Domestic electricity consumption was up 1.0% y/y in March 2016 and 1.8% y/y in 1Q16. Weaker growth was partly due to the high base in March 2015 and warmer weather compared to March of last year. DNO consumption was up 2.7% y/y in March 2016, as opposed to 8.2% y/y growth in March 2015. Consumption in the greater Tbilisi area (Telasi) grew 5.8% y/y as compared to 12.9% y/y growth in 2015. The growth rate in the regions was even weaker – 1.2% y/y as opposed to 5.1% y/y in March 2015. Despite a decelerated rate of contraction of Georgian Manganese electricity use, consumption by eligible consumers was down 6.7% y/y in March 2016 from an already low base in March 2015 (down 7.0% y/y). Georgian Manganese, representing 81.0% of direct consumption, reduced its consumption 4.7% y/y in March 2016. Consumption by the Abkhazian region was flat (+0.8% y/y), after expanding 7.7% and 7.3% in January and February, respectively. The Abkhazian Region got its full supply of electricity from Enguri and Vardnili, utilizing almost 100% of their generation in March. Georgia had to import additional electricity from Russia to fill the deficit in the region in the last couple months, so the halted growth is a welcome change. There were no electricity exports from Georgia in March 2016.
In March 2016, domestic generation was down 9.5% y/y on the back of lower TPP output, leading to higher imports from Russia. The amount of TPP-generated electricity decreased 56.2% y/y. Tbilsresi generation was down 98.7% y/y, while Mtkvari halted production in March 2016 (172gWh in March 2015), as Inter Rao is negotiating the sale. We expect generation to resume once the transaction is finalized. The drop in domestic generation was compensated by Russian electricity imports. Total imports were up 76.2% y/y in March 2016, accounting for 14.2% of total domestic consumption. HPP output was up 17.1% y/y in March 2016, on the back of increased generation by deregulated HPPs (+41.0% y/y) and regulated seasonal HPPs (+26.5% y/y). Enguri and Vardnili production was down 5.7% y/y due to weather conditions and low water levels in the reservoir.
Balancing electricity price in Georgia was down 49.9% y/y to USc 3.4/kWh. The market clearing price of electricity in Turkey was down 21.5% y/y to USc 3.9/kWh. The reason for the sharp drop in Georgian balancing electricity price was an unusually low average price on imports from Russia (USc 2.8/kWh), resulting from the short-term deal for discounted electricity imports in February. As 61.1% of total electricity traded by ESCO (and making up the balancing electricity price) was imported electricity, the low import price exerted downward pressure on the average balancing price. 29.7% of electricity traded by ESCO came from HPPs and the rest from TPPs. Electricity prices in Turkey continue the downward trend. The prices are expected to remain low on the back of lower commodity prices, but are expected to rebound in the medium term.
