Georgia’s energy sector operates on commercial principles, with tariffs set on a full cost recovery basis. The electricity and gas subsectors have been unbundled, with segregated generation/supply, transmission, and distribution, overseen by an independent regulatory commission. Electricity generation is now dominated by the private sector, and gas distribution dominated by independent companies. The energy storage business is expected to grow only if the regulatory framework and tariffs evolve to support private sector participation. The proposed first investment in large-scale energy storage is an underground gas storage facility near Tbilisi that will reduce seasonal variation in natural gas supply and mitigate supply disruptions. The energy storage capacity will reduce market imbalances and seasonal price volatility to end-users.