The bank has approved a $40m loan for developer JSC Dariali Energy with $30m of funding will be provided by Dutch development bank FMO and $10m from the Green Growth Fund.
The facility, which is estimated to generate 510GWh of energy per year, will play an important role in the development of hydropower resources in Georgia.
It will help to reduce carbon-based power generation and also cut reliance on imported fuels in the winter months.
The bank said the facility will be the first in Georgia to deliver carbon-neutral construction by including reforestation upon completion.
EBRD power and energy director said: "The project will be supplying electricity to both the Georgian and Turkish electricity networks utilising the Black Sea Transmission line financed by the Bank in 2010 and commissioned in 2014."
EBRD director for Caucasus, Moldova and Belarus Bruno Balvanera said: "Georgia is estimated to have some of the highest untapped hydropower resources in the world, with less than 20 per cent of this potential capacity presently developed.
"The investment supports efforts to develop this potential and lead the country towards a greener policy as well as take advantage of its strategic location of linking the South Caucasus with Europe and Turkey. This will help to strengthen not only national but also regional energy security."
The EBRD has invested about €2.2bn in more than 170 projects since the starting of its operations in Georgia.
The bank has committed more than €350m in the Georgian power sector alone.
Image: JSC Dariali Energy will develop, construct and operate the 108MW hydroelectric power plant in Dariali. Photo: Courtesy of European Bank for Reconstruction and Development.
