Energa and Enea signed a letter of intent relating to the construction of a modern power unit in Ostrołęka Power Plant

Energa and Enea intend to cooperate on the preparation, implementation and operation of a modern 1,000 MW coal-fired unit in Ostrołęka Power Plant. Presidents of the Boards of both companies signed a letter of intent in this field on Monday.

- We made another step towards the implementation of the investment which is very important as regards the Polish energy security. Guaranteeing the reliability and continuity of power supply is the key task faced by the energy sector today. A modern power plant in Ostrołęka will enable its performance – says Dariusz Kaśków, president of Energa SA – the key assumption of this project is its implementation as a profitable investment.  In the perspective of the coming capacity market Ostrołęka C will build value for all the stakeholders.

The intention of the both companies is joint elaboration of an effective business model, verification of the design documentation and optimisation of technical and economic parameters of Ostrołęka C. The cooperation will also include preparation of the tender and selection of the investment general contractor.

Energa and Enea agree that the implementation of Ostrołęka C project will positively affect the Polish energy security, will satisfy the highest environmental standards and will guarantee a next highly-efficient and low-emission source of energy in the Polish Power System.

- We have been analysing, for some time now, the possibilities of engaging into projects with a specific potential in medium and long-term perspective, which would serve further balanced development of generation and mining assets in Enea CG. They include the project of constructing a highly-efficient Ostrołęka C power plant, which is a part of a vital process of the Polish energy sector modernisation using the Polish coal as fuel. By Ostrołęka C project we will be able to use our experience gained during the construction of the new 1,075 MW unit in Kozienice Power Plant. Our commitment at this stage and signing of a letter of intent will enable elaboration of the investment business model best for all the partners - says Mirosław Kowalik, president of Enea SA.

Energa and Enea foresee that the construction of Ostrołęka C Power Plant will last for around 60 months, and the expenditures for the investment implementation will amount to ca. 5.5-6 million PLN/MW. Both companies assume that the rules of cooperation agreed upon in the letter of intent should contribute to making a decision on the tender announcement in 2016 with the aim of completing the investment in the second half of 2023.

The special purpose vehicle, appointed to construct Ostrołęka C power plant’s unit, holds a complete technical documentation and administrative decisions enabling publication of the tender announcement. Currently, economic analyses are in progress which aim at the elaboration of an effective business model and investment financing. The key assumption of the project is its implementation as a profitable investment which will guarantee a satisfactory rate of return for shareholders.

Current market conditions result in the fact that in order to guarantee relevant profitability of the project it will be expected to develop additional mechanisms of supporting the investment activities within the construction of new generating sources.

The Ministry of Energy, in order to meet the expectations, presented  a detailed concept of the capacity market for further social consultations on 4 July 2016. The capacity market is to develop the mechanism supporting the investment in highly-efficient conventional power engineering. Maintaining the availability affecting the security of the power system is also to be rewarded. According to the ministry’s plans the draft act in this field would be ready already this year so that the new solutions may enter into force as of 2017.