Kosovo C power station

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New Kosovo power station, also known as Kosovo C, is a proposed 500-megawatt (MW) coal-fired power station in Kosovo.

Location

The map below shows Pristina, the approximate location where the plant would be built.

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Background on Plant

The New Kosovo power plant is part of the government's plans to reform Kosovo's energy sector. Other plans include closing Kosovo A power station by 2017, rehabilitating Kosovo B power station to meet EU standards, and privatizing the country's electricity distribution system. Plans for New Kosovo also include a lignite coal mine, the Sibovc SW. The World Bank is the main sponsor providing funding for energy sector reforms in Kosovo, including New Kosovo.[1]

The plan to build a new coal plant close to the capital Prishtina has been proposed since the early 2000s. The original proposal was a 2000 MW unit that would export energy, but plans faded due to lack of investors. New Kosovo was later planned to have a capacity of 600 MW, and has been promoted by the US government through the World Bank, which is interested in supporting the project. After Kosovo became a member of the EBRD in December 2012, the bank declared its interest in potentially financing the new plant in its first Kosovo Country Strategy.[2]

On November 23, 2015, Kosovo’s minister of economic development, Blerand Stavileci, announced the latest version of the plant. The new design reduces the size of the plant from 600MW to one 500MW unit.[3] The plant is planned for operation in 2023.[4]

History

Plans to update Kosovo's power system began in the early 2000s and originally envisioned a 2,000-MW lignite plant that would allow the country to export energy to its neighbors. Political and investment setbacks caused the plant to be scaled back in size.

A 2010 EU report stated that plans for the development of a new Kosovo power plant (using lignite coal) had been reconfigured: "The initial installed capacity will be two units of 200-300 MW, the Sibovc lignite field will be developed immediately and participation in the Kosovo B power plant will be included in the package to be offered to investors with a view to refurbishment. The legal unbundling of the distribution and supply functions of the Kosovo Energy Corporation (KEK) is due at the end of 2010 with a view to privatization. Until completion of the new Kosovo power plant project, the other functions will remain integrated in KEK."[5]

A five-part U.S. State Department strategy for Kosovo obtained by ClimateWire suggested closing Kosovo A, rehabilitating Kosovo B to meet E.U. standards, developing a new 600-MW lignite-fired power plant, and privatizing the country's electricity distribution system.

Role of World Bank

The World Bank is considering supporting the Lignite Power Technical Assistance Project with a World Bank grant of US$10.5 million and a European Commission grant of Euros 2 million, as well as providing "advisory services" for the inclusion of private capital in the new lignite mine and power plant.[6]

In a July 2011 statement to ClimateWire, a World Bank spokesman said the institution had not taken a decision on financing Kosovo B, and that an independent panel of experts was being tasked to determine if the project meets the bank's coal guidelines. The World Bank asked for and received written support from the Obama Administration for the World Bank to approve the loan for the new coal plant and privatize the country's electricity distribution system.[7]

In January 2012 a World Bank analysis concluded that building a lignite coal plant in Kosovo could cost nearly twice as much money as previously estimated.

The study also acknowledged about 400 megawatts of hydro, wind and other clean energy capacity in Kosovo -- something the World Bank had previously dismissed as virtually non-existent. Yet despite newly recognized financial challenges to coal and the existence of cleaner alternatives, the World Bank ultimately concluded that a new 600 MW coal power station remained the "best and cheapest option" for replacing Kosovo's long-neglected power plants and establishing reliable power supply in the country.[8]

Citizen opposition

Lignite coal lies underneath Hade’s rolling hillsides. Hade lies nine miles outside Pristina. Its coal deposits has made Hade a target as KEK has expanded its mining operations and Kosovo and World Bank officials have planned for the nearby Kosovo C. As of June 2015, the government’s push to clear the village has forced about 1,000 Hade residents from their homes. Thousands more fear displacement. In a complaint filed June 12, 2015, with the World Bank’s internal watchdog, the villagers’ representatives claim the bank has violated its rules governing “involuntary resettlement.” They say the bank allowed the government of Kosovo to take their homes and farmland without fair compensation and without an adequate plan for resettling them.[9]

Environmental groups have also urged the World Bank to allow Dan Kammen, the bank's chief technical specialist for renewable energy, to do a special assessment of Kosovo's options. Kammen did an assessment in Malaysia, which then canceled a proposed coal-fired power plant in favor of alternative energy options. There is a standoff among members of the World Bank's board of directors over a proposal to eliminate coal financing for all middle-income countries. The Obama administration and World Bank officials argue that under the proposed energy strategy, coal lending is permitted for the poorest countries, and Kosovo fits into that category. Environmentalists argue that while the coal plant might meet the letter of the energy strategy, it does not meet the spirit of it, which is to develop cleaner energy sources for developing nations.[10]

Following a World Bank report released in January 2012 that supported the construction the proposed coal-fired power plant in Kosovo, environmental groups maintained that entrenched support for the coal project within the US State Department had obscured thinking about new, cleaner possibilities. The Sierra Club and others argued that the World Bank's analysis showed no near-term need for additional baseload capacity and noted that analysts had not actually calculated all of the costs involved in the plant or addressed Kosovo's needs for peaking power.[8]

Estimated cost of electricity

The Sierra Club analyzed the “Terms of Reference” provided to the Kosovo Strategic Framework for Development and Climate Change Expert Panel on whether the proposed plant meets World Bank policy and determined that it does not, as "the cost of electricity that would be provided by the Kosovo plant is grossly underestimated" because "the predicted cost of electricity is based on the assumption that all four surviving Kosovo units will operate 85 per cent of the time" yet "overall demand would [likely] be 20 percent, not 85 percent, thus tripling the cost of generation for this plant." The report concluded that the plant will likely cost 2-3 times what project proponents claim, and that the country does not have enough base load demand to justify such a large power project.[11]

The World Bank countered in a report stating that the coal plant will cost twice as much as first estimated, but still advocated its construction.[8]

In 2016 a report by IEEFA on the costs if the proposed plant is built found that:[3]

  • The average Kosovar household would pay 12.9 percent of its annual income for electricity, twice what most European households pay;
  • Low- to middle-income household in Kosovo would pay 18 percent of its annual income for electricity;
  • Very low-income households would pay 39.7 percent of their income for electricity; and
  • Retail electricity costs would increase by 33 to 50 percent.

Environmental Assessment and Bids

An environmental impact assessment is expected to be ready in draft form early 2015, and a board vote on World Bank funding could come by Fall 2015.[10]

In 2014 ContourGlobal, a New York-based international power generation company, submitted the only bid for the Kosovo C project. A 2014 WB memo obtained by ClimateWire stated that U.S. agencies such as the Export-Import Bank and the Overseas Private Investment Corp. "may be an option with a U.S. bidder, but would need some political softening in Washington" to provide additional funds for the project.[10]

ContourGlobal said it may start building the plant by 2016. As of February 2015 the cost of the project is estimated at up to US$1.6 billion, with a third to be financed by ContourGlobal and the remainder via loans. The plant is planned to go online in 2021.[12]

On November 23, 2015, Kosovo’s minister of economic development, Blerand Stavileci, announced the latest version of the plant. The announcement came in the form of oral remarks. The new design reduces the size of the plant from 600MW to 500MW and is subject to further negotiations. On December 18, 2015, the government of Kosovo, led by Prime Minister Isa Mustafa, announced the signing of a Memorandum of understanding for the project with ContourGlobal. Proposed financing includes a 30 percent equity contribution from ContourGlobal with the remaining 70 percent of financing from outside sources. The final terms of both ContourGlobal’s equity participation and loans from the World Bank and any other lenders are under discussion. The economic development minister states that the technical documents will be completed in the next several months and that construction is to start in late 2016 or early 2017 and will take four to five years to complete.[13]

Project Details

  • Sponsor: Kosovo Energy Company (KEK)
  • Parent company:
  • Developer:
  • Location: Pristina, Kosovo
  • Coordinates: 42.666667, 21.166667 (approximate)
  • Status: Pre-permit development
  • Capacity: 500 MW
  • Type:
  • Start date: 2023
  • Coal Type: Lignite
  • Coal Source: Sibovc SW coal mine
  • Source of financing: World Bank

Resources and articles

References

  1. "Kosovo C coal power plant," Banktrack, updated May 12, 2014.
  2. "Western Balkans: 'cheap' lignite plants built now will cost heavily later," Bankwatch, April 2014.
  3. 3.0 3.1 Sanzillo, Tom and David Schlissel,"The Proposed New Kosovo Power Plant: An Unneccessary Burden at an Unreasonable Price," Institute for Energy Economics and Financial Analysis, pp.3-4, January 2016
  4. "Energy Strategy of the Republic of Kosovo 2017 - 2026," Kosovo government, March 2017, p 34
  5. "EU report 2010" Energy Community, EU Report 2010.
  6. Cleaning Up Kosovo’s Dangerous ‘Black Spot’, World Bank, accessed May 13, 2011
  7. "U.S. on Both Sides of New Battle Over Assistance to 'Ugly' Coal-Fired Power Plant" NY Times, July 11, 2011.
  8. 8.0 8.1 8.2 "World Bank Studies Coal-Fired Power Plant for Kosovo" Lisa Friedman, EENews, January 17, 2012.
  9. Michael Hudson, "Refugees Of Development: Kosovars Who Rebuilt War-Torn Village Face New Threat As World Bank Considers Coal-Burning Power Plant," HuffPo, June 19, 2015
  10. 10.0 10.1 10.2 Lisa Friedman, "U.S. team at World Bank pushes for Kosovo coal plant," E&E, January 30, 2015
  11. Bruce C. Buckheit, "A Review of World Bank Group Cost Estimates For New Lignite-fired Plants in Kosovo" Sierra Club report, Oct. 2011.
  12. "ContourGlobal could start building Kosovo power plant in 2016," Reuters, Feb 4, 2015
  13. Sanzillo, Tom and David Schlissel (2016): "The Proposed New Kosovo Power Plant: An Unneccessary Burden at an Unreasonable Price." Institute for Energy Economics and Financial Analysis, pp.3-4. Accessed 12 January 2016.

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