The new incentive mechanism for the renewables in Georgia / ბიზნესის მხარდაჭერის ახალი მექანიზმი
10/13/2022
GREDA • გრედა-ის
მიერ
Government of Georgia announced that Contract for Difference (#CfD) model will replace Power Purchase Agreement (#PPA) model as an incentive mechanism for the #renewables.
In the interview Giorgi Abramishvili, GREDA Supervisory Board Chairman, explains that CfD mechanism implies less fiscal risks for both parties - the #Government and the #investor, as it allows the investor to receive a fixed, pre-agreed price and trade on the free #energymarket. If the fixed price is higher than a market price, the Government will pay the investor the difference between the fixed price and the market price. Conversely, If the market price is higher than the agreed price, the investor will return the Government the difference between the market price and the fixed price.
However, according to him, several significant factors should be taken into consideration while implementing the CfD mechanism. Namely, the model should be flexible - the RE investor companies should have an opportunity to exit the contract early and experienced #energy companies should be given an advantage in the #powerproject auctions.
In the interview Giorgi Abramishvili, GREDA Supervisory Board Chairman, explains that CfD mechanism implies less fiscal risks for both parties - the #Government and the #investor, as it allows the investor to receive a fixed, pre-agreed price and trade on the free #energymarket. If the fixed price is higher than a market price, the Government will pay the investor the difference between the fixed price and the market price. Conversely, If the market price is higher than the agreed price, the investor will return the Government the difference between the market price and the fixed price.
However, according to him, several significant factors should be taken into consideration while implementing the CfD mechanism. Namely, the model should be flexible - the RE investor companies should have an opportunity to exit the contract early and experienced #energy companies should be given an advantage in the #powerproject auctions.
