Shuakhevi Hydro Power Plant
The Shuakhevi Hydro Power Plant is a run-of-the-river plant in Adjara, Georgia. Construction on the project began in 2013 and was completed in April 2021. It has an installed capacity of with expected electricity output of. The plant has the capacity for diurnal storage in two reservoirs, allowing Shuakhevi HPP to store water for up to 12 hours and sell electricity at peak demand times. Three main tunnels were constructed on the Shuakhevi project; the 5.8 km Chirukhistsqali to Skhalta transfer tunnel, the Skhalta to Didachara transfer tunnel and the 17.8 km Shuakhevi headrace and pressure tunnel. It is estimated that the project will cost US$417 million. For the purposes of developing, constructing and operating the Shuakhevi HPP, ADB and EBRD extended a loan to Adjaristsqali Georgia LLC of up to $86.5 million and IFC a loan of 80m USD. Adjaristsqali Georgia LLC is owned by the Norwegian Clean Energy Invest AS, India's Tata Power and IFC Infraventures, an investment fund created by the International Finance Corporation. Alstom was chosen to supply the electromechanical equipment for the project.
The importance of Shuakhevi HPP for Georgia
Electricity demand in Georgia has been on the rise since 2009 and investment in new generation capacity is lagging behind. Georgia has about 40 billion kwt/h of potential electricity and only 18-20% is utilized today. The Shuakhevi HPP is a part of a large Georgian strategy to develop its hydropower potential. It will enable Georgia to use more of its energy resources to meet electricity demand during the winter months of December, January and February. Most of the energy will be exported to Turkey. The positive aspects of the investment according to EBRD include strengthening Georgia’s private energy sector, demonstrating new financing methods and setting standards for corporate governance and business conduct. It will also generate employment opportunities for local population. More than 700 Georgians were working in the project in 2016, most of them from the local communities. Almost 500 locals were trained in a school especially designed to build required technical skills. The project company has also funded an extensive CSR program in the valley with significant infrastructure upgrades for the local communities, support for local businesses etc. The project has also enabled the construction of a new 220 kV transmission line from Akhalsikhe to Batumi, significantly strengthening the grid connection in the whole of South Western Georgia.Controversial issues
Project justification
The contract for the Shuakhevi HPP project is the only contract for a hydropower project in Georgia where articles related to obligations of the state and the company on electricity tariffs and economic profitability are kept confidential. It is hard to say how the project will benefit Georgia, since it is not clear how the money will end up in the state budget.The project has responsibility to deliver electricity for three winter months in Georgia for a fixed tariff, contributing to reducing the need to import electricity and reducing the carbon emissions from electricity production in Georgia.
The project will pay 1% of invested amount in property taxes to the local municipality where the infrastructure is located, which is estimated to significantly increase the budgets in the municipalities hosting the infrastructure.