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Terminal Evaluation: PIMS 4335: Promotion of Biomass Production and Utilization in Georgia
Commissioning Unit: Georgia
Evaluation Plan: 2016-2020
Evaluation Type: Project
Completion Date: 11/2017
Unit Responsible for providing Management Response: Georgia
Documents Related to overall Management Response:
 
1. Recommendation:

1.The Biomass Strategy is an important document for the promotion of biomass in Georgia. The main achievement of the strategy is that it was elaborated in a consultative process and was approved by all main stakeholders, including MENRP and Ministry of Energy. The shortcoming of the strategy is that it is more a list of potential actions rather than a detailed strategy and action plan about next steps The strategy only gives little indications about financial support mechanisms (it mentions for example the establishment of a revolving fund), but lacks information on funding requirements as well as concrete steps. During the on-site mission it became apparent that there is little likelihood to get the Biomass Strategy in its current format and content approved as both MENRP and Ministry of Energy don’t support the entire document, but only specific components (there was no clarity which these components are). UNDP is providing support to the Ministry of Energy in preparing the National Renewable Energy Action Plan (NREAP), a commitment under the Energy Community. Efforts should be taken to make sure that a maximum of actions will be included in the NREAP, this would support the original target under the project of preparing a “National Bioenergy Strategy and Action Plan, which reflects broad stakeholder consensus, adopted by the Government of Georgia”. Specifically, the NREAP should clearly elaborate on the financial support mechanisms to be put into operation, how they will work and how they will be financed (e.g. grant funding, revolving loan fund,…). 

Management Response: [Added: 2018/11/09]

UNDP agrees to these recommendations and will ensure necessary follow up and reinforcement of initial project benefits. UNDP realizes the importance of policy improvement for the biomass usage in Georgia and thus, despite finalization of this project, UNDP CO will continue necessary advocacy efforts that are in line with the country commitments for the Paris Agreement and membership of energy Community aimed at increasing share of renewables in total energy mix

Key Actions:

Key Action Responsible DueDate Status Comments Documents
a. Ensure that maximum of actions from the Biomass Strategy that are compatible for the National Renewable Energy Action Plan format are included in the document.
[Added: 2018/11/09]
PMU/UNDP CO 2018/12 Overdue-Initiated a.The NREAP development is ongoing and inclusion of biomass strategy actions are advocated as the NREAP format permits; History
b. Advocate for the usage of the draft National Biomass Strategy by the Government
[Added: 2018/11/09]
PMU/UNDP CP 2018/12 Overdue-Initiated b.Since Government decided to have one overarching national strategy on renewables (NREAP), the draft Biomass Strategy will not be adopted by Government as a separate document; however, the extensive participation of stakeholders for its elaboration resulted in very useful information that could be utilized by the Ministry and its agencies for internal planning purposes; UNDP CO presented draft Biomass Strategy to the Minister of merged Ministry of Environment protection and Agriculture in January 2018, who confirmed strong interest of the government in promoting biomass in Georgia, especially in rural areas. The draft strategy paper was noted to be used both by the National Forest Agency and Forest Policy division as well as Agriculture Development unit as this will assist streamlining wood residue and agriculture waste management practices within the Ministry
2. Recommendation:

2.As mentioned several times in the Evaluation Report, on a governmental level no champion has taken full ownership of the further development of improved biomass. It is suggested that the MENRP takes a strong role in supporting the implementation of the outcomes of the project. MENRP is a key ministry due to its responsibility for climate changes issues, but also through the National Forest Agency, which is part of MENRP. The National Forest Agency is the key player in using wood residues from forests and also a key partner in the implementation of the pilot project with National Nursery.

Management Response: [Added: 2018/11/09]

Advocate with the Ministry of Environment Protection and Agriculture (MEPA) to have better ownership and serve as the champion for promoting biomass in Georgia 

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Advocate with the Ministry of Environment Protection and Agriculture (MEPA) to have better ownership and serve as the champion for promoting biomass in Georgia
[Added: 2018/11/09]
UNDP CO 2018/12 Overdue-Initiated Unfortunately, MENRP will not exist as a separate entity because of its merger with Ministry of Agriculture. However, the merged ministry is well positioned to have full ownership of the process, when it comes to sustainable forest management as well as management of agriculture waste. UNDP has initiated with the senior level (Minister) these discussions and was assured that Government has strong interest in developing biomass sector in Georgia, especially in rural areas and for the heating of public sector. Thus, Forest & Biodiversity Policy Division as well as National Forest Agency will have a leading role in support of improved biomass.
3. Recommendation:

3. The on-site mission and reports prepared by experts raised serious questions about the sustainability of the Greenergy pilot project. Currently, the project is out of operation due to internal issues and there are no short-term plans to restart production of wood briquettes based on wine prunings, the concept which was applied for in the grant competition. Greenergy plans to replace wine prunings by sawdust, as the drying of wine prunings (the company is using natural gas for that) proved to be too expensive. Part of the grant from GEF was used to purchase a wood chipper, which would have been used for cutting the wine prunings. As the chipper will not be used in the short-term (and there are question marks whether it will be used in the medium- or long-term), it should be investigated how the wood chipper can be used by other companies in Georgia with a need of chipping wood.

Management Response: [Added: 2018/11/09]

Agree

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Advice Greenergy to find ways for alternative usage of wood chipper and provide facilitation support
[Added: 2018/11/09]
PMU 2017/12 Completed Greenergy management established contacts with other interesting parties in region and offered services for wood chipping. The PMU conducted several meetings and advised Greenergy not to bypass this opportunity, which will potentially generate income from leasing of equipment
4. Recommendation:

4.The pilot project with National Nursery is an important cornerstone for the concept of improved biomass in Georgia, as wood residues from forests are being used for the production of briquettes. However, the on-site mission and reports prepared by experts raised issues and the need for further support in delivery of raw material, technical management of the plant and marketing of the briquettes produced. It is necessary to provide additional support to the project in order to secure sustainability of the pilot. The Forestry Agency should play an active role in supporting the project in securing biomass resources for the production of briquettes. Additional funding from donors would be necessary to provide support in technical, management and marketing aspects

Management Response: [Added: 2018/11/09]

Agree

Key Actions:

Key Action Responsible DueDate Status Comments Documents
To ensure better sustainability of the pilot project managed by national nursery, continue advocacy and facilitate fundraising efforts in close partnership with the National Forest Agency
[Added: 2018/11/09]
UNDP CO 2018/12 Overdue-Initiated
5. Recommendation:

5.The foundation and registration of the Biomass Association was an important step to create a mouthpiece for the entire sector. However, the project did not succeed in elaborating a sustainable business case for the Association, so there is a risk that the Association cannot become sustainable. As there is limited capacity and interest from the founding members to finance the operation of the Association, support in securing additional funding for the Association from international organizations and donors is recommended. Relatively small contributions from individual organizations and donors can add up to a sizeable budget, which could allow the Association to hire a full-time manager.

Management Response: [Added: 2018/11/09]

Agree

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Facilitate support in securing additional funding for the Association from international organizations and donors.
[Added: 2018/11/09]
UNDP CO 2018/12 Overdue-Initiated UNDP CO monitors work of the Biomass Association and provides information to various stakeholders and occasions to increase awareness about Association; Moreover, there are already two small-size projects that are implemented by Biomass Association which indeed is good indicator for sustainability and making the Association operational. With UNDP CO support, the contacts with Lithuanian Biomass Association were established (through the Embassy of Lithuania) and there are plans for a joint project to be introduced in Borjomi municipality for district heating, where biomass will be used; the CO will maintain this facilitation support and advice as needed the biomass association, on fundraising efforts;
6. Recommendation:

6.The Biomass Association is currently driven by individuals/companies. The Association should discuss and agree upon rules how financing received for projects could not only benefit individual members, but have a positive financial impact for the Association (for example by charging a management fee as percentage of funding received for using the name of the Association). Additionally, membership fees should be introduced at a low level with the aim of increasing these in steps over a number of years with the aim of securing a fixed income stream for the Association. 

Management Response: [Added: 2018/11/09]

agree

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Advice Association members to discuss and agree on rules for financing Association and introducing membership fees
[Added: 2018/11/09]
UNDP CO 2017/11 Completed UNDP CO or PMU is not a member of Biomass association; thus, UNDP can only make recommendations and provide advice, which was already done. During the establishment, Association member decided not to charge membership fees for the initial period of the organization. Association will reconsider this issue later in 2018
7. Recommendation:

7.The standards developed under the project (covering Room Heaters Fired by Solid Fuel, Wooden Briquettes and Wooden Logs) have been sent to Georgian National Agency for Standards and Metrology (GNASM) for checking and approval. In case there are issues or challenges arising, support should be given to make sure the standards are being approved.

Management Response: [Added: 2018/11/09]

AGree

Key Actions:

Key Action Responsible DueDate Status Comments Documents
The ‘Biomass Standards’, prepared with the project support were submitted to the National Agency for Standards and Metrology (GNASM); if there are any issues, support will be provided to overcome challenges
[Added: 2018/11/09]
UNDP CO 2018/12 Overdue-Initiated So far no issues or challenges were identified and it is assumed that the Standards will be approved; however, UNDP CO stands ready to provide any support, as needed to finalize this process History
8. Recommendation:

8.A number of promotional materials (brochures, infographics, videos) were prepared under the project, both in Georgian and English. The Biomass Association should be motivated to use these materials, both on their website and as printed documents.

Management Response: [Added: 2018/11/09]

Agree

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Materials are delivered to Biomass Association management and to all members separately. All of them are fully motivated to use materials.
[Added: 2018/11/09]
UNDP CO 2017/11 Completed
9. Recommendation:

9. At a very early stage in the project, the use of woodchips has been discarded due to high production costs. There was a lengthy analysis in the MTR Report explaining why the basis for the decision was wrong. Woodchips should be re-considered as an important source, as they are easy to produce with only limited treatment (chipping) and no drying required. Woodchips can be mainly used in bigger buildings with a central heating system, there was a short feasibility study carried out by the international consultant to showcase how woodchips can be used in municipal buildings in Tbilisi

Management Response: [Added: 2018/11/09]

Agree

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Inform and advocate for considering wood chips as alternative to briquettes;
[Added: 2018/11/09]
UNDP CO 2019/12 Initiated Woodchips were discarded in Tbilisi context during the feasibility study done for use of biomass in Tbilisi. During the business plan competition one of the projects considered woodchip production and utilization but this project was considered as a very high risk by the recommendation of RTA because of financial issues of funder of the company. Since production of woodchips is cheapest in componence with other biomass sources the future woodchips will be reconsidered as one of the most suitable biomass energy source for the regions.
10. Recommendation:

10. The role of improved biomass in Georgia should be manifested in a prominent role in the NREAP to be developed over the next months, with the support from SIDA. UNDP is providing support to the Ministry of Energy in preparing the NREAP and efforts should be taken to make sure that a maximum of actions will be included in the NREAP. The NREAP should include financial or regulatory incentives to help promote biomass in Georgia.

Management Response: [Added: 2018/11/09]

Agree

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Maintain advocacy efforts to ensure biomass actions are fully integrated in the NREAP
[Added: 2018/11/09]
UNDP, PMU 2018/06 Completed NREAP is developed by the independent experts and content is reviewed by the Ministry of Energy. However, the energy community secretariat requires a very strict format to be followed. Thus, the content of draft biomass strategy, developed with the support of Project, will be used to the extent possible and as the Energy Community format permits. UNDP will also lobby / facilitate inclusion of financial or regulatory incentives to help promote biomass in Georgia in NREAP at the maximum extent.
11. Recommendation:

11. Two out of the three pilot projects have an interesting potential for replication. The pilot project operated by Nisoni is already the second briquetting plant operated by the company (the first plant is located in Akhmeta) and shows that the company has the know-how and financial resources to set-up the production of improved biomass. The National Nursery plant in Akhmeta is interesting, as it is using forest residues. This as well as the background of the National Nursery and support by the National Forest Agency make this project a good candidate for further replication in the country

Management Response: [Added: 2018/11/09]

Agree

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Maintain strong advocacy and support for the replication of pilot projects in case of availability of funding.
[Added: 2018/11/09]
UNDP CO 2019/12 Initiated
12. Recommendation:

12. During the course of the project, studies were carried out to investigate the financial viability of improved biomass. A study on the three pilot projects showed that production of wood briquettes can be financially viable if sufficient raw material can be secured at a low price, there is good technical capacity to manage the production process and there is sufficient capacity to sell the products. The briquettes can then be used in improved stoves with manual feeding. The operators were able to sell the briquettes at around 500 GEL/ton (around USD 210/ton). In order to be profitable, production costs should be below 250 GEL/ton (around USD 105/ton), which only one project currently manages. The other two have production costs of more than 400 GEL/ton.
A study carried out by the international biomass consultant showed that more sophisticated solutions, such as fully automated boilers with automatic feeding system for woodchips still require considerable grant support to be financially viable. The low gas price (USD 0.87/m³ or 2.8 USD Cents per kWh) only allows minor annual savings and results in a payback period of around 45 years for the biomass installation.
Based on this information, it is important (as already mentioned above) to support the pilot projects (with specific focus on the National Nursery project) in technical, management and marketing aspects to make sure required sales prices can be achieved and production costs are as low as possible. Additionally, it is important to understand the need for further financial support of improved biomass projects when working on the NREAP.

Management Response: [Added: 2018/11/09]

Agree

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Provide support to the pilot projects in technical, marketing and management aspects, especially the National Nursery project, aimed at improving the financial sustainability of the pilot;
[Added: 2018/11/09]
UNDP CO 2019/12 Initiated UNDP CO will provide this support, as needed, pending the availability of funding to provide such services; alternatively, UNDP will facilitate resource mobilization for the Nursery to apply in practice this TE recommendation
13. Recommendation:

12. There are a number of donors in the country, (KfW, GIZ, SIDA etc …) which were interested in the results of the project, as this has a link to current or potential future activities of these donors. One donor, SIDA, provided USD 150,000 to UNDP to develop a National Renewable Energy Action Plan (NREAP) for Georgia. Contacts with donors should be re-established to investigate ways how to further support the extended use of improved biomass in Georgia as the commercial market for biomass is not yet there in Georgia and more donor support is required.

Management Response: [Added: 2018/11/09]

Agree

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Maintain close contacts with existing or emerging donors and investigate ways how to further support the extended use of improved biomass in Georgia
[Added: 2018/11/09]
UNDP CO 2019/12 Not Initiated UNDP CO has already secured funding of $150,000 for the NREAP development from SIDA in 2017; in addition, it maintained close partnership with GIZ, KfW, to attract their attention for considering further development of biomass in Georgia; GIZ for instance is already considering a large-scale project for the sustainable forest management whereby biomass utilization is core component; UNDP also had several consultations with the Czech development agency, as a potential partner in the area; these efforts will be continued in close cooperation with the MEPA and Ministry of Economic Development and Energy

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