Digomi and Ponichala HPP

Digomi and Ponichala HPP on Mtkvari River - A preliminary assessment

The two proposed sites are located within the city limits of Georgia's capital Tbilisi, on the Mtkvari River, one of Georgia-s most affluent rivers. The two sites have identical technical specifications with a rated output of 20.1MW each, and a total combined production of 224 GWh. The financial attractiveness of the sites are evaluated based on a tariff just below that of the highest cost thermal in Georgia - USc 6.8/kWh for the initial 7 years of full production. In this case, the project is viable and appears financially attractive, with cash flows covering the cost of capital. Expected revenues from sales of carbon credits play an important role in bridging the requirements of international investors and those of the regulator. Overall, the sector outlook is positive with the planned future liberalization presenting a potential significant future benefit to equity providers. While the sites appear to be technically and economically viable, given the location within city limits, particular considerations will have to be made with respect to city infrastructure and the immediate surroundings of the construction area.

Table A         results for the Digomi and Ponichala Cascade (Costs in USD)

* Two reservoirs.

** This is the estimated average tariff for the first 13 years of operation, before planned liberalization in 2023. According to the analysis below, this average tariff ensures an RoE of approximately 20% on the project.

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