$3.78bn Polish power plant investment gets go ahead

Polska Grupa Energetyczna (PGE) has announced that 1800 MW of new capacity will be added to the Opole coal-fired power plant, after being approved by the company’s board.

According to UPI, construction will commence next month on two new 900 MW generators, the company said in a statement, with Alstom (Euronext: ALO) to design the new extension.

Opole
PGE schedules the first unit to be in place in 2018, with the second unit in a year later.

In reaching its decision to make the $3.78 investment, the company said it will proceed despite low wholesale energy changes due to "directional changes in the energy sector -- not only in Poland but also in Europe" in recent months.

These included "systemic changes in the energy market," such as plans by the Polish government to introduce a so-called capacity market this year, under which energy providers are paid for their capacity rather than how much electricity they actually produce. This, it said, would "limit risk in conventional power."

PGE said its decision was also informed by an announcement by the government last week on a draft of a new law governing the renewable energy sector in the country following a dispute with the EU, ending uncertainty on how it would affect conventional power.

The draft law, ministers said, is designed to comply with the obligations of EU climate policy for the share of renewables in the energy mix while also reducing the costs of these sources.

It would scrap the current system of subsidizing the renewables in favour of an auction set-up under which providers who offer the lowest prices for renewable energy would receive purchase guarantees of up to 15 years.

Officials said they assume the renewables law will come into effect at the beginning of 2015, with auctions for the purchase of green energy to be held at least once a year.

The Donald Tusk-led Polish government sees Opole as crucial to the country’s energy security.

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