A trio of banks is investing in the construction and operation of the Shuakhevi hydropower plant in Georgia, in a bid to help the country tap its hydro potential and achieve self-sufficiency.

IFC, a member of the World Bank Group, the Asian Development Bank (ADB), and the European Bank for Reconstruction and Development (EBRD) have approved funding for the project – the largest-ever private hydropower investment in Georgia.

IFC arranged $250 million debt financing, consisting of two $90 million long-term senior loans, one each from ADB and EBRD, and $70 million from IFC. IFC’s total investment in this project is $104 million, which includes a $34 million equity investment in the project company, Adjaristsqali Georgia, a joint venture between India’s Tata Power and Norway’s Clean Energy Invest (40% each), and IFC (20%).

The Shuakhevi plant will help reduce Georgia’s dependence on imported fuel and increase the country’s renewable energy output. It will also foster cross-border electricity trading at other times of the year by exporting electricity to Turkey through a transmission line financed by EBRD. The project will benefit local communities by helping create jobs, boosting municipal incomes, and upgrading area roads.

"Through the strong partnerships fostered with the Georgian government, our equity partners, Tata Power, IFC, and the other lending institutions, we are realizing the renewable energy potential of Georgia," said Baard Mikkelsen, Chairman of Clean Energy. "This project demonstrates that non-recourse cross border financing is available for greenfield hydro projects in Georgia, and will be important for the development of the sector and Georgia."

Michael Barrow, ADB Deputy Director General for Private Sector Operations Department, added: "The project will promote regional cooperation and generate additional revenues for Georgia through energy trade. This groundbreaking renewable energy investment highlights the important role ADB plays in leveraging support for energy security and environmentally sustainable growth in the region."

Some $15 million of ADB’s $90 million in financing will be provided by the Canadian Climate Fund for the Private Sector in Asia, funded by Canada’s government and administered by ADB.

The project is the first hydropower project in Georgia certified by the United Nations Framework Convention on Climate Change for carbon emission reductions. It is expected to produce about 450GWh of power annually and reduce greenhouse gas emissions by more than 200,000 tons per year. The project will develop the 187MW Shuakhevi hydropower scheme, consisting of the Shuakhevi and Skhalta hydropower plants located in the Adjara region, in southwest Georgia. Work on the plant began in September 2013 with a target to start producing electricity in 2016.