Project Description:

This presents a bundle of three small-scale grid connected run of river hydro plants that will undergo rehabilitation to restore the generation capacity. The three rehabilitation projects include Machakhela, Misaktsieli and Ritseula. Rehabilitation is expected to begin in mid 2007 and the plants are likely to commence operation in 2008.

The USAID funded Rural Energy Program (REP) is supporting the rehabilitation of the small hydro projects (SHP) in Georgia. Georgia has a large number of rural communities with poor energy supply. Many rural businesses and households depend on expensive and environmentally unfriendly generators for electricity, and illegally harvested fuel wood for heat. The Rural Energy Program (REP) in Georgia aims at developing in-country capacity to increase the utilization of small hydropower resources and realization of energy efficiency potential in rural Georgia. The primary objectives of the REP includes: 1) increased supply of energy to rural areas; 2) improved management of local energy production; 3) improve in-country capacity to develop and deploy renewable energy applications in rural communities; and 4) improve capacity to more efficiently utilize and protect the local energy resource base.

The three projects considered under the REP in this PDD are described separately below:

Plant Name: Machakhela Small Hydro Project (SHP)

Machakhela SHP owned by Bakuri Ltd. is located on Machakhela River and commenced operation in 1956. It consists of 50 m long weir, 15 x 57.5 m silt basin, 21.4 m head, with water discharge rate 9 m3/sec. The power house is equipped with 2 Francis-type turbines totaling 1,480 kW (740 kW each). Both the units of the SHP are currently operating with low efficiency 760 kW (380 kW each). The units were originally 740 kW. The annual average generation over the last six years (2000-2006), for which generation data is currently available, was 1.5 million kWh. The plant failed to generate at all between 2000 and 2004.

Due to poor maintenance and recent floods the plant is operating with relatively low efficiency (760 kW) and needs refurbishment. The rehabilitation will not only increase the installed capacity but also prevent the SHP from collapse in the coming few years. The weir, powerhouse silt basin, penstock all are in poor technical condition and needs minor repairs and replacements. After rehabilitation the total capacity of the SHP will be 1,480 kW, adding 720 kW, with total expected annual generation of 9.4 million kWh annually. The rehabilitation of the plant will not affect the overall weir height of the plant or change the original physical characteristics of the plant.

The SHP is connected to the grid. The main buyer of the plant’s electricity at present is Adjara Electricity Distribution Company (AEDC), the distribution company in the Khelvachauri district. After rehabilitation, AEDC is expected to off-take the entire electricity production for distribution to end-users.

Plant Name: Misaktsieli SHP

Misaktsieli SHP owned by Ento Ltd. is located on Aragvi River and commenced operation in 1964 with the primary purpose of supplying electricity to the nearby village. The SHP is fed by the Lami-Misaktsieli irrigation canal and has a total length of 24.7 km, with water discharge rate 6.85 m3/sec. The power house is equipped with two Francis-type turbines totaling 2,600 kW (Unit 1: 1,600 kW, Unit 2: 1,000 kW). One generating unit (Unit 2) is currently operating with low efficiency 700 kW. The unit was originally 1,000 kW. The annual average generation over the last six years (2000-2006), for which generation data is available, was 1.8 million kWh. The plant failed to generate at all in 2001 and 2002.

Due to age, poor maintenance and deterioration, one generating unit is operating with low efficiency (700 kW) while the other generating unit (Unit 1) has broken down. Both the turbines need refurbishment to increase the capacity of the plant. The canal, headworks, intake and power house are damaged and needs minor repairs and reconstruction. After rehabilitation the total capacity of the SHP will be 2,600 kW, adding 1,900 kW from the current capacity. After rehabilitation, the total annual generation is expected to be 11.81 million kWh. The rehabilitation of the plant will not affect the overall weir height of the plant or change the original physical characteristics of the plant.

At certain times the SHP feeds an isolated electrical network of customers around the facility while at other times the SHP is connected to the central grid, which is not reliable and disconnections are frequent and unscheduled. At present the main buyers of the electricity are United Electricity Distribution Company (UEDC), Georgia Wholesale Energy Market (GWEM) and Georgian Electrokavshiri (the local land line telephone company). After rehabilitation Natakhtari brewery will be an additional purchaser of the electricity. The local distribution company (UEDC) will facilitate the transaction as the plant must utilize the electricity grid.

Plant Name: Ritseula SHP

Ritseula SHP owned by Ritseulahesi, Ltd. is located on Ritseula River and commenced operation in 1937 for supplying electricity to the surrounding villages and to support agricultural activities in the district. It consists of low height dam structure 5 m at the left bank and a canal 1.5 m long and 1.9 m high, with water discharge rate 3 m3/sec. The power house building is equipped with 3 horizontal hydro units, double nozzle Pelton-type turbines totaling 6,056 kW (Unit 1: 4080 kW; Unit 2: 988 kW; Unit 3: 988 kW). One generating unit (Unit 1) is currently operating with low efficiency 3,500 kW. The unit was originally 4080 kW. The annual average generation over the last six years (2000-2006), for which generation data is available, was 23.7 million kWh.

Due to age, poor maintenance and deterioration, Unit 1 is operating with low efficiency (3,500 kW) while generating Unit 2 and Unit 3 never operated. The SHP was previously rehabilitated in 1959 and under-went major maintenance again in 1995. The current rehabilitation plan requires refurbishment of Unit 1. Unit 2 and Unit 3 need to be dismantled for detailed inspection and rehabilitation work. Other minor repairs and reconstruction work needs to be done on the SHP. After rehabilitation the total capacity of the SHP will be 6,056 kW, adding 2556 kW, with total expected annual generation 32.77 million kWh. The rehabilitation of the plant will not affect the overall weir height of the plant or change the original physical characteristics of the plant.

The SHP is the only hydro plant operating in the Ambrolauri district and currently has a PPA agreement with a silicomanganese factory and the JSC “Rustavcementi” which are valid for one year and will be prolonged on an annual basis. After the rehabilitation a large part of this will be utilized by the JSC “Rustavcementi” (67%) and the remainder will be supplied to silicomanganese factory (33%). The local distribution company will facilitate the transaction as the plant must utilize the electricity grid for supply to the end-user.

Objectives:
The objectives of the three project activities are:

• Operation of small hydro plants that are currently operating with low efficiency.
• Increase the operating capacity from 4.9 MW to 10.1 MW adding 5.2 MW after rehabilitation, with expected supply of 53.98 million kWh of electricity annually to the Georgian grid.

The proposed CDM project activity will allow the SHPs to produce electrical energy through sustainable means using hydropower resources, to sell the generated output to the grid and to contribute to the global climate change mitigation efforts. This renewable energy will displace electricity produced by thermal power plants and reduce Georgia’s dependency on fossil fuel electricity sources. The overall reduction of GHG during the crediting period is estimated at an average of 9,033 tonnes of CO2 equivalent (CO2e) per year or 90,330 tonnes of CO2e over a ten year crediting period by offsetting more carbon-intensive electricity production from the Georgian electric grid.

Contribution to Sustainable Development:
According to the project participants, this project contributes to sustainable development in Georgia. Specifically, the project contributes as follows to the three aspects of sustainable development: economic, environmental and social aspects:

Economic aspects

• Effect on the region: The project is implemented in relatively rural and economically disadvantaged regions of Georgia. The investments that the projects bring will have a positive impact on the local economy.
• Employment generation: New employment is created during construction works at different project sites of the SHP. The operation of these plants also creates new employment opportunities for the region.
• Project’s impact on other ongoing sectoral programs and plans: The project is a part of the government’s larger program aiming to reduce Georgia’s dependency on primary sources of energy by rehabilitating and constructing at least 15 MW of installed mini hydro electricity generation to help Georgia achieve the target set by the Georgian Ministry of Energy of “ensuring energy security through the re-equipment of existing power capacity and construction of new facilities” (Main Directions of the State Power Sector of Georgia). The project diversifies the sources of electricity generation and decreases dependence on imported natural gas from Russia. Considering that Georgia’s energy sector is heavily dependent on importing gas to supplement hydro-power during electricity shortfalls (which constitutes the largest item in the country’s import bill), reduction of gas imports will have a significant positive effect on the weak Balance of Payments of Georgia.

Environmental aspects

• Substitution of fossil fuels: The project will substitute the power plants on the margin of the electricity system in Georgia. These are thermal power plants running on natural gas.
• Air quality: The project can reduce over 9,033 tCO2 annually. In addition, the project will reduce local pollutant emissions (NOx, SO2, VOCs) associated with electricity generation in Georgia and provide positive health impacts for the local population.
• Contribution to environmental conventions: The project will contribute to meeting the Kyoto Protocol goals by helping to reduce GHG emissions.

Social aspects

• Stakeholders contributions:
• Availability of better living conditions: The project generally contributes to increased energy security in the country, particularly in the region because the plants will improve reliability of power supply.
• Development of intellectual capacity: The training and capacity building of local employees through the Rural Energy Program, under which these plants are being rehabilitated, will contribute to Georgian intellectual capacity.