Giant unit will lower Slovenia electricity prices from mid-April – traders

Author: Ellie Chambers

2015/02/17

The addition of a new 600MW unit to the Sostanj power plant in Slovenia should be substantive enough to force down the price of electricity on the country’s wholesale market, according to traders.

The 600MW block 6, scheduled to begin operation on 15 April, is intended to replace blocks 1-5 at the coal-fired plant. However, plant owner HSE told ICIS on Monday that the 275MW unit 4 is not due for decommissioning until 31 December while the 345MW unit 5 will stay online until the end of 2027.

This means the plant will have a total capacity of 1.2GW from when block 6 begins operation in April until the end of the year.

“The [Slovenian] market is really small, it will definitely put pressure on prices,” said one trader. “Also, regional hydro is very high, there is no fundamental reason why this extra electricity would be exported,” he added.

Block 3 at Sostanj, which has a capacity of 75MW, was decommissioned on 15 February, leaving the plant with a capacity of 620MW until unit 6 comes on line. Units 2 and 1 were taken offline in 2008 and 2010 respectively.

The Sostanj expansion project has already been the subject of controversy after costs spiralled leading to the suspension of the project between December 2013 and May 2014 due to cash flow as well as coal supply problems.

Last week, power plant director Matjaz Eberlinc acknowledged the expansion had proved a heavy financial burden.

“The fact is that the investment in the replacement unit six burdened not only TES, but the entire HSE Group. The next few years will be difficult mainly due to the settlement of liabilities to banks and suppliers, as well as ensuring the smooth operation of the replacement unit 6,” he said. Ellie Chambers