Georgia’s hydroelectric power plants: a controversial development project

In theory, the construction of hydroelectric power plants in Georgia should be a win-win situation. On one side, the European giant, which wants to use the seemingly green and sustainably produced electricity needed for the green transition. On the other side, the small Georgian state, which is already harmonizing its energy laws and practices with EU directives, in search of a sustainable way to strengthen its economy. Two players, one stage: the Georgian water system.

Georgia, situated between the regional heavyweights of Russia and Turkey, boasts a dense network of rivers, many of which flow rapidly and are fed by glacial, snowmelt, and rainwater sources. The history of hydropower plant development in the country can be traced back to the Soviet era. In the 2000s, not only were existing power plants privatized, but the energy sector was also opened up to private companies. As a result, many privately operated plants were established.

Even though the development of Georgia’s hydropower plants and the—still speculative—links with the EU may appear “sustainable,” this partnership raises numerous questions.

Georgia’s Hydropower Boom

The Georgian government views the possibility of exporting electricity as a real stroke of luck and, in recent years, has even moved beyond its long-standing discourse, which had focused solely on “energy independence” (primarily from Russia). In 2024, the mountainous and earthquake-prone country had an installed power plant capacity of 3,410 megawatts, 73% of which came from hydropower. The government is aiming for an ambitious increase to 7,222 megawatts by 2034. New hydropower plants are expected to contribute 3,812 megawatts to this total—more than the current electricity generation from hydropower. This would give the small country, which has roughly the same population as Berlin, a higher installed hydropower capacity than Germany (5,570 MW). In 2023, Georgia operated 119 plants. Another 218 plants are currently in the planning stages.

In an effort to position itself as an energy exporter, Georgia has opened up to foreign direct investment, particularly in large hydropower plants. For small and medium-sized power plants, which make up the majority of upcoming projects, Europe’s last free-flowing rivers have already been divided up, primarily among a domestic elite. Georgia offers investors attractive conditions for the construction of hydropower plants, including the provision of necessary land at reduced rates as well as mechanisms to safeguard political and security

Mega projects are where it becomes more critical: here exists the danger that the

Kritischer wird es bei Großprojekten: Hier besteht die Gefahr, that the state enters into a power purchase agreement, which includes a long-term and contractually binding obligation to pay compensation, even if the electricity is not needed or the contractually fixed prices are significantly above the market value. Such regulations are disadvantageous in two respects: they place a considerable burden on the Georgian state budget and can also lead to rising electricity prices for domestic consumers in the long term.

Does the construction of hydroelectric power plants really lead to greater prosperity in Georgia?

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Hydropower from Georgia: Foreign and domestic capital interests prevail

Since gaining independence in 1991, Georgia has pursued a policy aimed at attracting foreign direct investment. This policy includes legislation that prioritizes profits. Labor rights, environmental requirements, tax revenue, and the concerns of affected communities are considered secondary. Therefore, foreign direct investment in Georgia is compatible with the principle that investing companies can outsource all risks while simultaneously reaping profits. The case of the Turkish-Norwegian consortium Enka, behind the large-scale project of the planned but, for now, failed Namokhvani hydroelectric power plant, is a prime example.

Behind closed doors and without public knowledge, the Georgian government granted the construction company cheap access to land and long-term power purchase agreements. The affected communities were expected to be content with meager compensation for their relocation and the loss of their cultural heritage.

The state, in turn, committed to providing financial security for all unforeseen events (such as disasters), which was intended to benefit the company. Precisely because the company did not build the hydroelectric power plant due to local opposition, it successfully sued the Georgian government for damages: $450 million for a power plant that was never even begun to be built. The land in question still belongs to the company.

However, it would be wrong to assume that only “foreign” investors are willing to sacrifice communities and ecosystems for profit. Local developers—often part of, or with obvious connections to, the ruling party—also profit from the construction, for example, the family of Georgia’s Environment Minister David Songhulashvili.

Influence of the EU: Internationalized governance of the hydropower sector

It would be an oversimplification to focus solely on capital interests. State actors and (development) policymakers, both from Georgia and abroad (international organizations and financial institutions), are also enabling the hydropower boom.

Despite its current anti-European and sovereignty-oriented rhetoric, the incumbent government is cooperating harmoniously with international actors, often from Europe. Georgia currently holds the chairmanship of the Energy Community. The Energy Community is an international organization established in 2005 by the Treaty of Athens. Its contracting parties are the European Union and currently nine non-EU states. Its aim is to extend the EU’s internal energy market to Southeast Europe and its neighboring countries. To this end, the non-EU contracting parties commit to incorporating the relevant EU energy acquis into their national law and harmonizing their regulatory frameworks with EU requirements. This includes, among other things, the opening of energy markets, which would allow profit-driven logics to take hold in the energy sector.

The EU itself, within the framework of the “Global Gateway Initiative,” is pledging up to €2.3 billion for project financing of the Black Sea Submarine Cable (BSSC), which is intended to connect Azerbaijan and Georgia to the EU. The BSSC could also receive financing from international financial institutions such as the World Bank or the European Bank for Reconstruction and Development. These institutions have also been crucial in transforming Georgia’s water sector into a liberalized and profit-oriented system. Their financial support or commitments have driven the implementation of a number of hydropower plants, some of which are highly problematic, in recent years.

The expansion of hydropower in Georgia combines local resources with globalized energy visions. However, this process remains contradictory. Whether it will result in a fair and sustainable transformation or a new chapter of unequal development will only become clear when the affected communities, and not just state and international actors, are taken into account.

Note: In a previous version dated November 17, 2025, the figures for the output of hydroelectric power plants in Georgia were incorrectly stated as 4621 MW in 2024 and 10336 MW planned for 2034. The figures have since been corrected.