POWER Digest [January 2018]

Construction Underway on New Unit at Serbian Coal Plant. It has been almost 30 years since any new power generation capacity was built in Serbia, but that stretch is coming to an end as China Machinery and Engineering Corp. in November began construction on a 350-MW unit at Serbia’s second-largest coal-fired plant. The project, with a total cost of $715 million, includes expansion of a nearby coal mine that supplies fuel to the plant, along with the upgrade to generation capacity at the Kostolac power complex. The Serbian government is financing 20% of the project, and the Export-Import Bank of China is funding 80% through a 20-year loan. The plant is expected to be ready for commercial service in 2020. Milenko Grcic, CEO of Serbian utility Elektroprivreda Srbije, which operates the plant, said the new unit will have the latest pollution control equipment. About 70% of Serbia’s electricity comes from coal plants, with the rest from hydropower. Several countries in the Balkans, including Serbia, Bosnia, Kosovo, and Montenegro, have plans to build new coal-fired generation as older coal units are closed.

Albanian Government Offers Incentives for New Thermal Plants. New power plants sited in Albania’s southeast region of Korca and the southwest town of Kucova will take advantage of government incentives for public-private partnership projects, the Albanian government said in November. The plants are part of the framework of the Trans Adriatic Pipeline (TAP) project, which after connecting with the Trans Anatolian Pipeline at the Greek-Turkish border will transport natural gas across northern Greece, Albania, and the Adriatic Sea to southern Italy, where it will connect to a natural gas pipeline network in Italy. Construction of the TAP began in 2016 and is wrapping up in Albania, with about 70% of the total pipeline project completed as of late November. Along with the new power plants, Albanian officials said the TAP project also would allow for startup of a thermal plant in Vlora, which will receive natural gas from the pipeline. The Vlora plant was completed in 2011 but was never placed into service due to technical issues and the high cost of power generation associated with the plant at the time. Albania is trying to increase its thermal generation capacity to cope with increased demand for electricity in the country, which has long depended almost solely on hydro plants for power generation. Albania also wants to increase its generation from solar and wind. The European Bank for Reconstruction and Development earlier this year signed an agreement to work with the Albanian government to develop large-scale photovoltaic projects in the country, and plans for several wind projects have been announced in recent months.

Power Prices Fall Dramatically in Mexico’s Third Power Auction. Mexico’s third power auction held on November 16 yielded some of the lowest prices for power in the world and will add 2,562 MW—from nine solar plants, five wind farms, and a gas plant—to Mexico’s total capacity. Among big winners in the auction were French firm Neoen, Canadian Solar Energy, ENGIE, Enel, Trina Solar, and Mitsui & Co.Average prices in the third auction for renewables (plus a corresponding clean energy certificate) fell to $20.57/MWh—a sharp decrease from average prices of $33.47 in the second auction in September 2016, and $41.80 in the first auction held in March 2016. Mexico’s renewables prices beat out even Chile’s, which fell sharply to $32.50/MWh in an auction held at the beginning of November. Mexico’s three auctions are expected to ramp up its renewable capacity to help the country meet a target of generating 35% of power from clean sources by 2024, under its energy transition law. The target will increase to 45% in 2036 and 60% by 2050.

Uniper Fending Off Takeover by Fortum.German firm Uniper is going all out to fend off a hostile takeover by Finland’s Fortum. Fortum has already signed an agreement to buy a 47% share of Uniper currently held by E.ON, a German utility that spun off its coal, oil, gas, and nuclear assets to form Uniper in January 2016. E.ON’s focus remains on renewables and energy networks. On December 7, Uniper, which operates in more than 40 countries and has 13,000 employees, promised its shareholders dividends that will increase on average by 25% per year until 2020 to convince them not to tender stock to Fortum’s $9.49 billion takeover bid. Uniper has said that the deal undervalues the group and is a bad strategic fit. According to CEO Klaus Schäfer, Uniper’s reorganization that began two years ago (when it was part of E.ON) has paid off robustly by lowering annual costs and by divesting activities not part of its core business. The company’s power plants, storages, pipelines, and trading positions could allow the company to “profit considerably,” Schäfer said.

Construction of 1-GW Coal-Fired Expansion Project Begins in Indonesia.Construction has begun on the 1-GW ultrasupercritical coal-fired Cirebon power plant expansion in Indonesia. Mitsubishi Hitachi Power Systems (MHPS) is building the project in West Java province on a full turnkey basis in consortium with Toshiba Groupand Hyundai Engineering & Construction Co., Ltd.MHPS, the project’s engineering, procurement, and construction contractor will also supply the plant’s ultrasupercritical-pressure boiler and flue gas desulfurization system. The plant owned by PT Cirebon Energi Prasarana (an entity collectively financed by Marubeni Corp., JERA Co., PT Indika Energy Tbk, Samtan Co., Ltd., and Korea Midland Power Co. Ltd.) is scheduled to be completed in 2022. The project will expand the existing 660-MW coal-fired plant at the site owned by Marubeni. Indonesia’s state-owned utility PT PLN will buy power from the expansion project under a power purchase agreement.

1-GW Gas Plant in Malaysia Announced. South Korea’s Korea Electric Power Corp. (KEPCO) in November teamed with Malaysian firm Tadmax Resources Berhad to build a combined cycle gas turbine power plant rated at between 1 GW and 1.2 GW in Malaysia. KEPCO will hold a 25% stake in the $1 billion project. KEPCO and Tadmax still need to get final approval for the two-block project from the Malaysian government, which is expected in the third quarter of 2018. Construction could begin in 2019 and the facility is slated to be completed in 2023. Power will be sold to the state-owned utility Tenaga Nasional Berhad through a power purchase agreement. ■

Sonal Patel and Darrell Proctor are POWER associate editors. 

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