05.12.2012 Construction of a CCGT unit in Stalowa Wola begins

TAURON Polska Energia and Polskie Górnictwo Naftowe i Gazownictwo have launched the construction of a CHP plant in Stalowa Wola, the largest gas-fired unit of this type in Poland. The foundation stone was officially laid on December 3rd 2012.

plant to be built in Stalowa Wola will be fitted with an advanced CCGT unit with a capacity of 450 MWe. Operating in high-efficiency co-generation, the unit will produce not only electricity, but also heat in the form of hot water for municipal needs and process steam for the local industry. The CCGT unit is scheduled to be placed in service in 2015. It is being funded through project finance. The unit will be operated by an SPV, Elektrociepłownia Stalowa Wola, in which PGNiG and TAURON Polska Energia each hold a 50% interest. The investment project worth PLN 1.6bn is being financed with the partners' own resources (approximately 25%) and with external funds (75%) advanced by the European Investment Bank and the European Bank for Reconstruction and Development.

Dariusz Lubera - President of the Management Board of TAURON Polska Energia, Mikołaj Budzanowski - Minister of the State Treasury, Agustín Nuñez Martínez - Ambassador of Spain in Poland and Grażyna Piotrowska-Oliwa - President of the PGNiG Management Board

"The Stalowa Wola CHP plant is an element of our consistently pursued Strategy Full of Energy (Strategia Pełna Energii). It is based on modern, efficient and well thought-through power generation projects. The investment project in question will not only strengthen the power generation sector, but also aid its transition to the 21st century," said Mikołaj Budzanowski, Minister of the State Treasury.

A joint-venture of the partners, the project is fully reflected in their respective strategies. PGNiG intends to secure a new, large customer for gas, while expanding its presence in the power sector.

 "Developments favourable for the gas sector that have taken place in recent months bode well for the construction of Poland's largest gas-fired CHP plant. The reduction of gas prices negotiated by PGNiG with Gazprom, the on-going liberalisation of the gas market and the planned legislative changes aimed to support co-generation projects by introducing new orange certificates help create an environment conducive to the development of gas-fired CHP plants. PGNiG will construct new generation units drawing on the experience and solutions developed in cooperation with the TAURON Group during the execution of the project in Stalowa Wola. The undertaking is an example of effective cooperation between major Polish conglomerates. I hope it will not be the last project we successfully execute together," said Grażyna Piotrowska-Oliwa, President of the PGNiG Management Board.

TAURON is in the process of retrofitting and diversifying its portfolio of generation assets; the company also seeks to increase the share of energy from its own sources.

"The unit under construction with a capacity of 450 MWe is one of the key projects provided for in TAURON's corporate strategy and its first gas-fired unit. Our experience clearly demonstrates that access to our own, diversified generation sources is of key importance. Given the relatively low costs and short period of construction, as well as low emissions of CO2, NOx and virtually no emissions of SO2, gas-fired power generation is a commercially viable option," said Dariusz Lubera, President of the Management Board of TAURON Polska Energia. "Thanks to the state-of-the-art high-efficiency technology and co-generation of electricity and heat, it will be possible to bring down the generation costs, while obtaining further support in the form of certificates."

The location and selected technology give the project a competitive edge. As the project will be located in close proximity to the gas pipeline owned by Operator Gazociągów Przesyłowych Gaz-System, it will be possible to quickly connect the CCGT unit to the gas grid. The open cooling system relying on water from the San river ensures higher efficiency than would be the case if cooling towers were used instead (closed cooling system). As Operator Systemu Przesyłowego PSE-Operator is constructing a 220 kV substation in the immediate vicinity of the project, it will be possible to connect the CCGT unit to the power grid quickly and at low cost. The supply of fuel via the gas pipeline, the absence of any solid waste, and very low gas and dust emissions make the project environment friendly.

It is estimated that the Stalowa Wola unit will generate approximately 3,500 GWh of electricity per year, while burning 600 million cubic metres of gas . The investment is a turn-key project involving the construction of a 450 MWe CCGT unit with a heating unit, complete with infrastructure and all the required auxiliary equipment and connections.

In October, Abener, the general contractor for the project and member of the international group Abengoa, delivered the basic engineering design to the CHP plant. In November, after the delivery of excavation, foundation and stabilising checkdam designs, earthwork and construction works were commenced, and the beginning of December saw the start of work on the stabilising checkdam. Orders were placed for a gas turbine, steam turbine and waste heat recovery boiler. The assembly of the gas turbine and steam turbine is scheduled for completion in Q4 2014. The adjustment operation is due to start in Q2 2015, and the unit will be commissioned in the middle of 2015.

The joint venture was started on November 20th 2008, when Tauron Polska Energia .and PGNiG executed a letter of intent confirming the parties' intention to cooperate. On December 7th 2009, the parties entered into an agreement outlining the project's framework. In 2010, an execution agreement was negotiated, signed on May 7th 2010 by four parties, namely TAURON, Elektrownia Stalowa Wola (TAURON Wytwarzanie), PGNiG, and PGNiG Energia. The agreement defined the manner of cooperation between the companies. In March 2011, the companies signed a package of agreements decisive for the implementation of the project:

- an agreement on the operation of Elektrociepłownia Stalowa Wola, executed between Tauron Polska Energia, PGNiG, PGNiG Energia, Elektrownia Stalowa Wola and Elektrociepłownia Stalowa Wola

- a long-term electricity sale contract between PGNiG, PGNiG Energia, TAURON and Elektrociepłownia Stalowa Wola,

- a comprehensive agreement for gas fuel supplies between PGNiG and Elektrociepłownia Stalowa Wola. The tender procedure carried out by Elektrociepłownia Stalowa Wola was completed in April 2012, which allowed the company to execute the agreement with the general contractor.