Tauron Polska Energia SA and Polskie Górnictwo Naftowe i Gazownictwo SA will build the largest gas power and heating plant in Poland, to be localized in Stalowa Wola. On 11 March 2011 the companies signed a package of contracts determining the implementation of the project. The estimated value of the investment amounts to PLN 1.9 billion.
The modern gas and steam blocks of 400 MWe and 240 MWt in Stalowa Wola will start operating at the end of 2014. It will be managed by a special purpose vehicle Elektrociepłownia Stalowa Wola, in which PGNiG SA and Tauron Polska Energia SA hold 50 percent shares each. The preparatory work has already started.
The contracts specify, among others, principles of gas supply to the new entity as well as sales of electrical energy from the block.
The construction of the gas and steam block in Stalowa Wola is the joint initiative of the two partners, reflected in their strategies. Tauron is aiming at recovery of generating capacity and increase of the share of energy from own sources, while PGNiG wants to acquire a new, large recipient of gas as well as develop operations in the electro-energy sector. The project assumes the construction of the gas and steam block generating electric energy in highly performing cogeneration as well as heat as water for municipal purposes and technological steam for the nearby industrial plants.
- The construction of the block in Stalowa Wola is a proof of the use of one of the most innovative worldwide energy technologies of energy acquisition by Polish companies, which is particularly important for the protection of the natural environment. Due to the emission limits of greenhouse gases as well as obligation to purchase CO2 emission license introduced by the energy and climate Policy of the European Union, the construction of gas fired power plants turns out to be not only environmentally friendly, but also more profitable financially in comparison with traditional projects based on other raw materials. I wish to congratulate the companies of Tauron Polska Energia and Polskie Górnictwo Naftowe i Gazownictwo for the common decision on execution of this Project which is going to be the turning point for the Polish economy – stated Jan Bury, Secretary of State in the Treasury Ministry.
- Construction of the steam and gas block in Stalowa Wola may in the future have strategic importance for Poland in the context of the ongoing construction of the liquid gas (LNG)in Świnoujście, which will allow to receive 1.5 to 5 billion of m3 of gas by sea route starting from year 2014. It will be possible to use the additional sources of raw material for energy generation. It is a turning point because so far, only about 3 percent of the Polish energy market was using the technology based on natural gas. It is an insignificant part comparing with the other European countries, e.g. the Netherlands where as much as 60 percent of energy is acquired from this raw material.– said Mikołaj Budzanowski, Undersecretary of State in the Treasury Ministry.
- The gas and steam block in Stalowa Wola will be the biggest and the most modern object of this kind in Poland. Its construction is consistent with the corporate strategy of Tauron, assuming development of generating powers based on coal, gas and renewable energy sources. Application of a modern, highly efficient technology will allow for reduction of carbon dioxide and nitrogen oxides emission as well as for elimination of sulphur dioxide and dust emission. Those ecological conditions, in view of the strict EU environmental policy, as well as short time of construction of the unit, are the most important arguments promoting the gas-based investment – says Dariusz Lubera, President of the Management Board of Tauron Polska Energia.
- The Project in Stalowa Wola is an opportunity for us not only to acquire a new, large recipient of gas, but first of all it is a milestone in converting GK PGNiG into a multi-energy concern. We are willing to develop further projects in electro-power sector which is considered as the most perspective gas market segment in Poland. We hope that our good cooperation with Tauron and common experience will stimulate further projects modernising the power sector and reducing its adverse effects on environment. Therefore the construction of new power plants and heat power plants will remain to be the priority of GK PGNiG in the nearest years– says Michał Szubski, President of the Board of PGNiG.
The joint Project was initiated on 20 November 2008 by signing the Letter of Intent between Tauron Polska Energia and PGNiG, in which the mutual intent of cooperation was expressed. Subsequently, the agreement of 7 December 2009 was concluded, determining the framework of the project. As a next step, the implementation agreement was negotiated, which was signed on 7 May 2010 by four parties, i.e. Tauron, Elektrownia Stalowa Wola (company of Tauron Group), PGNiG and PGNiG Energia. The agreement determined the rules of cooperation.
On 11 March 2011 the following contracts were signed:
- contract on operations of the power and heating plant Elektrociepłownia Stalowa Wola, concluded between Tauron Polska Energia, PGNiG, PGNiG Energia, Elektrownia Stalowa Wola and Elektrociepłownia Stalowa Wola,
- contract on sales of electrical energy concluded between PGNiG Energia, Tauron and Elektrociepłownia Stalowa Wola,
- contract on supply of gasous fuel concluded between PGNiG and Elektrociepłownia Stalowa Wola.
The Contract on operations of Elektrociepłownia Stalowa Wola determines in detail the way of conducting the Project as well as allows for development of the ultimate business model. During its negotiation, the financial model was developed, as well as basic trade contracts for the project, i.e. the gas contract and the energy sales contract. Development of these contracts allowed for constructing of the ultimate business model of the Project as well as for formulation of the project management method, including the rights and responsibilities of the partners.
The execution of the project based on equality is planned, both in terms of rights and responsibilities.
The Parties will finance the project at about 30 percent, and the remaining part, i.e. about 70 percent will by covered by debt financing.
Within the contract on operations, the following assumptions were defined:
· PGNiG shall guarantee long-term gas supply to Elektrociepłownia Stalowa Wola,
· PGNiG Energia and Tauron shall receive electrical energy generated in the steam and gas block, proportionally to the shares held in the special purpose vehicle,
· PGNiG Energia and Tauron shall conclude long-term contracts with Elektrociepłownia Stalowa Wola on purchase of property rights– certificates of origin of electrical energy from high-capacity cogeneration, at the level corresponding to volumes of purchase of the electrical energy,
· Elektrociepłownia Stalowa Wola shall take over the heat supplies for local customers perfomed by Elektrownia Stalowa Wola so far, the latter shall act as a reserve source, which will additionally guarantee high security of the supplies,
· It is also the intention of the partners to make Tauron provide services of a Commercial-Trade Operator for Elektrociepłownia Stalowa Wola, including the service of management of circulation of license on emission of greenhouse gases.
The subject of the contract on sales of electrical energy is the long-term sales of energy generated by Elektrociepłownia Stalowa Wola to Tauron and PGNiG Energia. The Contract has been concluded for 14 years. The partners will receive the energy at the amount proportional to shares held in Elektrociepłownia Stalowa Wola (the parties hold half of the shares of this company each). The total estimated value of the contract distributed between Tauron and PGNiG Energia amounts to about PLN 13.56 billion. The subject of the gas contract is the supply of the fuel during 14 years. The annual volume of supply to the block in Stalowa Wola was established at the level of about 540 million m3.
Besides the formal issues, preparations for launching of the construction are underway. In October 2010, within proceedings conducted by Elektrociepłownia Stalowa Wola, concerning the construction of steam-gas block of ok. 400 MW, applications were submitted to allow for participation in the procedure. Within the proceedings to select the general contractor, 12 offers were received, while within the proceedings for the contract engineer – five offers. The Company has already selected the engineer while the general contractor shall be selected in the second half of 2011.
Beforehand, the President of the Office of Competition and Consumer Protection issued the statement of approval of concentration consisting in establishment of common entrepreneur by TAURON and PGNiG under the form of special purpose vehicle under the name Elektrociepłownia Stalowa Wola. The partners of the Project, through their sister companies, hold 50 percent of the shares of this entity each.
The cost of investment in Stalowa Wola is estimated at about PLN 1.9 billion, and the concluding of the project is planned at the end of 2014. The technology applied shall guarantee maintenance of all ecological parameters at very high performance of the block.
