Temur Gochitashvili - The new gas-fired, combined cycle TPP will significantly reduce imported electricity

13 January, 2020
The gas-fired, combined cycle, Gardabani 2 TPP will start to operate in several days. Its pre-commissioning testing works have been completed successfully. Information below provides brief description of the new TPP, economic and ecological benefit associated with its operation, challenges of the current period of the thermal energy of Georgia and the future prospects. This information will significantly assist experts interested in issues of energy of Georgia and economy and geopolitics of the region in general, public institutions and politicians in preparing impartial strategic decisions in connection with prospects of development of the energy sector of the country.

Presently, approx. 80% of the locally produced electricity in Georgia is generated by HPPs, and the remaining electricity is generated by gas-fired TPPs (also, a wind farm in small volume). At the same time, due to significant growth of electricity consumption during the recent years, Georgia has to satisfy the demand with increasing imported power. The situation is complicated by dependence of power produced by HPPs on climatic conditions, as well as significant growth of share of consumers with unpredictable load (crypto currency servers) in the total load in recent years, which leads to a significant misbalance between production and demand. In particular, electricity consumption in the country, generally, reaches its peak during the winter season when power generated by HPPs is relatively low due to shallowness of rivers. Demand on electric power in this period cannot be satisfied even by generation of local TPPs, which predetermines the tendency of critical growth of import in recent years – 479 million KWh were imported in 2016 and this indicator increased to 1 630 million KWh in 2019. The cost of electricity imported last year, up to USD 90 million, became a heavy burden for the macroeconomy of the country, including the currency exchange rate, which is also a significant challenge for the energy security of the country.

Growth of demand on electricity, especially during the peak consumption period, when the current potential of the existing hydro- and thermal energy capacities cannot ensure supply of required amount of power, predetermines critical dependence on import. Under such conditions, the most rational way of eliminating the sharp increase of demand on power energy and the seasonal deficit is to construct gas-fired baseload thermal power plants, which will ensure development of generation independent from the climate, balancing and stable functioning of the energy system using own resources.

It should be mentioned that, according to the international practice, power energy production growth rate should precede demand growth. At the same time, traditionally, despite the future orientation at renewable energy, the basic power energy mostly produced by fossil fuel resources represents (see the Table) and according to the forecast, will remain to be the prevailing source of balancing and sustainable functioning of power energy systems worldwide and in separate countries in the transitional period too (target period of large-scale transition to the renewable and environment-friendly technologies in many countries of the world – until 2050).

Energy source and/or purpose USA Russia Germany Italy Switzerland Sweden Turkey World (average)
Basic 84,0 82,7 61,6 69,0 40,1 45,7 70,3 75,7
Renewable and unconventional 16,0 17,3 38,4 31,0 57,4 46,9 29,7 24,3

Based on international experience, development of power energy founded on use of separate, even extremely attractive renewable energy resources cannot be perceived to be a panacea at the current stage, because for the purpose of ensuring energy security at least, it requires necessary reservation by own basic generation facilities independent from environmental conditions or import from the region’s neighbor countries distinguished for depoliticized energy.
In rare exceptional cases, with Norway being the most vivid example (where practically entire volume of locally produced power energy is provided by hydropower), existence of at least several preconditions is necessary:
• excessive local production of power energy for own consumption (in case of Norway, own consumption is excessive by averagely 10-15% than total consumption which allows the country to become a net exporter of power energy);
• opportunity of unlimited exchange of power energy with neighbor countries and regions (Norway is a part of the unified power energy system of Scandinavian countries, so-called "Nordic Energy Market" and it is connected to markets of the Baltic region, north Europe and other countries by the existing interconnectors with 700-1700 MW capacity);
• high level of regional integration both in terms of technologies and legislation to ensure unlimited access to imported energy and its unhindered delivery to the internal market in case of need and energy security of the country in general (thorough integration of Norway into regional systems, in addition to interconnectors, is ensured by harmonization of energy legislation and identity of market regulations with the EU countries. Norway’s power energy trade with the remaining Scandinavian countries and the Baltic countries is carried out through the joint trade platform of "Nord Pool").
It is important to consider that despite the above, sustainable functioning of the electric power system in Norway requires an agreed management of the network stability conditions and economic requirements, which is often associated with unscheduled shut offs of hydro generation facilities and their operation in a part load mode.

There is the same situation in other countries of Europe rich in renewable resources which are integrated into unified energy systems of the Energy Community and their unhindered exchange of power energy with neighbor countries is ensured both at the technological and legislative level.
Exchange of power energy with the systems of neighbor countries is limited also due to the market regulations envisaged by the new energy legislation and technical capacities to a certain extent, while construction of new, regulated HPPs is significantly behind the schedule.
Due to the geographic location, the social-political orientation different from the neighbor countries, the existing and planned market regulations and the system architecture (systems of neighbor countries operate in three different synchronous modes and all four of these countries have different legislation, planning and operation philosophy), as well as due to limited availability of investments and environmental protection requirements, in the reasonable perspective of the closest period, formation of preconditions similar to Norway is practically impossible in our country. Therefore, accelerated development of baseload power generation facilities based on modern, highly efficient and environmentally friendly technologies operating with comparatively available natural gas remains as the sole alternative for satisfaction of increasing demand on electric power with own generation and ensuring network sustainability and energy security under conditions of Georgia, when the system has yet to operate in the isolated regime frequently.
It should be mentioned than in 1980-1990s, total installed capacity of baseload TPPs of Georgia equaled to 1500 MW and annual generation was approx. 7 billion kWh, despite the fact that all currently operated basic HPPs (including the most high capacity Enguri and Enguri HPP Cascade, with total capacity of 1640 MW) had already been constructed and functioning, while the power system of Georgia represented a part of the united system of the south regions of the Union and carried out unhindered exchange with systems of neighbor republics. At the same time, it should be highlighted that specific consumption of power per capita was almost equal in Georgia and the European countries having a similar geographic-climatic environment (Italy, Spain, Austria, Portugal, Greece, Turkey), while today it falls behind not only the European but also the world average indicator.
Therefore, despite the fact that satisfaction of the basic demand on power energy with electricity generated by local HPPs is considered to be the dominant in the Georgian energy policy in general and the top priority of the medium- and long-term strategy, the international experience proves that generation facilities producing baseload electric power represent an inseparable part of power systems of the transitional period and guarantors of their sustainability and the energy security of the country in general.

Therefore, putting the gas-fired, combined cycle Gardabani TPP into operation, which is scheduled for the nearest days, marks a milestone in the energy sector of the country. Georgian Oil and Gas Corporation made investment in the amount of up to 185 million USD in construction of the TPP with 230 MW capacity located on the territory of the already existing TPPs in Gardabani. Construction of TPP began in February 2018 and was successfully finalized in less than two years.

Gas-fired, combined-cycle Gardabani-2 TPP represents the 2nd energy generation facility based on one of the most efficient, resource-saving and ecologically less detrimental, modern technologies built in Georgia in the recent years. It is equipped with modern type, F class 2 gas and 1 steam turbine and generators produced by "General Electric"(GE-Power). Their design efficiency is 55,6 %. GE-Power is a worldwide leader in production of facilities of this class and its products are distinguished for energy efficiency and high standard of quality. It should be mentioned that F class gas turbines successfully function in more than 100 TPPs of various countries of the world. For comparison, estimated saving of fuel for generation of approx. 1,3 billion KWh of power energy per year by a TPP in a combined cycle mode, equals to 160 mcm of gas compared to producing the same amount of power energy on old blocks (3, 4, and 9).
All other key equipment and systems of the new TPP are selected in strict compliance with ISO (International Organization for Standardization) standards, Euro norms (EN), ASME (American Society of Mechanical Engineers) standards and other international standards and norms. In environmental protection issues, restrictions recommended by the World Bank are considered together with the Georgian legislation.

By means of the correct bidding policy and good management, Georgian Oil and Gas Corporation ensured rather low specific share of investments in construction of the new TPP, which is less than the specific budgetary cost recommended by the recognized international expert of the industry (see Gas Turbine World 2019, Handbook, MTU Power) and is approximately twice lower than the same indicator of almost all HPPs currently under construction or planned in Georgia. Construction works of the facility were carried out by one of the largest Chinese engineering-industrial corporation (China Tianchen Engineering Corporation – TCC).

Operation of the new TPP ensures a significant environmentally friendly effect too – in particular, during its operation, specific emission of CO2 will be reduced by 70% calculated per 1 KWh produced electricity, which means reduction of total emissions by approx. 225-275 thousand tons per year.

Growth of sustainability and flexibility of the electric power system of the country provided by the new TPP is also important. In particular:

• Annual generation of Gardabani TPP-2 in design mode exceeds the total generation of all regulatory HPPs of the country, except Enguri HPP Cascade by approx. 55% and allows for replacement of approx. 85% of the electricity imported in the current period (including from Russia), preconditioned by sharp seasonal misbalance with local production;
• The new TPP is distinguished for operational flexibility – in case of emergency shut-off of the unified electric power system of the country, it will ensure independent activation within the shortest period of time (according to the producer, within maximum of 25 years) and prevention of a large-scale negative effect with its own resources (without assistance from another country). Operation of gas-fired, combined cycle TPP also provides a significant fiscal effect, as cost of imported electricity is much higher than the cost of import of gas used for production of the same amount of electricity (1 cubic meter of gas ensures replacement of imported electricity of the cost of approx. 30 cents, while average cost of Shah Deniz gas import is much less than 10 cents). Reduction of currency spent on electricity import will facilitate stabilization of GEL exchange rate and improvement of macroeconomic indicators of the country in general. It should also be mentioned that local production of electricity will contribute to creation of additional jobs, and unlike gas, one of the key suppliers of electricity is the Russian Federation.

Except the achieved results, for the future prospects of development of the energy of the country, particular importance is attached to the tasks of Georgian Oil and Gas Corporation regarding ensuring of carrying out the initial stage measures required for implementation of projects of two additional, gas-fired, combined cycle TPPs (approx. capacity of each TPP – 250 MW) in Gardabani, as defined by the Decree of the Government of Georgia No. 2047 dated September 26, 2019 and the Decree No. 2655 dated December 19, 2019. This has laid a practically new basis for development of the electric power system of Georgia, which together with hydropower capacities of development of the hydropower sector of Georgia, ensures construction of baseload electricity generation facilities within reasonable limits and qualitative reduction of critical dependence of the country on import.
For planning the construction progress rates of new TPPs, recommendations of the basic scenario of the 10-Year Transmission Network Development Plan approved by the order of the Minister of Economy and Sustainable Development of Georgia are considered, which forecast consumption of up to 19 billion kWh of power by 2025 and up to 23 billion kWh of power by 2030. Therefore, it is envisaged to start commissioning of 2 additional new TPPs together with the two, already operating gas-fired, combined cycle TPPs, which will replace the old, low-efficient blocks and /or import. In particular:
• By 2022 it is envisaged to finalize construction of a new, gas-fired, combined cycle TPP with installed capacity of approx. 250 WM;
• By 2023, before commencement of the planned major overhaul of Enguri HPP, it is envisaged to construct additional 4th TPP with installed capacity of approx. 250 WM.
Accordingly, by 2025, the total installed capacity of modern, gas-fired, combined-cycle TPPs, considering the installed capacity of "GE-POWER" gas turbine, should reach approx. 1100 MW and the possible annual generation, considering the design load factor, should reach approx. 5,5 billion kWh (25% of the forecast demand on power for 2030). The new TPPs generate 70-75% more power compared to old, low-efficient blocks under conditions of using the same volume of gas. Therefore, if the possibility of generation of annual 1,2-1,3 billion kWh is envisaged by the existing combined cycle TPPs and annual 1.5-1.6 billion KWh – by the planned TPPs, the country will save approx. 700 million m3 of imported gas in total.
As a summary, it is possible to offer the main results and conclusions obtained as a result of the analysis:
As a result of operation of Gardabani 2 TPP, the country will obtain a modern, highly efficient power generation facility equipped with environmental protection technology which will ensure generation of up to 1.3 billion kWh of power annually.
Gardabani 2 is a facility with particularly low investment requirement and the actual specific cost of its unit installed capacity is much lower that its estimated budgetary specific cost;
Gardabani 2 provides a significant environmental protection effect as well – during its operation, harmful emissions will be reduced by approx. 250 thousand tons compared to production of the same amount of electricity on "old" blocks of Gardabani;
Apart from the economic and environmental protection effect, the largest strategic importance is attached to the project. Its operation will reduce critical dependence on electricity imported from other countries by approx. 85% and will ensure qualitative growth of security of supply during the peak consumption periods;
Gardabani 2 will perform the function of providing the system with baseload power, will facilitate maintaining the stability of the power energy system of the country and will increase the reliable operation of the entire energy sector.
Georgian Oil and Gas Corporation, in cooperation with the Ministry of Economy of Georgia, is developing projects of new, gas-fired, combined cycle, baseload TPPs the implementation whereof will start a new stage for the purpose of rational planning and development of the country’s power generation, considering the international practice and the local specifics;
Proactive implementation of generation facility projects, in advance of the growth of demand on electricity, which acquires particular importance against the background of the ongoing process of the market deregulation, will facilitate the growth of production of export products, through full development of the existing potential of renewable energy, which will be ensured by their reservation with electricity produced on the new baseload generation facilities.

Temur Gochitashvili
Doctor of Technical Sciences, Professor,
Chairman of Supervisory Boards of
Georgian Oil and Gas Corporation