The Black Sea Submarine Cable Project: Update from Tbilisi
The Black Sea Submarine Cable Project currently is a major topic of discussion between Georgia and its international partners. It would offer the potential of exporting electricity from renewable sources from the Caucasus to the European Union. Political support for the project is high. Running roughly 1,200 km between Georgia and Romania, mostly underwater, the project is ambitious.
In discussions in Tbilisi, some express caution concerning the project’s scale, physical vulnerability, construction costs, and Georgia’s export potential. On the other hand, advocates point to the long-term benefits and similar proposals such as the Australian-Singapore interconnector. Despite reservations, many also view the project with a degree of hope due to its high symbolic value as the cable would create a direct connection to the EU.
Single largest infrastructure project in Georgia
It is the single largest infrastructure project that currently is being put forward by the Government of Georgia: the Black Sea Submarine Cable Project, as it is officially called. The vision is ambitious. The cable is meant to connect Georgia with Romania, from Anaklia to Constanta, running 1,195 km, 1,100 km of which underwater. The high voltage direct current (HVDC) cable would have a voltage level of 500 kV and a capacity of 1,000-1,500 MW. The idea is that energy from the Caucasus and Caspian could be exported to the European Union – with a particular focus on renewable energy, from hydropower and other sources. The project in that way would connect and perhaps even integrate the Caucasus and Caspian region much more closely with Europe, and ideally also incentivize investment into additional renewable energy generation. A fiber-optic cable would be laid alongside, to strengthen Internet connnectivity between the Caucasus and the EU.
Most agree that in principle this is an attractive vision. Consequently, the Black Sea Submarine Cable Project is regularly on the agenda during high-level visits, such as the recent meeting of Levan Davitashvili, Georgia’s Minister of Economy, with Sven Giegold, State Secretary of the Federal Ministry for Economic Affairs and Climate Action. Next to Georgia and Romania, the project involves Azerbaijan and Hungary. The European Union has been supportive of the project, too. As Ursula von der Leyen, President of the European Commission, has said at the signing of a memorandum of understanding in December 2022, “the project holds a lot of promises. Now it is up to us to deliver on security of energy supply and on decarbonising our economies.”
Considerations of Caution
In discussions in Tbilisi, views on the project remain mixed. Some find the scale of the project daunting. No submarine cable of this length is currently in operation. The longest existing cable, North Sea Link, with a roughly similar capacity, connects Norway and Great Britain, at 750 km of length. (The second-longest cable runs from Norway to the Netherlands.) The length of the cable implies some “loss functionality”, with North Sea Link losing about 3.4% at present.
A bigger concern is the physical vulnerability of such a project. The cable would run less than 150 km from the southernmost tip of Crimea, currently occupied by Russian forces, and thus within easy reach of the Russian navy, also from Novorossiysk, in sovereign Russian territory. The sabotage of Nord Stream in September 2022 has underscored that multibillion-dollar infrastructure projects are not off-limits. Analysts in the Baltics have highlighted that Russia has developed a number of “special purpose vessels” that could be a threat to Baltic Sea cables as well. Such threats, sector insiders point out, create the major challenge of how to insure the project, especially given its size, at a rate that remains viable for the commercial operation of the cable. Without insurance, in turn, few credible investors will be willing to commit funding.
Next to these geopolitical risks, there is the sheer challenge of building the Black Sea Submarine Cable Project. The Black Sea on average is more than 1,000 meters deep, and as the naval mine that washed up to a Georgian beach in February 2023 – exploding on shore – illustrated, it can hold its surprises. For about 700 km the submarine cable would run at about 2,000 m below sea level – an additional challenge in case repairs are needed. There are, in other words, many unknowns. Some observers argue that building the cable will cost more than the EUR 2.3 bn currently estimated. North Sea Link, completed on schedule in 2021 and significantly shorter, cost a total EUR 2 bn, more than originally projected. Representatives of international financial institutions say that there have been preliminary discussions about potential contributions, but significant work would be ahead to mobilize the level of funding that is required.
The discussion of the cable ties into the development of the entire energy sector. Will the region have enough energy to export, by the early 2030s, the scheduled time of completion? At least in Georgia, there are doubts. Domestic energy consumption is expected to grow ahead of the projected growth of generation. In practice, entrepreneurs in the sector say that it can be hard to move forward with projects, and various investors have faced setbacks, including resistance at the municipal level. While the government has stressed that it is keen for more generation to come online, observers are still waiting to identify a substantial acceleration in the sector.
Emphasis on Long-Term Benefits
Advocates of the project point out that the Black Sea Submarine Cable is only one of several ambitious projects around the world. There have been discussions, for example, of an Australia-Singapore interconnector (SunCable project), to export renewable energy, in particular solar and wind, relying on the high potential for this kind of supply from Australia. Future surplus Australian renewable energy could meet Southeast Asian electricity demand, which currently primarily relies on coal. This project – 3,200 km long – would face similar challenges, but its proponents highlight that these are dwarfed by the long-term benefits. (The SunCable project is being restructured, after two key investors fell out.)
The results of a feasibility study by the Italian consulting company CESI are expected later in 2023, or possibly in the first quarter of 2024. Given the scale of the investments, people in the business sector have suggested a more extensive public discussion is required, to weigh the risks and benefits of such a substantial commitment. Among the alternatives that are mooted are larger investments in the transmission lines to Turkey, as an immediate export market and, eventually, as part of integrating with the synchronous grid of Continental Europe.
High Symbolic Value and Outlook
Despite reservations, many view the Black Sea Submarine Cable Project with a degree of hope. In the absence of a land border, the cable would be a direct connection to the EU. In this way, the project carries significant symbolic value. One sign to watch out for, according to sector insiders, is whether the Georgian government convenes a commission to move the project forward. At this stage, the project in Georgia is mostly run from the Georgian State Electrosystem (GSE), the country’s electricity transmission system operator. Once the full commission would be in place, it would be a clear signal that Georgia has mobilized for a whole-of-government effort.
Picture: ©Dragon Claws-stock.adobe.com
