Electricity Generation License - How Does Electricity Generation Activity Start in Georgia?
An electricity generation license in Georgia is one of the key legal issues for any business that plans to build a power plant, generate electricity or start operating in the energy sector.
Electricity generation is not only a technical or investment project. It is also connected with energy regulation, grid connection, commissioning of the facility, environmental requirements, communication with the Commission and, where applicable, obtaining a license.
One of the first questions for a business is: do I need a license to generate electricity?
The answer is not always the same. In some cases, electricity generation is a licensable activity, while in other cases the law directly establishes exceptions where a license is not required.
This article will help you understand when an electricity generation license is required, in which cases generation may start without a license, which documents must be submitted to the Commission, what an investor should consider at the project planning stage, and what obligations arise after the license is obtained.
What Is an Electricity Generation License?
A license is a right issued by the Commission that allows a person to carry out an activity defined by law. In the electricity sector, one such activity is electricity generation.
If a person intends to generate electricity and the activity does not fall within the exceptions established by law, that person must apply to the Commission for an electricity generation license.
Obtaining a license means that the energy undertaking meets the requirements established by law and licensing rules and has the relevant technical, financial, economic, operational and organizational capacity to generate electricity.
Therefore, a license is not merely a formal permit. It confirms that the undertaking is ready to carry out regulated energy activity in compliance with the requirements of legislation.
When Is an Electricity Generation License Required?
As a general rule, electricity generation is subject to licensing.
This means that if a company or another person plans to generate electricity in a commercial, grid-connected or otherwise significant form for the energy market, the first step is to assess whether an electricity generation license is required.
A license is usually required when the generation facility is connected to the electricity transmission or distribution network, the activity goes beyond isolated self-consumption, and it is not a small-capacity or micro-capacity case that is exempt from licensing under the law.
In practice, this issue is especially important at the early planning stage of an energy project. Before an investor starts resolving matters related to land, the technical design, grid connection, construction or environmental requirements, it is necessary to determine legally whether the specific generation model is subject to licensing.
When Is a License Not Required for Electricity Generation?
The law directly establishes several cases where electricity generation does not require licensing.
The first case is electricity generation solely for own consumption, where both the generation facility and the consumption facility are not connected to the electricity transmission or distribution network.
This exception is important for isolated systems. For example, if a person generates electricity only for personal household or non-household consumption and the system is connected neither to the transmission network nor to the distribution network, a generation license is not required.
However, special attention must be paid to this condition: it is not enough that electricity is generated for own consumption. The legal exception applies when the generation and consumption facility is not connected to the grid.
The second case is electricity generation during the commissioning of a facility. This relates to the period when the facility has not yet fully entered ordinary commercial operation and the relevant technical or legal procedures are being completed.
The third case is electricity generation by small-capacity and micro-capacity power plants. In the cases provided by law, such facilities do not require licensing, although this does not mean that they have no legal obligations at all.
In particular, in the case of a small-capacity power plant, there may be an obligation to submit a notification to the Commission.
At the same time, electricity generation activity may not require a license, but this does not automatically mean that the undertaking has no other legal obligations.
For example, a small-capacity power plant that does not require a license is obliged to notify the Commission about the commencement of its activity in accordance with the law and the form approved by the Commission.
As a rule, the notification must be submitted no later than 5 working days after the commencement of the activity. In the case of electricity generation, commencement of activity is linked to the generation of electricity, except where generation takes place at the commissioning stage of the facility.
The notification must include the relevant information, including registration data, legal and actual addresses, contact information, a document confirming commissioning of the facility, information on actual or planned generation, and other data provided by the Commission’s legal acts.
It is important that such notification is informational in nature. However, this does not exclude the Commission’s authority to supervise the activity and assess whether the energy undertaking’s activity complies with the requirements of legislation.
How Should an Investor Start an Electricity Generation Project?
Before starting an electricity generation project, the investor should assess several legal issues.
First, it must be determined what type of facility is planned - a small, micro or other power plant that requires a generation license.
Next, it must be assessed whether the facility is connected to the electricity transmission or distribution network. If the facility requires grid connection, issues such as the technical condition, connection point data and relations with the relevant network operator become important.
At the third stage, it must be assessed whether an environmental decision is required, or, from 1 September 2026, an integrated environmental permit in the relevant cases. Depending on the nature, capacity, location and possible environmental impact of the energy project, this issue may become one of the main legal preconditions for the project.
After that, the documentation required for the license must be prepared, if the project is subject to licensing.
Finally, the undertaking’s obligations after commencement of activity must be assessed - whether these involve reporting, compliance with license conditions, notification to the Commission of changes in data or other regulatory requirements.
What Conditions Must the License Applicant Satisfy?
To obtain an electricity generation license, the license applicant must confirm that it has the capacity required to carry out the specific activity.
This includes technical capacity, namely the existence of the relevant electricity generation equipment, facility, infrastructure and technical conditions.
Economic and financial capacity is also important. The Commission must see that the undertaking can carry out the licensable activity, fulfill the relevant obligations and manage the activity on a continuous basis.
In addition, the undertaking must have operational and human resources. Electricity generation requires personnel with the relevant qualifications, or a contractual model that provides for the performance of necessary functions through third parties.
The license applicant must also confirm that it can take all measures necessary to maintain service quality and fulfill other obligations established by legislation.
If the license applicant cannot confirm its ability to satisfy these conditions, the Commission may refuse to issue the license.
What Documents May Be Required to Obtain an Electricity Generation License?
To obtain an electricity generation license, the relevant license application and documentation must be submitted to the Commission.
In the case of electricity generation, the following documents may be particularly important:
- · documents confirming ownership or use of the energy equipment required for electricity generation;
- · documents confirming commissioning of the electricity equipment, if obtaining such a document is mandatory;
- · documents confirming compliance of the equipment with technical requirements;
- · documents confirming ownership or use of the means necessary to carry out the energy activity;
- · where necessary, documents confirming the use of operational or maintenance services through third parties;
- · a single-line diagram and plan of the electricity network;
- · the technical condition for connection to the electricity network, if the activity requires grid connection;
- · if a connection exists - information on the technical parameters of the connection point, confirmed by the relevant network operator;
- · an environmental decision, if it is mandatory for the specific project;
- · from 1 September 2026, in the relevant cases, an integrated environmental permit, if such permit is mandatory;
- · a list of operating assets and their values;
- · the energy undertaking’s audit report on financial statements;
- · information on the organizational structure confirming the existence of human resources with the required qualifications and competence;
- · or documents confirming that the relevant professional functions will be performed through third parties.
In practice, the list of documents depends on the type of the specific project, the technical characteristics of the facility, the grid connection model, environmental status and the form in which the undertaking intends to carry out electricity generation activity.
Grid Connection and Technical Condition
One of the key issues in an electricity generation project is grid connection.
If the project requires connection to the electricity transmission or distribution network, the license applicant must have the relevant technical condition or information on an existing connection.
The technical condition for connection defines the terms under which the facility may be connected to the grid, the technical parameters that must be met and the data that must be confirmed by the relevant network operator.
From a practical perspective, grid connection is often one of the most important parts of the project. The location of the power plant, its capacity, the grid’s throughput capacity, the connection point and technical requirements may directly affect the project’s cost, timeline and legal prospects.
Therefore, when planning an electricity generation project, the grid connection issue should be assessed legally and technically at the initial stage.
Environmental Decision and Other Permits
An electricity generation project may require not only an energy license but also an environmental decision.
If an environmental decision is mandatory for a specific project under the Environmental Assessment Code, the license applicant must submit the relevant document to the Commission.
From 1 September 2026, in the relevant cases, the law also provides for the issue of an integrated environmental permit if such permit is mandatory for carrying out the specific energy activity.
This means that the legal assessment of an electricity generation project should not be limited to the question: do I need a generation license?
It must also be assessed whether the project requires an environmental decision, an integrated environmental permit, documents related to construction or commissioning, a technical condition for grid connection and other special consents.
How Does the Commission Decide Whether to Issue a License?
A license must be issued in a transparent, objective, legally substantiated and non-discriminatory manner.
The Commission examines whether the license applicant meets the conditions established by law and licensing rules. In this process, both the formal correctness of the documents and the undertaking’s actual ability to carry out electricity generation activity may be assessed.
The Commission has the right to request additional factual circumstances, documents, data and information confirming satisfaction of the relevant license conditions.
If the license applicant cannot confirm its ability to satisfy the necessary conditions, the Commission may refuse to issue the license. Such refusal must be legally substantiated and based on the principles of objectivity, transparency and non-discrimination.
A refusal to issue a license may be appealed in accordance with the procedure established by law.
For What Term Is an Electricity Generation License Issued?
According to the Law of Georgia on Energy and Water Supply, the licenses provided by this law are issued for an indefinite term.
This means that an electricity generation license is not a temporary right issued for a short specific period. However, the indefinite term does not mean that the licensee is released from the obligation to continuously comply with license conditions.
The licensee is obliged to comply with the license conditions throughout the entire period of the license. The Commission, within its supervisory authority, has the power to request documents confirming compliance with these conditions.
As a rule, the number of electricity generation licenses is not limited, unlike activities where the law establishes exclusive rights in a specific area or market segment.
What Obligations Does a Licensee Have?
After obtaining a license, the licensee has not only rights but also obligations.
The licensee is obliged to properly perform the functions and obligations imposed on it, comply with license conditions and observe the requirements established by Georgian legislation.
The licensee must notify the Commission of changes made to the data or information submitted for obtaining the license. The procedure and deadlines for notifying specific changes are defined by the licensing rules approved by the Commission.
The licensee is also obliged to prepare and submit an activity report to the Commission and, in the cases provided by law, to other competent state authorities as well.
In addition, the licensee may not terminate, reduce or increase outside the license area the service provided under the license without the Commission’s prior consent, except in cases provided by law.
Violation of license conditions may become grounds for liability, suspension of the license or revocation of the license.
Amendment, Suspension and Revocation of the License
An electricity generation license is issued for an indefinite term. However, in the cases provided by law, it may be amended, suspended or revoked.
A license may be amended if this is caused by a change in legislation or if there is a substantiated request by the Commission or the licensee.
The Commission may suspend a license if the licensee violates the requirements of legislation or the license conditions and a written warning and fine have already been applied to it.
The license is suspended until the violation is eliminated, but for no more than 6 months. After the violation is eliminated, the license is restored by a decision of the Commission, based on the licensee’s application.
Revocation of a license is possible in the event of violation of the license conditions or the law. This once again shows that obtaining the license is only the initial stage, while the main challenge is continuous compliance with the license conditions.
What Should a Business Consider Before Starting Electricity Generation?
Before starting an electricity generation project, a business should go through several practical legal stages.
First, it must be determined whether the planned activity is licensable. For this purpose, the type of facility, capacity, grid connection, purpose of generation and exceptions provided by law must be assessed.
At the second stage, it must be checked whether a notification must be submitted to the Commission, especially when the matter concerns a small-capacity power plant.
At the third stage, it must be assessed which documents are required to obtain the license - ownership or use of equipment, commissioning, technical compliance, grid connection, environmental decision, audit report, organizational structure and other data.
At the fourth stage, it must be assessed which other permits or consents may be required for the project, including environmental, construction, technical or grid-related requirements.
At the fifth stage, post-license regulatory obligations must be planned, including reporting to the Commission, notification of changes in data and compliance with license conditions.
How Can LTA Help?
LTA assists investors and energy companies with the legal assessment of electricity generation projects, determination of licensing requirements, communication with the Commission and preparation of licensing documentation.
Our services may include:
- · legal analysis of the electricity generation project;
- · assessment of the need for a license;
- · analysis of exceptions from licensing;
- · assessment of notification obligations in the case of a small-capacity power plant;
- · assistance with preparing documentation to be submitted to the Commission;
- · assessment of legal issues related to grid connection;
- · analysis of legal risks related to environmental and other permits;
- · explanation of obligations arising after the license is obtained;
- · support in communication with the Commission and other state authorities.
Starting electricity generation activity requires not only technical planning, but also the proper legal structuring of the project. At this stage, it is important to assess regulatory risks in advance.
