CrisisWatch

Will Greece ignore the economic omens and go for new coal?

by Theodota Nantsou

In the current dismal economic setting, the construction of the new lignite power plant by Greece's Public Power Corporation constitutes a completely irrational move: the public energy utility will need to disburse 400 million euros for a project that has been proven to be economically non-viable. By insisting stubbornly on the construction of Ptolemaida V, the PPC threatens to entrap Greece in an outdated energy model, at a time when technological progress renders clean energy a cost-competitive basis for the reconstruction of the country’s production model.

The construction of Ptolemaida V is currently at an advanced licensing stage. However, the start of the actual work requires a deposit of 400 million euros within 2015, which will come from PPC’s own funds, at a time when the company is in the worst possible financial state.

WWF Greece addressed the new Minister of Reconstruction of Production, Environment and Energy, Panos Skourletis, and the Executive Board of the German bank KfW, which co-finances the construction of PPC’s mega-lignite plant “Ptolemaida V”.

The decision to construct Ptolemaida V was taken several years ago, when the status of the Greek economy, as well as that of the European and global climate and energy policy, were very different. During the last year and a half though, the data have changed dramatically, and hence the decision to construct Ptolemaida V requires careful reconsideration.

If finally built, Ptolemaida V will be the country's largest lignite-fired plant, with a capacity of 660 MW and an installation cost of at least 1,4 billion euros. Approximately one half of this amount will be provided by a syndicated bond loan to PPC under the guidance of the German government-owned KfW-IPEX Bank and guaranteed by the German Export Credit Agency, Euler Hermes. This money will be used to purchase German-made equipment for the new plant. PPC has already commissioned the construction of Ptolemaida V to a consortium led by TERNA.

WWF Greece informed the Minister and the KfW board about the recent developments in European legislation, which will impose a heavy burden on the finances of Ptolemaida V, thus rendering it an economically non-viable investment. In particular, drastic changes in the modus operandi of the EU’s Emissions Trading System, will lead to a significant increase in the price of CO2 emission allowances, which will in turn cause Ptolemaida V’s operating cost to skyrocket. Moreover, the need to comply with the revised emission limit values for other gaseous pollutants* (as determined by the “Seville” process) will require new, expensive anti-pollution technology even before the new plant begins its operation.

Finally, Ptolemaida V is neither unique nor the cheapest solution in terms of covering base load needs for Greece’s electricity system. WWF Greece’s recent scientific report shows that Ptolemaida V’s base load can alternatively be covered by hybrid combinations consisting of wind, PV and Pumped Hydro Energy Storage (PHES) stations. More importantly, the levelised cost of energy (LCOE) for several of these hybrid solutions is shown to be lower than that of Ptolemaida V. It is significant to note that the study proposes the conversion of seven pairs of existing PPC-owned hydropower stations to PHES units, thus minimizing the corresponding installation cost as well as the environmental impact.  Hence, the proposed solution is realistic, economically more favourable and clearly more sustainable, compared to Ptolemaida V, while its implementation will benefit PPC as well. 

Read more:

  • WWF Greece's letter to the Greek Minister of Reconstruction of Production, Environment and Energy here (in Greek).
  • WWF Greece's letter to the Executive Board of KfW here
  • WWF Greece’s report “Clean Alternatives to Ptolemaida V” here

 

*nitrogen oxides (NOx), sulphur oxide (SO2), particulate matter (PM), mercury (Hg)

Last modified onSaturday, 27 August 2016 12:27
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