The project
The 2007 project concerns the construction of a 600 MW super critical, lignite-fired steam turbine power plant and associated cooling tower, stack, flue gas desulphurisation, wastewater treatment and control systems and connection to an existing substation.
The power plant with an overall efficiency of 46% will operate in cogeneration mode (supplying heat to the local district heating system) and will largely replace the existing lignite-fired generating capacity operating at low conversion efficiencies (26-33%). As a result, lignite consumption and CO2 emissions will remain at current levels, but electricity production will increase by more than 30%. The project is designed to be carbon capture ready as there is ample space for the installation of CO2 flue gas cleaning equipment in the future. The promoter has considered the possibility of long-term CO2 storage.
The selected technology for Unit 6 of the Šoštanj TPP is considered to be the best available technology (BAT) for lignite firing as a primary energy source in electricity production, and assures high-energy conversion efficiency and operation within the applicable regulations.
EIB’s involvement
The EIB is supporting the project with loans totalling EUR 550 million signed in 2007 and 2010 which are now fully disbursed.
Furthermore, the project meets the Bank's criteria for financing of new coal/lignite power stations. In particular:
- it employs state-of-the-art supercritical generating technology and is carbon capture ready (capable of future flue gas retrofitting with sufficient physical space in the vicinity of the power station to install the necessary equipment and compliant as per the competent authority with EU Directive 2009/31 on geological storage of carbon dioxide)
- it increases the efficiency of electricity production by more than 20% in relation to the generating units replaced
- the project contributes to meet growing electricity demand using domestic fuel resource (lignite) and contributes so to the diversification of energy resources in the region.
The benefits of the project are that it replaces existing and inefficient lignite generating capacity at the same site, contributes to security of supply (avoiding fuel price volatility), supports use of indigenous fuel resources in line with EU energy policy, contributes to a diversified generation mix in Slovenia and supports employment in a convergence region.
EIB and coal power plants
Under its current Energy lending Policy, which was approved by its Board of Governors in 2007 and is currently being reviewed, the Bank can finance coal/lignite power stations under very restrictive conditions, applying in particular the following “screening criteria”:
New commercial coal/lignite power stations should use best available technology and be “carbon capture ready”. They should be cost effective, taking into account CO2 externalities, i.e. be able to exploit CCS once that technology becomes commercially available. In order to avoid a shift towards carbon intensive electricity generation, new plants should replace existing coal/lignite power stations while providing a decrease of at least 20 per cent in the carbon intensity.
Retrofitting projects for existing coal/lignite power stations should be relatively small investments, so that they do not delay plant replacement in the medium term, and they should aim at substantially reducing pollution, including by increased energy efficiency.
Applying these criteria has resulted in at least 20 potential operations being found not eligible for Bank support, and the EIB lending to coal/lignite fired power projects represents some 6% of power generation projects supported by the Bank during the period 2007-2012.
EIB financing of clean Energy projects in Slovenia
To date, the Bank has provided up to EUR 220 million for the financing of Renewable Energy and Energy Efficiency projects in Slovenia. In particular, the Bank has provided loans to support the construction and operation of two hydro power plants, one pumped-storage power plant and several investments in the sector of environmental protection and improvement. In addition, the Bank is currently appraising new investments for the co-financing of households and small and medium sized projects in the fields of energy efficiency and renewable energy.
Slovenia’s long term climate policy objectives and the EU ETS
Slovenia has a diversified electricity mix, which at the time of appraisal was 40% nuclear, 36% thermal and 24% hydro. Net imports were negligible but commercial trading was an important activity. The country has limited domestic energy resources, mainly sub-bituminous coal, lignite and hydropower, and it imports 100% of its oil and natural gas and more than 20% of its coal requirements. According to the national energy plan, Slovenia’s electricity generation capacity is to increase in line with demand requirements. The installation of new gas-fired CCGT units, cogeneration, hydro and other renewable sources of energy are planned. Natural gas and renewable energy will increase their share of total generation, while coal’s share will decline in relative terms.
Slovenia’s climate change objectives for 2020 and beyond are defined within the scope of broader energy objectives principally the need for energy diversification and security of supply. The TES power plant will participate in carbon emissions trading under the EU ETS.
Ongoing investigations
The project is currently subject of investigations which have been initiated by several bodies or agencies at national and EU level, including by the Bank’s Complaint’s Mechanism.
The EIB is closely following these on-going investigations and has taken the necessary legal measures regarding its loan to ensure that the project is fully in line with the EIB policies as well as with the national and EU legislation, and that the appropriate remedies are applied should any of the allegations regarding the project be confirmed.
Pending the outcome of the investigations regarding these allegations, the Bank will closely monitor the implementation of the project.