TES 6 coal power plant Slovenia

Šoštanj in North Slovenia 30km from the Austrian border is the location of an existing lignite-fired power plant - Termoelektrarna Šoštanj or "TEŠ"[1] owned by HSE (Holding Slovenske Elektrarne d.o.o.) a 100% state-owned electric utility[2]. The plant is presently comprised of five blocks. Blocks 1-2 built in the 1950s have closed, 3 is about to close and 4-5 are set to close in 2016. A new sixth block of 600MW is now planned and this project is known as TEŠ6.

Apart from the climate angle, there are many other concerns surrounding this project.  The Ministry of Economy did a detailed analysis of economical efficiency of the project TEŠ 6 and findings show that the investment is very sensitive - high sensitivity is shown in four elements, according to which the project can be profitable or not: (1) price of coal (which is, in the current investment program, very low), (2) price of emission allowances, (3) electricity sales price and (4) the total amount of investment.

The project, as it is set now, is, according to the report, highly risky. The risk of the state is to lose its property if the project goes on in such a form. The report has also found out that there are serious suspicions for breaching legislation and corruption. Because of these issues, the government appointed a special auditor to comprehensively audit the individual management activities of TES 6 and initiate all other appropriate verification procedures of infringements with the competent authorities. Meanwhile, the Minister of Economy sent the report and related documents to the Commission for Prevention of Corruption, police and the state prosecutor.   

[1]    http://www.te-sostanj.si/

[2]    http://www.hse.si/en/

The TEŠ6 project was proposed in 2003 and was included in the government development programme of 2007. It has so far received all relevant permissions from the Slovenian government. The project was originally expected to cost €700m-900m. But the overall rise in coal plant capex over recent years has seen the project's costs to escalate to €1.2bn according to the EIB[1]. In September 2007 the EIB loaned an initial €350m which was increased to €550m in April 2010. In January 2011 the EBRD signed a €200m loan for the project (including €100m syndicated to commercial banks). The remaining €400m is financed from HSE. The Slovenian government has not yet provided loan guarantees to facilitate the loan from EIB, of which a big part - €440m - has to be supported by a state guarantee.

The Slovenian authorities and EIB maintain that the project is ‘Best Available Technique' (BAT) standard - as is required by EU law. This means it improves efficiency to 46% compared to the plant it is replacing (around 35% efficient). This is less efficient, however than CCGT and while it may be BAT across the emissions profile of the project, it is not necessarily the case that the project has been subjected to the standards for carbon capture readiness laid out in the CCS directive.

[1]             http://www.eib.org/projects/pipeline/2006/20060319.htm

The TES6 coal fired power plant development is in dire opposition to European climate legislations and ambitions as well as a dubious economic investment, not to mention the current investigation on the grounds of suspicion of corruption that surrounds the initiative.

Private investors and commercial banks must perform due diligence before committing to finance this project including a thorough investigation and sound judgement based on the full review of the history and objectives of the project.

We demand the immediate halt of any sort of private financial support to this project and that the pledged 100 Million Euro funding from the above named commercial banks to be withdrawn immediately.

One of the key arguments behind pushing this project further is that it will preserve about 3000 working places in Šaleška valley (about 1500 jobs in the Velenje lignite mine, about 700-800 in TEŠ itself and about 700-800 in related support companies). However, this means that with the 1,2 billion EUR investment we are saving about 3000 jobs, which means that we invest about 0,4 million EUR into each one of these jobs. Investing the same amount of money into energy efficiency and renewables would certainly open more jobs - maybe not only in the region of Šaleška valley, but also elsewhere in Slovenia. The fact is also that on long-term these jobs are going to disappear because the lignite mine will run out of lignite. What we do today to save these jobs will only postpone the real problem solving to the next generation, who will inevitably have to face the problem.

Operating TEŠ6 without carbon abatement will result in emissions of 3.1mtCO₂ a year, which is close to being equivalent to all of Slovenia's emissions in 2050 (if it cuts emissions by 80% in line with European targets)[1]. The EIB and EBRD supporting this project with light conditions around CCS (or alternatives to coal) may leave an open door to many more coal projects.

Although the project is promoted as an environmental investment, because it will reduce the emissions per produced kWh, it is far from that. It uses the dirtiest possible technology for producing electricity. The only real reduction that it will achieve is reduction in SO2 emissions, but for the rest, all other emissions will be increased.

[1]             Note that the agreed EU target is actually 80-95% reductions on 1990 emissions.