Tauron, PGNiG Sign LoI to Build New CCGT Unit (Poland)

Tauron, PGNiG Sign LoI to Build New CCGT Unit

Polskie Górnictwo Naftowe i Gazownictwo and TAURON Polska Energia signed a letter of intent concerning construction of a 400 MW gas-fired co-generation unit at TAURON’s Łagisza Power Plant.

The parties undertook to collaborate in construction and operation of the unit, as well as trading in electricity.

The new unit at the Łagisza Power Plant will be the second investment project – after the CCGT unit in Stalowa Wola, whose construction is under way – to be carried out by the partners. It will be a high-efficiency plant (approx. 58%), characterised by no dust emissions, and by low emissions of sulphur dioxide, nitrogen oxides, and carbon dioxide.

“Both TAURON and PGNiG are interested in gas-fired electricity generation. We have been happy with our collaboration to date. Based on the positive experience with the preparations for construction of the CCGT unit in Stalowa Wola, we decided to start working on another investment project,” said Dariusz Lubera, President of TAURON Polska Energia. “The gas-fired unit in Łagisza is fully consistent with our fuel diversification strategy and efforts aimed at replacement of existing power generation capacity, as after 2017 the 120 MW coal-fired units currently operating at the power plant are going to be decommissioned.

In line with its strategy, PGNiG intends to expand the scope of its operations and extend the value chain by engaging in gas-fired electricity generation and electricity trading.

“The investment project envisaged at the Łagisza Power Plant is a natural step forward in the PGNiG and TAURON’s collaboration. Our first joint investment project in Stalowa Wola enabled us to work out the cooperation model, which will be put in practice again, but it also helped in building trust and understanding between the companies. Thus, we hope that the new undertaking will be carried out in a fast and efficient manner, using the competence and potential of both groups. The collaboration strengthens the safety of the project and facilitates better spreading of risks, giving us competitive advantage over other investors,” said Grażyna Piotrowska-Oliwa, President of the PGNiG Management Board.

In the letter of intent TAURON and PGNiG agreed to appoint their respective working teams. The teams will prepare a draft agreement defining the parties’ obligations and a cooperation concept for the preparatory phase of the project. They will also develop a model and initial timetable for the construction phase of the project, and will agree on financial and technical details. The letter of intent does not exclude Inwestycje Polskie’s participation in the project financing.

The concept providing for the replacement of electricity generation capacity at the Łagisza Power Plant by constructing a cogeneration unit has been chosen based on the existing and prospective stable heat and electricity market, as well as the plant’s available infrastructure. The Łagisza power plant is currently a key heat source for Będzin and Dąbrowa Górnicza, and after 2017, also for Sosnowiec.

The research performed has confirmed the existence of a stable heat market in the plants’ vicinity until 2016. Given its location, together with TAURON Ciepło’s heat plant, the Łagisza Power Plant may form a part of an integrated heat system for the Higher Silesia urban area (Higher Silesia and Dąbrowa Górnicza region), thus ensuring energy security of the local market through the operation of two plants that can be used as reserve heat sources for each other.

Another advantage of the project location is the fact that the Łagisza Power Plant employs highly qualified personnel and operates relevant technical infrastructure covering all key phases of electricity and heat generation (supplies of water, fuel and other feedstock, as well as evacuation of the generated power at all voltages: 110 kV, 220 kV and 400 kV).

LNG World News Staff, December 19, 2012