Minister of Energy admits that Ostrołęka C is unnecessary and economically harmful

At COP24 in Katowice Minister of Energy Krzysztof Tchórzewski confirmed construction of Ostrołęka C power plant to be against Poland's economic and environmental interest. Now the minister justifies it with the necessity of cooperation with the European Union and the Baltic States and by the need to "meet deadlines". Stop Ostrołęka C coalition comments: no international documents support it. The Ministry of Energy have not presented any strategic document which would confirm that the Ostrołęka C power plant is an important element in the synchronization of the Baltic States' power systems with Continental Europe - neither documents of the European Commission, nor the Polish Power Grid or the Lithuanian operator LitGrid mention it.

To the best of our knowledge, a document stating that Ostrołęka C is necessary for synchronisation with the Baltic states simply does not exist. When other arguments have failed, Minister Tchórzewski reaches for a new, irrational justification for this coal project. Claiming that building a coal power plant is required by European solidarity and, at the same time, lack of any solidarity in protecting the climate by moving away from coal is the height of hypocrisy - comments Diana Maciąga, Climate Coordinator at the Association Workshop for All Beings.

Ostroleka C's owner sued by it's own trade union

Trade union Synergia filed a lawsuit against Enea for revoking the directional consent for the construction of Ostrołęka C power plant. Trade unionists had been criticising the project for several months as unprofitable and politically driven, and they had presented their concerns directly to Minister Tchórzewski.

World-first climate risk case launched over Ostroleka C

ClientEarth, a shareholder in Enea, has filed a challenge against the company’s decision to greenlight the €1.2bn, 1GW Ostrołęka C coal power plant. The resolution authorising the contested plant passed at a shareholder meeting on September 24 2018, despite sharp minority shareholder dissent. The court action hinges on the “indefensible” financial risk the project poses to investors due to rising carbon prices, increased competition from cheaper renewables and the impact of EU energy reforms on state subsidies for coal power under the capacity market.

Investor LGIM-lack of funds for Poland's planned Ostroleka coal plant a concern

Legal & General Investment Management, Britain’s largest asset manager, said it has serious concerns over Poland’s planned development of the Ostroleka C due to unsecured financing for the project. LGIM is invested in both Enea and Energa.

“We have serious concerns about the development of a new coal plant in Poland, Ostroleka C given that they have not yet secured capacity market payments or confirmed third-party financing, (...) We don’t believe the companies should proceed with this project until they can provide us with reassuring evidence of its financial viability and the role it will play in meeting the energy security and the carbon targets in Poland and Europe,” said Meryam Omi, the head of sustainability and responsible investment strategy at LGIM.

Energa EGM votes for an NTP for Ostroleka C

On September 3, the Extraordinary General Meeting of Energa voted for issueing a Notice to Proceed (NTP) for the Ostrołęka C power plant. Shareholders holding 23,5 million shares voted against, 4.6 million abstained. Neither the members of the Supervisory Board nor the Management Board of the company were present, disregarding the good investor relations practices. Issuing NTP before the capacity auction (duo on December 21 2018) breaks the obligation towards Energa’s bondholders: in the Eurobonds prospectus from February 2017, Energa AB stated that an NTP would not be issued before the auction. Following the EGM decision, both Enea and Energa suffered drop in share prices.

In order for the construction works to start the same consent must be expressed by the EGM of ENEA, which is on September 24, 2018.

New report smashes Ostrołęka C - the power plant shows deep unprofitability

The latest report by Michał Hetmański,Instrat Foundation, "Ostrołęka C - what's next with the last coal-fired power plant in Europe?" shows complete lack of profitability of the largest new coal-fired power plant in the EU and serious legal doubts connected with it. Ostrołęka C can get only 15% of its revenues from the capacity market. Even under optimistic assumptions it will never provide investors with return on the investment. Ostrołęka C requires "adding" at least PLN 2.3 billion throughout its life cycle, i.e. an additional approx. 50% of the construction cost. In the optimistic scenario of a very slow increase in the prices of CO₂ emission allowances and a rapid rise in electricity prices - the power plant still turns out to be unprofitable. The power plant can generate electricity (LCOE) at a price of 488 PLN / MWh or even 505 PLN / MWh. This is much more than in the case of just recently developing polish wind farms (300), offshore farms (420) and even photovoltaic (440).

Energa's rating downgraded due to Ostrołeka C

On July 16 EuroRating downgraded Energa’s rating from BBB to BBB- in response to Energa signing the contract with GE Power/Alstom to build Ostrołeka C power plant.EuroRating assessed the current structure of Energa financing as relatively weak and pointed out that another large expenditure for the construction of the Ostrołęka C power plant (mainly financed by the increase in debt) will cause its further deterioration. The agency also noted that this power plant would need to use imported coal and thus harm Poland’s energy safety and advised withdrawal from this project on its early stage.

NGOs file for annulment of the Ostrołęka C integrated permit

12 July 2018, the Association Workshop for All Beings, with the support from Frank Bold lawyers and the Society for Earth, filed a motion for annulment of the former Minister for Environment Jan Szyszko’s decision regarding the extension of the integrated permit for the Ostrołęka C coal power plant referring to the flagrant breach of law. Additionally, the current integrated permit has a number of shortcomings. It does not specify two basic parameters, such as the gross electric power and the net electric power, making the calculation of the electrical efficiency, which co-decides whether the installation meets the requirements of the BAT standards, impossible. Estimation of the pollutants amount is also not possible because this document does not include the power plant’s operating time. Last but not least, the integrated permit does not specify the obligation to monitor the emission of heavy metals such as mercury, arsenic, cadmium, chromium, copper, nickel, lead or zinc.

GE Power and Alstom Power System sign contract with Ostrołeka C

On July 12 the American-French consortium of GE Power and Alstom Power System signed a contract to build the Ostrołęla C Power Plant. The consortium had won the tender with the amount of PLN 6.02 billion. The Ostrołęka S.A. power plant, co-owned by Energa and Enea, had allocated only PLN 4.8 billion to the order. This confirmed the earlier concerns of experts that the project is significantly underestimated. GE Power had already signed a letter of intent for cooperation in the construction of Ostrołęka C Power Plant with Polimex-Mostostal S.A., a Polish company which had lost the tender but has close links to project owners: Energa and Enea, who are among its shareholders.

Polish NGOs caution Prime Minister Morawiecki to stop plans for new coal power plant

On July 12th, 27 major Polish NGOs working on climate protection published an open letter to Poland’s Prime Minister Mateusz Morawiecki. They are asking him to stop the Ostrołęka C coal-fired power plant project. According to experts, this TPP will be uneconomic and harmful to the environment and public health. It will jeopardize Poland’s energy safety while blocking the development of clean energy on regional and national level.

GE Power and Polimex-Mostostal to build Ostrołęka C

On 22.06.2018 GE Power and Polish company Polimex-Mostostal signed a letter of intent with respect to the construction of the Ostrołęka C power plant. GE Power Sp. will subcontract Polimex-Mostostal S.A for one or more of the following scopes: construction work, delivery of steel structures and assembly of steel structures. The two companies may also partner in the area of project work and other services and deliveries required for the implementation of the Ostrołęka Project. Polimex-Mostostal has struggled with financial problems until in 2017 65,93% of its shares were purchased by state-owned energy companies, including PGE, Enea and Energa.

Ostrołęka C secretly granted extension of the IPPC

Ostrołęka C received an integrated permit (IPPC) in 2011. The date from which the entity was obliged to start operating was set for June 2016. As the investment process was prolonged, this requirement could not be met. The investor applied to the Marshal of the mazovian voivodship for extension of this term till 2022. In accordance with the law the Marshal refused, justifying his decision with the fact that the application was submitted in July 2016 (one month after the deadline established in the integrated permit). As a result the Ostrołęka C’s IPPC would become invalid on 30 June 2018. In September 2016 the investor appealed directly to the Minister for the Environment and received a prolongation of its integrated permit. According to the Minister for the Environment, extending the IPPC was a matter of public interest. The amendment to the IPPC was not publicly announced.  

In winter 2017/18 the NGO’s from the Strop Ostrołęka C coalition submitted a request for public information on the environment to the Ministry regarding the project’s development, including its IPPC. In response they were provided with a set of documents but it was lacking any trace of the amendment. It was only in May 2018 that the coalition learnt about the amendment via journalists. It is highly unlikely that the vital document was excluded from the documentation unintentionally.   

GE Power, Alstom to build Poland's last coal-fired power plant

Energa and Enea have announced that the consortium of GE Power and Alstom has won the tender to build Ostroleka C with a bid of PLN 6.23 billion. The 1000 megawatt powerplant is expected to open in 2023 and to power roughly 300,000 homes. GE power will design the plant using ultra-supercritical technology. The plant is expected to be the last coal-fired power plant to be build in Poland as energy minister Krzysztof Tchorzewski has said. Energa and Enea plan to make use of a back-up power capacity scheme approved by the EU in February. It allows them to be paid for keeping the plant online to produce when electricity is needed.

Energa to announce result of power plant tender

The results of the tender for the construction of Ostrołęka C is expected within days according to Energa’s acting Chief Executive Alicja Klimiuk. She declined to comment on whether the tender could be cancelled because all three bids overshot the budget. She did add that the project will participate in a power capacity auction later this year. 

Energa closes bidding process for Ostrołęka C

The bidding process for the construction of Ostrołęka C was closed on December 28th. Three groups have submitted offers to build the project. China Power Engineering Consulting Group has offered to build the unit for PLN 4.85 billion (USD 1.38 billion). A consortium of GE Power and Alstom Power Systems has proposed a PLN 6.23 billion contract. A group of Polimex-Mostostal and Rafako proposed a contract of PLN 9.59 billion. Energa has stated they will consider more than just cost for the final decision. Energa and Enea have planned to spend PLN 4.8 billion , however, they have not ruled out attracting investors to help finance the project.

Ostrołęka C to be the last coal unit built in Poland?

According to an article published on September 6th (in Polish), during the Economic Forum in Krynica, Poland, Minister for Energy Krzysztof Tchórzewski said that ‘he would like Ostrołęka C to be the last new coal unit built in Poland’. He sees the future of energy in nuclear power and coal gasification. The author of the article stresses that construction of Ostrołeka C is not yet certain and that ‘several energy experts unofficially claim that this unit will not be built’. It must be noted, however, that another article published on the same day quotes Minister Tchórzewski’s claim that Poland does not abandon investments in coal and will built new coal units.

Energa to build Ostroleka C even without capacity market

According to Reuters Energa will go ahead with plans to build the Ostroleka C power plant, irrespective of whether Poland introduces a power capacity scheme – the so-called capacity market. Energa Chief Executive Officer Daniel Obajtek said in August 2017: ‘When it comes to Ostroleka, generally we are not waiting for the law to be introduced. This process will be conducted irrespectively of this’. This statement clearly contradicts Energa’s previous position that the capacity market is essential for the Ostroleka C project to be profitable. The latter was found in the project’s base prospectus of February 2017 and in the company’s answer to the Shareholders questions asked during Energa’s AGM, issued in July.

Energa and Enea signed the investment agreement on Ostroleka C Power Plant

On 8 December 2016, Energa and Enea entered into an investment agreement aimed at the joint preparation, construction and operation of a new coal-fired power unit with a gross capacity of 1,000 MWe in Ostrołęka. Enea will purchase a 50-percent stake with a value of PLN 101 million currently held by Energa in the share capital of the special purpose vehicle established for the execution of the project (source 4-traders.com). The project's joint venture received approval by the Poland's Office of Competition and Consumer Protection (UOkiK) on the 18th of January 2017.

Poland's Energa suspends plan to build 1 GW coal-fired unit

It was announced on September 17, 2012 that Poland's Energa has suspended plans to build a 1000-megawatt coal-fired unit in the country's north-east due to problems securing financing and will instead invest in the power grid, gas-fired generation and renewables.

Ostroleka C in talks to secure financing

Ostroleka C Power Plant is currently past administrative procedures and permits stage and is currently trying to secure financing for the planned investment. It is in talks with Societe Generale on project finance and in talks with strategic investors and financing institutions. The power plant estimated costs are PLN 6 bln (EUR 1,5 bln). ENERGA S.A. is undergoing a process of privatisation.