Georgia’s Energy Footprint: Shaping the Middle Corridor’s Evolution
September 2024
Giorgi Mukhigulishvili
Ilia State University and Weg Georgia
Georgia, positioned strategically along the Middle Corridor, plays a vital role in enhancing regional energy connectivity through strategic infrastructure development and EU-aligned policy frameworks. Notable projects like the Baku-Tbilisi-Ceyhan (BTC, oil), the Western Route Export Pipeline (WREP, oil), the South Caucasus Pipeline (SCP, gas), the Baku-Tbilisi-Kars (BTK) railway, and the planned innovative Georgia-Romania Black Sea Submarine Cable (BSSC) project – underscores Georgia’s vital role in bolstering regional energy connectivity. Additionally, Georgia’s ports like Batumi, Poti, and Kulevi oil terminal, alongside the prospective Anaklia deep sea port, are crucial gateways to the Black Sea, significantly enhancing the Middle Corridor’s potential.
For a small country such as Georgia, the development of the Middle Corridor is of paramount importance as it offers significant opportunities for economic, political, security, and technological advances. The initiative will enhance Georgia’s prospects of becoming a regional hub.
Georgia’s commitment to energy-sector reforms, aligned with EU directives and regulations, further strengthens its position in the Middle Corridor framework. Since joining the Energy Community in 2017, Georgia has undertaken significant reforms in the energy sector by adopting EU directives and regulations, thereby creating a favorable investment climate for renewable energy resource development intended for export to the EU. However, the full realization of a competitive power market remains a work in progress. Georgia’s energy policy framework supports energy transit and transportation, strengthened by the EU-Georgia Association Agreement and the Deep and Comprehensive Free Trade Area, which aligns national energy laws with EU regulations and facilitates integration into the European energy market.
The implementation of EU directives and regulations, as part of Georgia’s commitments, can create a more predictable and transparent business environment. Membership in the Energy Charter Treaty enhances international energy cooperation, investment protection, and dispute resolution, while bilateral and multilateral agreements with neighboring countries and key energy players ensure smooth transit and mutual benefits from energy projects. Georgia has considerable renewable energy potential in hydro, solar, and wind power, which remains largely undeveloped. According to REN21, the economic potential for renewables in Georgia is estimated at 18 GW (compared to 3.4 GW in 2024), encompassing 15 GW of hydropower and 1.5 GW each for wind and solar energy. The National Energy Policy of Georgia aims to achieve a 27.4 percent share of renewables in the country’s final energy consumption by 2030, thereby increasing electricity exports during the spring and summer.
Moreover, Georgia is exploring opportunities for the development of green hydrogen, with a strategy already in place. The production and export of green electricity and hydrogen represent a promising pathway for promoting renewable energy within the Middle Corridor. Georgia’s favorable geopolitical location positions it as a regional educational center for significant academic and scientific initiatives related to the Middle Corridor’s development. Furthermore, it is a regional leader in developing financial technologies, utilizing innovative technology to provide services and solutions. This can foster an innovative financial environment conducive to large energy projects, supporting the broader objectives of the Middle Corridor.
Despite Georgia’s significant potential as a transit country and its critical role in supporting the Middle Corridor’s development, several challenges persist. Political tensions within the country, increasing Russian influence, and recently deteriorating relations with the EU and the United States complicate Georgia’s ability to fully engage in regional projects of mutual interest with the EU. Its growing cooperation with China adds another layer of complexity. Nevertheless, the unwavering determination of the Georgian people to pursue independence, democracy, and integration with the EU and NATO remains a powerful force. The coming parliamentary elections are poised to be a critical juncture for the nation’s political, economic, and social landscape. They will significantly influence the trajectory of Georgia’s domestic policies, international relations, and democratic development. Addressing these challenges requires a nuanced and strategic approach that balances internal stability, external alliances, and the aspirations of the Georgian population.
”Georgia’s favorable geopolitical location positions it as a regional educational center for significant academic and scientific initiatives related to the Middle Corridor’s development”
Georgia’s future government can play a pivotal role in the development of the Middle Corridor by enhancing regional cooperation, investing in critical infrastructure, and aligning the country’s regulatory frameworks with international standards. By fostering regional cooperation, Georgia can help ensure the corridor’s operational efficiency and security. Additionally, strategic investments in infrastructure projects – such as the modernization of ports like Batumi and Poti, and the development of the Anaklia deep sea port – are essential. Upgrading railway systems and expanding road networks can further enhance the corridor’s capacity, making it a competitive alternative to northern and southern routes.
Furthermore, adopting best practices in customs procedures, border controls, and logistics management to minimize delays and reduce transportation costs. Georgia should continue its reforms in the energy sector, focusing on the integration of renewable energy sources and the development of green hydrogen projects. These initiatives not only support the EU’s green transition goals but also position Georgia as a key energy hub in the region. By addressing these regulatory and infrastructural challenges, the future government can significantly contribute to the Middle Corridor’s development, thereby enhancing regional connectivity and economic resilience.