📋 Tender Overview
Project Name
Energy Storage and Green Hydrogen Development Project
Project Number
54448-001
Country / Economy
Georgia
Project Status
Active
Project Type / Modality of Assistance
Loan
Source of Funding / Amount
Loan 4590-GEO: Energy Storage and Green Hydrogen Sector Development Program
Ordinary capital resources US$ 104.00 million
Sector / Subsector
Energy / Electricity transmission and distribution - Energy sector development and institutional reform
Gender
Some gender elements
Description
The proposed project aims to improve energy security, reduce Georgia's reliance on grid stability support from neighboring countries, and pave the way for greater private sector participation. The proposed project will enhance electricity grid's ability to integrate higher level of renewable energy by adding a 200MW/200MWh Battery Enabled Storage System (BESS) to its transmission network at the Ksani Substation near Tbilisi. The proposed project will also introduce improvements in the legal and regulatory framework necessary for acknowledgement and inclusion of storage technologies like BESS and green hydrogen into the network. This will facilitate private sector investments in renewable energy penetration as well as the development of larger BESS facilities and green hydrogen. The proposed project supports the government's goals of reforming the energy sector, emerging as a regional platform for trading clean energy, and improving the efficiency of the transmission network, as reflected in Asian Development Bank's (ADB) country partnership strategy for Georgia, 20242028
Project Rationale and Linkage to Country/Regional Strategy
Georgia's V-shaped recovery. Georgia's sound policy response to the coronavirus disease (COVID-19) crisis generated a robust economic recovery in 2021. Gross domestic product (GDP) rebounded sharply from a contraction of 6.8% in 2020 to 10.4% growth in 2021. Initial concerns about potential spillovers from the Russian invasion of Ukraine have not materialized and did not alter the economic outlook for 2022. Instead, economic performance is expected to remain robust on account of an increased influx of migrants from the Russian Federation and strong growth in remittances and exports. Improved external inflows are expected to narrow the current account deficit to 8.2% of GDP in 2022, compared with 9.8% in 2021. Economic output is projected to grow by 6% in 2022, signaling economic resilience and prudent macroeconomic management.
Sound macroeconomic management and positive outlook. Countercyclical fiscal expenditure to mitigate the impact of the COVID-19 pandemic in 2020 resulted in a breach of fiscal rule for the fiscal deficit and public debt. In compliance with the Economic Liberty Act (2011), the authorities adopted a credible fiscal adjustment plan to ensure compliance with the fiscal rule by 2023. The public debt to GDP ratio was rapidly brought below the 60% threshold, and is expected to reach 45.3% in 2022.
