Introduction

Following its accession to the Treaty Establishing the Energy Community in 2017, Georgia undertook the obligation to implement the acquis communautaire, which includes, inter alia, establishment of open and competitive electricity markets. Following adoption of the Law of Georgia on Eenrgy and Water Supply, dozens of bylaws were approved and enacted,with the aim to establish an effective regulatory framework and prepare stakeholders for the opening of the electricity markets.

Even though designing the new wholesale electricity market model represented a challenge caused by various factors unique to the Georgian power system, this difficult task was accomplished by using the legal tools for regulation, compliant with the acquis, such as public service obligations and contracts for differences. However, effectiveness of the new design remains to be seen in practice. Originally scheduled for 1 July 2021, the date for opening of the day-ahead and balancing and ancillary services market has already been postponed for several times.

This paper reflects on the basis for Georgia's European aspirations and the historical context of the local power sector. It reviews the new electricity market model and identifies the challenges yet to be addreesed by the stakeholders and policymakers. Lastly, the paper evaluates potential setbacks which can be expected once the organized electricity markets are open and reviews the possible solutions

This paper will be part of the OGEL Special Issue on "Energy Market Creation: Liberalisations and Transformations". More information here www.ogel.org/news.asp?key=716