Bulgarian coal plant faces closure over failure to operate according to EU standards

, SEE Energy News

Czech power utility ČEZ said it would temporarily halt operations of its coal-burning plant in Bulgaria as of next year, after it failed to agree on a plan to bring it up to EU environmental rules.

Talks with Bulgaria’s state-owned Bulgarian Energy Holding (BEH) over setting up a joint company to fund the upgrade have failed, after a market analysis showed such an investment would not be justifiable given the current costs of electricity and greenhouse emissions, ČEZ said in a statement yesterday (2 November).

The venture was intended to fund environmental upgrades at three of the six units in the 1,260 megawatt plant at the Black Sea city of Varna to extend their lifespan and then lease them.

“The financial model showed that […] the plant would be producing electricity at a cost that would not be competitive in the regional liberalised energy market,” ČEZ said.

ČEZ still will push forward with efforts to sell or rent the plant, which has been used largely as a back-up for Bulgaria’s power grid.

“We are ready to discuss all working options. In all cases after 1 January 2015, we will have to temporarily stop the plant because it cannot work without environmental upgrades,” the plant’s chief executive, Mincho Minchev, said in the statement.

Last month the chief executive of ČEZ said it might delay the decommissioning of some units at the plant beyond the end of the year because it might get an exemption from EU rules as part of measures to secure energy stability with respect to tensions with Russia.

Indeed, a Commission paper says the plant in Varna could get an exemption and continue to function in a worst-case scenario in case of disruption of Russian gas supplies.

ČEZ had cancelled previous plans to invest €100 million euros in the three units due to unfavourable market conditions and after Bulgaria did not extend a contract for providing security to the power supply system.