1. GEORGIAN ELECTRICITY MARKET OPERATOR
August, 2017
astana

2. BRIEF HISTORY esco’s Role
ESCO (Electricity System Commercial Operator) was founded on August 7, In August, 2011, the enterprise has been transformed into the JSC with the 100% owned by the state. From 2012, the Partnership Fund has been the 100% shareholder of this company. The Ministry of Energy of Georgia has been managing ESCO throughout its existence.
esco’s Role
Currently, ESCO is one of the key energy companies of Georgia. Its duties and functions are regulated by the Law of Georgia on Electricity and Natural Gas and the Electricity (Capacity) Market Rules.

3. Esco GOALS
Maintaining transparency in the electricity (capacity) wholesale trading process and procedures;
Sustaining financial stability;
Improving investment climate.

4. Esco’s Main Activities
Main directions of ESCO activities are: trading the balancing electricity and calculating the balancing electricity price:
Balancing electricity is the difference between the volumes of direct contracts, signed by the buyers and sellers, and actually delivered volumes for given month.
Balancing electricity, purchased by ESCO consists of the energy generated by thermal and hydro power plants as well as the electricity imported by ESCO.
The buyers of balancing electricity are distribution companies, direct consumers and exporters.
Annually, balancing electricity share in the wholesale trade varies from 10% to 16%.
Monthly, balancing electricity sale price is formed based on the weighted average price of balancing electricity bought by ESCO.

6. Signing Medium and Long-Term Contracts on Import/Export
Trading the Guaranteed Capacity in Accordance with the Law of Georgia on Electricity and Natural Gas and the Electricity (Capacity) Market Rules:
Guaranteed capacity serves to the stability, safety and reliable functioning of the country’s unified energy system.
Capacity trade is taking place only through ESCO, based on the standard conditions of direct contract. Georgian government determines the guaranteed capacity sources.
Guaranteed capacity buyer is liable for the compensation of guaranteed capacity cost in proportion with its actual share of consumption or export in total actual consumption and export.
As of today there are 5 guaranteed capacity sources with total capacity of 622 mw.
Signing Medium and Long-Term Contracts on Import/Export
In order to balance energy supply and consumption of the country, as well as in emergency situations, esco carries out electricity import and export.
From 2007 to 2016, ESCO sold Billion kwh of balancing electricity, exported billion kwh and imported billion kwh of electricity.

7. Registration as the Wholesale Trade Participant
Following the power market liberalization and formation of various types of sellers and buyers, ESCO has undertaken one of the key functions of registering the wholesale trade participants.
Inspecting the Meters Used in Wholesale Metering
ESCO systematically pursues the inspection of wholesale metering unit, according to the approved plan or upon request. Up to 1200 meters are checked periodically for proper operation.
Supporting Construction of New HPPs
In the event that the MOU is signed between the government of Georgia, ESCO and an investor as well as in case of signing the PPA, ESCO shall carry out compulsory purchase of electricity (capacity), generated by newly built power plant, in compliance with active legislation.
Stable financial position of the enterprise leads to the positive outcome of its activities. The average annual turnover of ESCO exceeds $120 million.

8. QUALIFIED ENTITIES-MARKET PARTICIPANTs
Sellers
Generation Licensee
ν The Commission sets the fixed tariff
Regulated Plant
Partly regulated plant
ν The Commission sets the Cap Marginal Tariff
Deregulated small and new plant
ν No tariff is set

9. Deregulated small plant ν No license required
ν Tariff is free
* Until 2017 (including), the HPPs up to 13mw belong to small HPPs.
* From 2018, the HPPs up to 40 mw belong to small HPPs.
Importer ν No license required
ν The Commission sets the Cap Marginal Tariff

10. QUALIFIED ENTITIES-MARKET PARTICIPANTs
Buyers
Distribution licensee:
Requires licensing by the Commission to perform distribution activities.
Direct Customer:
In 2015, direct customer was the entity eligible to enroll in the wholesale trade only if its annual consumption was not less than 3 mln kWh.
In mln kWh.
From 2017 and onwards - 1 kWh.
Exporter
No license required.
Tariff is free.

11. WHOLESALE POWER TRADE THROUGH DIRECT CONTRACTS THROUGH ESCO
Bilateral Direct Contract is signed between the Qualified Enterprises.
The contract price depends on the status of Qualified Enterprise, acting as a Seller (whether it is regulated, partially deregulated or fully deregulated).
THROUGH ESCO
Balancing Electricity (which is the difference between the volumes actually generated/consumed and volumes contracted in advance through the Direct Contracts) is traded through ESCO.
Balancing Electricity is traded through the direct contracts as well as through the Standard Conditions of Direct Contract.

12. GEORGIAN Electricity market model

13. International relations
ESCO is actively involved in electricity market liberalization process and currently works on the electricity trade model of European standards. ESCO has become the full member of Association of Power Exchange – APEX and the Member with the Observer’s Status of EUROPEX (the Association of the European Power Exchange). APEX and EUROPEX provide a discussion platform and opportunity to exchange the information on commercial, technical, management and practical experience. APEX includes the market operator companies from more than 50 countries, while EUROPEX connects the power exchanges of European Region.

14. Thank you