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In the beginning of 2013 billion worth investment will turn into a new combined heat and power plant that will generate electricity to the needs of Lithuania and heat to Kaunas consumers. Liability for the implementation of investment project falls on the company Kauno elektrinė, which was established last year.

 

Interview by the Litovskij kurjer with Rimandas Stonys, the Director General of Kauno elektrinė and the Member of the Board of Kaunas Heat and Power Plant (KHPP) that currently generates heat to the city, about the project of a new power plant and the future of the Lithuanian energy sector.

 

- We are successfully implementing the project for the construction of the new power plant – we are definitely forging ahead and working despite of the fact that this investment project is of an especially complicated nature.

We have already chosen the principal technical supervisors, with whom contract will be signed in the short run. After that we will prepare documentation for the selection of a general contractor and technical equipment manufacturer. We should complete the process this year. At the moment we are about to commence the procedure of drawing up a detailed plan.

We have set a goal to bring the new combined heat and power plant into operation in the beginning of 2013. Should the implementation of the project succeed within optimal deadline, the power plant would start its operation from the beginning of autumn heating season of 2012.

 

- There are no obstacles in implementing the project of a new power plant. It goes without saying that there are thoughts whether power plant of such capacity is really needed but, as far as the official opinion of the government is concerned, we do not face any objections or hindrances. Development of co-generation is defined in the National Energy Strategy. We possess all the permits for construction, any land lease issues have been managed, Report on the Environmental Impact Assessment and any related discussions and proceedings have been completed.

Exchange in opinions is taking place and it is natural because the project is socially sensible and relevant not to Kaunas only, but to Lithuania too. After all, cheap heat will be produced to Kaunas residents; we plan to occupy a large part of the Lithuanian electricity market. Due to the existence of interests of different business groups, it will not be possible to avoid project evaluations.

In my opinion, there are several most important points of focus. Among them there is benefit to consumer, of which I have no doubts, and I may assure that after the construction of a new power plant the price of generated heat will get cheaper for sure. As far as energetic safety is concerned, producer inside the country is at all times safer than import. As regards the national safety issue, I may say that this object is necessary and beneficial to the state.

Let me repeat myself and mention that we are open to any discussions and ready to listen to different opinions.

 

- Only after the preparation for the competition and assessment of tenders it will be possible to talk about which technical equipment manufacturer we have chosen. Nevertheless, taking a broader look, in the course of construction of the power plant we will use the services of a number of companies.

Globally, there are only several manufacturers of technology that generates electricity and heat at the same time. We have talked with everyone subject to prior procedure. It shall be noted that such turbines, as we plan to install in the new combined heat and power plant, are manufactured only by “Siemens”, “General Electric” and “Ansaldo”. Should we choose another kind of technology, namely engines, other two companies would add to the above list. Actually, in Saint Petersburg (Russia) there is another manufacturer, but, following preliminary evaluations, its turbines are not in conformity with our technical requirements.

I do stress that competition will be open and public. We will establish all the conditions to ensure participation of all the world and European manufacturers of such technology.

 

- We welcome all the alternatives positively. Nevertheless, I would consider waste incineration more as an ecological rather than an energy-related issue.

Lithuania is able to do without a number of things. As life has already demonstrated, we will have to manage without Ignalina Nuclear Power Plant also. It could be possible to do without district heating as well. If Kaunas is able to manage without a new combined heat and power plant, it may do without waste incineration too. We do not assert that we are the best and only our technology has the right to be brought into light. People, who say that, do not understand or are not willing to do that because of possible lack of competence or simply support of one or another production means.

Should we refrain from the construction of a new heat and power plant, in 2015 we will be obliged to close the existing power plant due to its non-conformity with the EU requirements. How are we going to produce heat to Kaunas taking into consideration that already now even 90 % of heat is produced by Kaunas Heat and Power Plant? Most important is benefit to consumers. Currently, combined heat and power technology is the most modern technology, when electricity and heat are generated simultaneously. This option was chosen so that the price of generated heat is at the minimum level and the urban population would buy the heat for the cheapest price.

 

- Wind power plants, biofuel boilers and hydroelectric power plants are running in Lithuania. Most of the European countries should learn from Lithuania. Considering the renewable sources of energy production, Lithuania is above the EU average. We are below such countries as Sweden, Latvia, Finland and some others. Leaders in the European industry are Germany, Italy, Greece, Holland, Czech Republic and other countries, where the renewable sources of energy production, expressed as a percentage, occupy a smaller part as compared to Lithuania.

As far as heat production in Lithuania is concerned, renewable sources could occupy a greater part than at the present moment but, as far as the energy production is concerned, in my opinion, it is beyond the possibilities. Even if the entire Lithuania was planted with biofuel plants to be used in power plants afterwards, we would not be able to generate enough electric energy to satisfy the needs at the national level.

Renewable sources of energy generation lead to an increase in the national energy autonomy but, however, cannot solve all the energy issues. Despite being the leaders in Europe according to heat consumption, we are lagging behind the average 2-3 times in terms of consumption of electric energy.

 

- Yes, considering only Kaunas alone, power plant of such capacity is over too much; however, given the extent of Lithuania, up to 18 % of electric power required nationwide will be generated in this power plant. On the other hand, isn’t it beneficial for the city to have investment worth one billion litas, is it not useful that Kaunas will occupy a marked part in the balance of the Lithuanian electric power?

In Kaunas heat production price reaches one of the lowest levels in Lithuania and we aim at retaining the present situation. Thus, the need of a power plant is more an economic rather than political issue.

As a result of calculations of risk factor evaluation, it was clarified that the optimal option would be to construct a completely new power plant, which would generate heat and electric power. You should agree that consumers are most concerned that the heat price decreases.

Biofuel and waste incineration boilers would not satisfy heat demand in Kaunas completely. Following the scientific research, conducted by the specialists of Kaunas University of Technology, even the overall number of waste, collected in Kaunas region, would be enough for the production of only up to 20 % of heat necessary to Kaunas.

After final estimates with technical supervisors we will reach a decision of what capacity of the power plant (from 280 up to 350 megawatts) would bring hugest benefit both to the city and all consumers.

 

- We are planning to occupy part of the national electric energy market and our price may compete with the Elektrėnai Power Plant. Price of electricity, generated at Elektrėnai Power Plant that runs in condensing regime, cannot compete with that of the combined heat and power plants.

Considering the capacity, there is no other producer to compete with the Elektrėnai Power Plant before the birth of the new nuclear power plant. Discussions focus on how many billion kilowatt-hours of electric energy this power plant should generate. As far as this issue is concerned, I hold my own opinion, which I do not want to thrust upon anyone, - it should not be operated in the regime of such capacity, as it has been planned by Elektrėnai Power Plant at the moment.

The Sate should stimulate and purchase energy from cheaper local sources of generation. Co-generation is cheaper at the present moment. Lithuanian Power Plant in Elektrėnai is necessary insomuch as to ensure the stability of the Lithuanian electricity balance that would remain as safety guarantee and reserve. Kaunas Heat and Power Plant does not claim this role.

 

- Lithuanian Energy Strategy establishes the development of construction of combined heat and power plants. This is defined in the state plans; permits for construction have been obtained. We neither claim to receive state subsidies nor apply to the EU funds for support. We plan to construct a new power plant on the basis of our equity, raised or borrowed capital.

We believe that this is a beneficial object both to Kaunas and Lithuania and it is considered as a welcome initiative. We are not in the need of extraordinary help and there are no bureaucratic obstacles for project realisation, whereas one or other statement may be dealt with during discussions.

It is significant that the state stimulates production inside the country. Now we do not see it. To justify my words, I would like to mention that presently import tax on electric energy is much lower than that of the export.

Investors would like to have guarantees instead of being only intimidated whether it is necessary or not to construct a power plant.

It is worthwhile knowing what kind of procedure will be applied to be able to attract new investment.

 

- Taking a look from the perspective of consumers, it is important that the State bought from those who offer the cheapest electric power. Currently, Lithuania has electricity connection with Latvia and Belarus.

Latvia has quite a number of hydroelectric power plants. Thus, once the tides begin in spring and autumn, they generate more electric energy than it is needed to Latvia. We would not be able to compete with the Latvian post-flood electricity.

At the present moment Estonia has the possibility to combust local slate until 2015 and, thus, generates cheap electric energy. After that, following the EU requirements, Estonia will be forced to reorganise its production, which will demand additional investment, and it is likely that their electric energy will be more expensive.

At the present moment the greatest supply of electric power comes from Russia. Nevertheless, this country has a number of regions where the price of electric energy is higher than that offered to Lithuania by Inter RAO. Shouldn’t there be a question put why Russia subsidises Lithuania and sells electricity at a cheaper rate than inside its own country? Won’t the sellers of the Russian electricity foist any long-term contract to block local Lithuanian producers after the shutdown of Ignalina Nuclear Power Plant and taking advantage of the economic crisis?

Import is beneficial when price is at a lower level. From the point of view of safety, it is important to promote local production but not at any cost.

 

- Already before the shutdown of Ignalina Nuclear Power Plant it was obvious that the major problem of the Lithuanian energy sector would not be the provision of electricity, but the price of electric power instead. I am sure that producer’s price must be grounded economically. We will be inevitably forced to compete with the other local producers and foreign distributors, which in turn means the need to offer an attractive price. Approach of the state must be a comprehensive one so that both the consumers had an attractive low price and the state was safe because the maximum necessary product (electric power) would be generated inside the country.

 

- Heat and electric energy are commodities. These are commodities of specific nature but the market and the laws therein do exist all the same. Competitive fight in terms of a market share takes place. We have competitors and ourselves are considered as competitors to biofuel and waste boiler rooms, wind power plants, other local producers and foreign electric energy suppliers. The most important thing is avoid going beyond any ethical and decency limits.

 

- Compared to the current power plant, the performance of the new plant in generating heat will be more efficient. I can reassert that heat will get cheaper to Kaunas residents for sure.

 

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