Montenegro: TPP Pljevlja closure would be expensive

, SEE Energy News

Montenegrin state-owned power utility EPCG considered two scenarios; according to the first one, the shutdown of TPP Pljevlja or the cessation of work from June this year to June 2022, would cost 155 million, while according to the second scenario, which envisages the cessation of work, from June 2021 to December 2022, the cost would rise to 234 million euros.

If coal-fired thermal power plant Pljevlja were to close now, Montenegro would have to pay over 100 million euros a year for electricity imports. This is, among other things, shown by the analysis of the assessment of the financial effects of the possible shutdown of TPP Pljevlja made by EPCG.

CEO of EPCG Nikola Rovcanin explained that the assessment took into account the planned monthly production from the electricity balance and the planned annual production of the plant in the amount of 1,317 GWh, with futures prices from Hungarian HUDEX. Cross-border capacity costs averaging 5 euros/MWh have not been added to prices. In the first scenario, envisaging 12 months production halt, cost of electricity imports would amount to 109.4 million euros, while the cost of the plant’s maintenance would be additional 46 million euros. According to the second scenario, electricity imports costs would be 160.1 million euros, with additional 73.7 million for the maintenance for 18 months period.

Based on this analysis, suspension of TPP Pljevlja’s operation after the end of the regular annual overhaul in early June, would result in illiquidity of not only EPCG, as a majority state-owned company, but also all related entities in the energy sector: Montenegrin electricity distribution system operator CEDIS, Pljevlja coalmine, Montenegrin electricity market operator COTEE and other entities indirectly related to the energy sector, which could lead to economic and socio-economic collapse in Montenegro.

On 20 April, the Energy Community Secretariat sent an Opening Letter to Montenegro to address its breach of the Large Combustion Plants Directive. In particular, the country’s sole thermal power plant Pljevlja, continues to operate despite the expiry of the limited lifetime derogation period of the plant. Montenegro has to respond until 20 June. Following a written declaration not to operate a plant for more than 20,000 hours after 1 January 2018, the limited lifetime derogation (also known as opt-out) was granted to selected installations by the Energy Community Ministerial Council. It is an implementation alternative to complying with the maximum emission limits set by the Large Combustion Plants Directive. Following the expiry of the 20,000 hours, the plants can only remain in operation if they meet the (stricter) standards of the Industrial Emissions Directive. This is not the case for TPP Pljevlja.