KGHM Polska Miedź and TAURON Wytwarzanie, a subsidiary of TAURON Polska Energia, set up a special purpose vehicle (SPV) under the name of Elektrownia Blachownia Nowa on September 5. The SPV will carry out the complete implementation of the investment project that will include preparing, constructing and operating an approx. 850 MW CCGT unit erected at the site owned by TAURON Group’s generation subsidiary, Elektrownia Blachownia, in Kędzierzyn–Koźle. Each of the shareholders assumed a 50 percent stake in the SPV’s stock capital.
The design and construction of the unit will be carried out – by a contractor selected by the SPV – as a „turn-key” project, including the infrastructure, installations and auxiliary facilities. The unit will be connected to the new 400 kV distribution station that will transmit electricity to the Polish National Power System (Krajowy System Elektroenergetyczny) and will comply with all the requirements defined in the Transmission Grid Maintenance and Operation Manual (Instrukcja Ruchu i Eksploatacji Sieci Przesyłowej).
– According to the schedule the unit will be commissioned in 2017 and it will be one of the key elements of TAURON Group’s CAPEX program the objective of which is to restore the Group’s power generation capacity and diversify its energy mix – says Dariusz Lubera, President of the Management Board (CEO) of TAURON Polska Energia. – This is the second gas fired unit built by TAURON Group and also the second one that will be constructed as a joint project with a business partner. I am convinced that the experience that we have already gained during the construction of the 400 MW gas fired unit in Stalowa Wola will make working on this project easier – he adds.
– We are consistently implementing our strategic and business plans. Power generation will be a profitable sector, both in the short term, as well as in the long term,– says Herbert Wirth, President of the Management Board (CEO) of KGHM Polska Miedź. – Power is a very good product for our company whose main revenue comes from sales of copper which, unfortunately, is a product susceptible to large volatility swings. The power market is stable with a tendency to move up, therefore investing in both, equity and physical assets, in this sector is the right decision.
The establishment of the SPV was preceded by the European Commission’s approval related to market concentration and establishment of the joint venture which was granted on July 23 this year. Prior to obtaining the EC’s clearance TAURON Wytwarzanie and KGHM were conducting preparatory works related to the project’s implementation. They included, among others, submitting a request for issuing the gas transmission grid connection conditions. Currently the system reconstruction feasibility study is being prepared. In early February this year the Mayor of Kędzierzyn-Koźle issued the decision on the environmental conditions which is legally binding. Works are under way to obtain the permit for the construction of the new unit. At the request of the County Administrator’s Office (Starostwo Powiatowe) in Kędzierzyn–Koźle the Regional Environment Protection Office (Regionalna Dyrekcja Ochrony Środowiska) in Opole is working on agreeing the conditions for the project implementation.
The SPV’s share capital is PLN 65,152,000. TAURON and KGHM Polska Miedź hold a 50 percent stake in the company each. Shareholders estimate that the total investment outlays will be approx. PLN 3.5bn. The project will be financed using the shareholders’ own funds and a loan taken by the new SPV.
The cooperation between TAURON and KGHM Polska Miedź commenced in April 2009 with the signing of the Letter of Intent related to the construction of an electricity generation unit at Elektrownia Blachownia’s site. Less than a year later (in March 2010) the partners agreed upon the principles of cooperation during the project’s implementation. At the beginning of 2011 the analyses of expected benefits related to the contemplated fuel switch were completed and in April 2011 the partners made the decision that further design works would be conducted based on the „gas option”.
The restoration of the generation capacity is TAURON Group’s priority outlined in its corporate strategy. The document assumes commencing the construction of new capacity of 2400 MW based on conventional sources (coal, gas, biomass) by 2020 and fuel diversification. Diversifying revenue sources and entering the power generation sector is also one of the priorities of the strategy of KGHM Polska Miedź for 2009 – 2018.