POWER Digest [February 2018]

Polish Energy Company Puts Large Coal-Fired Unit Online

Enea, the Polish state-owned energy company, in December inaugurated what it calls the largest coal-fired power generation unit in Europe. The company put a 1,075-MW unit built by Mitsubishi Hitachi Power Systems (MHPS) online at its Kozienice plant, where it will operate alongside a dozen additional units with generation capacities from 250 to 300 MW. Krzysztof Figat, Enea’s head of production, said in a ceremony streamed via the internet, “The B11 section [coming online] is the largest and most modern in Europe.” The new unit is part of a $1.8 billion project at Kozienice. About 90% of Poland’s power generation is from coal. The country also is home to Europe’s largest coal-fired plant, the nearly 5,500-MW nameplate capacity Belchatow Power Station, which is the second-largest thermal plant in the world. The European Commission in December approved an $11.2 billion plan to help Poland develop renewable energy. The country’s goal is to generate at least 15% of its power from renewable sources in 2020. Its government has moved slowly to embrace renewables, pointing to the coal industry’s importance as a source of jobs. Mateusz Morawiecki, who took over as prime minister in mid-December 2017, is a member of the pro-coal Law and Justice Party. He has talked about the country increasing power from renewables and other low-carbon sources—including construction of the country’s first nuclear plant—but at his swearing-in said, “Today coal is the basis of our energy industry and we cannot and do not want to give it up.”

U.S. Company Set to Build Coal-Fired Plant in Kosovo

The government of Kosovo on December 20 signed a deal with the New York-based arm of global technology and energy company ContourGlobal for construction of a 500-MW coal-fired power plant in the Balkan country. Greg Delawie, the U.S. ambassador to Kosovo, said at a ceremony marking the agreement, “This project will represent the largest foreign investment in Kosovo’s history.” Kosovo officials said ContourGlobal will finance about 30% of the construction, and also be “responsible for arranging debt financing.” The project, known as Kosova e Re, or New Kosovo, has an estimated cost of about $1.5 billion. The new facility is expected to provide about 50% of the country’s power. Delawie said Kosovo’s current power plants are “old and less reliable than we all want,” and said the lack of reliable power has been a “huge obstacle” to the country’s growth. The plant is expected to be online in 2023.

Siemens Has Contract for Combined Cycle Plant in Tatarstan

Siemens in December was awarded a $450 million contract to build a combined cycle power plant in Tatarstan, a Russian republic. The 495-MW plant will be built in cooperation with ENKA, the largest construction company in Turkey. The contract was awarded by Nizhnekamskneftekhim (NKNK), a member of the TAIF Group in Russia, which works in a variety of industries, including oil refining and petrochemicals. The contract calls for delivery of two SGT5-2000E gas turbines, one SST-600 steam turbine, and includes a 13-year service agreement. NKNK is a petrochemical arm for TAIF. TAIF CEO Albert Shigaboutdinov said the plant will generate power for NKNK’s industrial production. He said the plant “will run on associated gas derivatives [syngas]… byproducts from [NKNK] production processes.” The plant is scheduled to come online in May 2021.

Big Deals Signed for Massive Geothermal Projects in Ethiopia

Geothermal management firm Reykjavik Geothermal on December 19 said it signed a 520-MW power purchase and implementation agreement with the government of Ethiopia and its state-owned utility Ethiopian Electric Power (EEP) for the Tulu Moye area. At the same time, Corbetti Geothermal Co., a firm funded by Reykjavik Geothermal, Iceland Drilling Co., and financing entities, African Renewable Energy Fundand InfraCo Africa, signed a similar 520-MW agreement with EEP for the Corbetti area. The two projects will be developed in phases with a total budgeted cost of about $2 billion, making them one of the largest independent power projects investments in Africa. The 2008-established Reykjavik Geothermal and the Ethiopian government in 2013 signed a framework agreement for the development of 1 GW of baseload geothermal power. EEP said in a statement that the agreements are a major step in development of a geothermal industry in the country, which it says has a potential of more than 10 GW. The Tule Moye project will be developed around the Tulu Moye volcano in the Ethiopian Rift Valley under a joint venture between French investor and asset management firm Meridiam and Reykjavik Geothermal. According to the firms, a three-year-long study of the region suggests that it is one of the best geothermal resources in the world, capable of sustaining much more than the original 500 MW planned for the initial project. The firms expect the project will be completed by 2023. Corbetti, which could become Ethiopia’s first independent power project, is situated in the Corbetti Caldera 250 kilometers south of Addis Ababa. The greenfield project’s first phase—which is wholly equity funded—will involve drilling up to six exploratory wells and building a small power plant. The second phase entails drilling nine to 13 wells and constructing a 50-MW commercial-scale power plant.

Scotland Eyes 50% Renewables Mandate by 2030 in New Energy Strategy

A new energy strategy published by the Scottish government on December 21 sets out two high-level targets to boost development of renewables in the nation. By 2030, the government wants 50% of all Scotland’s heat, transport, and electricity consumption to be sourced from renewables. It also targets a 30% increase in energy productivity across the economy. The government also unveiled£80 million in new investment in the energy sector, including£60 million for low-carbon innovation and£20 million for energy investment. The government is also planning establishment of a publicly owned energy company.

NERSA Approves Sliver of Beleaguered Eskom’s Requested Rate Hike

The National Energy Regulator of South Africa (NERSA) on December 15 approved a tariff increase for financially strapped state-owned utility Eskom. However, the 5.23% increase was well short of the 18.9% Eskom had asked for. The revenue and tariff decisions received 23,000 comments, many from heavy energy users‚ non-profit groups‚ environmental activists, and local government bodies, after public hearings of the rate hike held in eight of South Africa’s nine provinces in November. Some groups noted that the country has recently seen soaring power costs. The South African Chamber of Mines said in a statement the mining sector’s cost base has increased by more than 300% over the past eight years. But according to financial analyst Moody’s Investors Service, Eskom has high ongoing financing needs over the period of its five-year plan unless it can materially scale back capital expenses, “which is unlikely,” it said. Faced by subdued demand, the company owned by the Department of Public Enterprises is generating lower revenues than anticipated but has incurred high costs as it completes its Medupi and Kusile coal-fired power plants. Eskom expressed disappointment with NERSA’s decision. It said it will await the government’s decision document, which it expects will provide more insight and allow it to make an assessment on the impact to the business and, ultimately, a decision on the way forward. ■

Sonal Patel and Darrell Proctor are POWER associate editors.