David O'Byrne in Istanbul -

With Turkey's latest power consumption figures showing demand rising a staggering 9.7% over the first six months of this year and with repeated warnings that the development of new power plants inside the country isn't keeping pace with this, it's little surprise that Turkish energy companies have started looking abroad for sources of power.

What is surprising, though, is that instead of looking to take advantage of Turkey's recent interconnection with the pan-European ENTSO-E electricity grid, many Turkish companies are instead looking to Turkey's north-eastern neighbour Georgia, both as a source of power and as a destination for investment in new hydroelectric power plants. "Georgia is a perfect fit for Turkey - long in the winter and short in the summer," says Mustafa Karahan, head of Turkey's Electricity Traders Association (ETD), explaining that Georgia has a big demand for power during its cold winters and a low demand for power in summer when the mountainous country's many rivers are in full flow - and when Turkish demand is highest.

In short, Georgia is the ideal location for hydropower projects that can supply the local Georgian market in winter and export excess power to Turkey in the summer.

Currently, Georgia and Turkey are interconnected by a 28-kilometre, 220-kilovolt line, which has allowed limited seasonal power trading. However, the two governments have agreed to construct a new 400-kV line between Akhalshike in Georgia and Borcka in north-eastern Turkey at an estimated cost of $312m, which will allow for far higher levels of exports and is expected to encourage the development of more hydropower projects, both in Georgia and in neighbouring Azerbaijan, which also has spare capacity.

Some 40 hydropower plants totalling 2,485 megawatts (MW) are currently already under development in Georgia, of which 782 MW is being developed by Turkish companies, with several other Turkish groups in negotiations with Georgia over other as-yet unfinalized projects.

While relations between Turkey and Georgia have become increasingly close over the past two decades, Turkish companies have been helped in their efforts to develop Georgia's hydropower potential by former Turkish bureaucrat Yusuf Guney, who, since the end of his term as head of Turkey's energy regulator, has been working as an advisor for the Georgian Energy Ministry.

Largest of those hydropower plants already under development is the Namakhvani cascade, which is being developed by a consortium of Turkey's Nurol Group and SK International of South Korea, and once complete will consist of three dams totalling 450 MW.

Also under construction is the 87-MW Parvani plant being developed by Georgia Urban Energy, a subsidiary of Turkey's Anadolu Kafkasya Enerji Yatırımları. Planned to begin generating in 2014, the plant will supply the Georgian market for three months in winter and will export power to Turkey for the remainder of the year.

More is still to come, with Turkey's Atac having been awarded licenses for two plants totalling 46 MW and Limak having signed an deal with Georgia for the construction of a cascade of four hydropower plants, pending the completion of final negotiations.