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Czech Sev.en Group calls for lignite power plant reprieve

March 21, 2018 | European Power Daily (Volume 20 / Issue 57) | Page 2 | Henry Edwardes-Evans

- Need to avoid ‘brutal day of closures’
- System critical plant needs recognition
- Eur1 billion acquisition drive

POLICY & REGULATION

Czech lignite generator Sev.en Group is calling for more lenient nitrogen oxide and mercury emission limits from 2021 to avoid a “brutal” culling of thermal plant “on a single date”, company executive director Alan Svoboda said Tuesday.

Sev.en’s head of generation Lubos Pavlas said the company supported Euracoal’s objection to 2017’s revised Large Combustion Plant BREF air quality standards, noting that the Czech Republic had opposed the tougher controls on NOx, SO2, particulates and mercury in the final vote.

In November last year, coal industry lobby group Euracoal along with several German lignite mine and plant owners launched a legal action against the European Commission over the controls.

Controversy has focused on one standard in particular: the 175 mg/cu m yearly average ceiling on NOx emissions for lignite and hard coal plants of 300 MW or more.

The standard is likely to require a significant number of plants to install expensive NOx controls, threatening over 25 GW of capacity in Central and East Europe and up to 9.8 GW in Germany, according to S&P Global Platts Analytics.

“The limits are too ambitious for NOx and mercury. We don’t say anything on sulfur or particulates,” Pavlas said. “It is also a question of how the government implements the decision. We have a technical design, but it is very expensive. So we’ve joined with Euracoal to call for more friendly limits on NOx and mercury.”

Svoboda said the regulation had not been conceived to shut out coal “by brutal force on a single date”.

“The BREF should ensure that everything that is built new has the best possible parameters, while ensuring refurbishment of assets at reasonable cost. That philosophy is fine. But turning it into a weapon against coal by proponents of alternative sources would be wrong, you’d be wiping out lots of critical plant in the system, including in Germany,” Svoboda said.

A possible hearing was up to 18 months away, the executives said.

Acknowledging the hostility of environmental groups to any opposition to stricter air quality limits, Svoboda said thermal plants still had a critical role to play in system stability, notably in southern Germany, but also in the UK, Italy, Benelux and Spain, all markets that Sev.en Group is targeting in a Eur1 billion conventional generation (lignite, coal, gas) acquisition drive.

“We need to distinguish between the different NGOs and public opinion makers, often speaking about the energy system without much insight, and the people who are responsible for the energy systems,” Svoboda said.

“Their view is very different. They see that conventional assets are needed and will have to be catered for in the system. Look at German redispatch and backup service costs. They are growing exponentially, exceeding Eur1 billion last year. The costs will only increase as plants are closed,” he said.

Meanwhile the owners of the assets are splitting off, selling or closing plants as their strategies swing behind decarbonisation and renewables.

“A combination of the two [conventional and renewable generation] does not seem to be that viable for a number of utilities,” Svoboda said.

“It is a strategic decision to reduce complexity and focus on one type of asset category. A majority is deciding on renewables, I can understand why it’s so attractive, on the other hand there’s a role for a consolidator of conventional assets,” he said.

Sev.en Group is now hoping to emulate fellow Czech thermal plant consolidator EPH and step in where other utilities are stepping out.

“It’s not a strategy for all time, but as long as these assets are needed in the system we think there will be a way to accommodate them,” said Svoboda.

“I admit this is opportunistic – there is no way this asset category can pay back its original cost of investment. Those times are over. But as long as the plants are needed there will be a way to cover operational cost, and times of volatility when extra margin can be made,” he said.

In addition, Sev.en is looking at additional projects on conventional sites it may acquire, including single cycle gas peaker plants, biomass generation and combined heat and power applications, he said.

— Henry Edwardes-Evans

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