord Pool Concept involves the reorganization of the existing structure into a form of market to allow the co-existence of the deregulated and regulated sectors. As an interim measure, state-owned generation will be used to serve non-eligible customers through a defined group of plants to the regulated segment. Electricity provided to non-eligible customers will be priced at the capped tariffs set by the GNERC. The Electricity Trade Mechanism proposed in the USAID Energy Program White Paper and the MoESD Concept are identical and include contractual trade, Day-Ahead Market