As coal-fired power plants are shutting down across Europe ahead of schedule, CEO of ContourGlobal Maritsa East 3 Vassil Shtonov said the government in Bulgaria needs to help keep such facilities afloat until large gas power plants are built.
Coal power plants in Europe got some relief during the energy crisis as the parabolic rise in the prices of natural gas made them competitive again. The tables then turned once more. Bulgaria imported electricity during the latest cold wave, as it was cheaper than from domestic coal plants. Minister of Environment and Water Julian Popov estimated last week that the facilities wouldn’t keep operating past 2030, arguing it is the market that would close them, not the government.
The ContourGlobal Maritsa East 3 thermal power plant’s 15-year contract with state-owned National Electricity Co. (NEK) is expiring next month, taking it to the open market. The firm’s Executive Director Vassil Shtonov told Divident.eu in an interview that the facility would operate only when the prices are higher than its costs, unless the gap was successfully hedged abroad.
Maritsa East 3 is most competitive coal plant in Bulgaria
Maritsa East 3 or Maritsa iztok 3 was commissioned in 1978, but the London-based company modernized the coal plant in 2009. The project cost EUR 700 million. A further environmental upgrade was conducted in 2015.
KKR agreed to acquire ContourGlobal in May 2022. NEK, a subsidiary of Bulgarian Energy Holding (BEH), holds a 27% stake in ContourGlobal Maritsa East 3. The plant, located near Stara Zagora, consists of four units with 908 MW in total. It buys coal from state-owned Maritsa East Mines (Mini Maritsa iztok), part of the Maritsa East complex.
The coal plant is switching to the open market, so it will operate only when the price is higher than the costs
Shtonov revealed that electricity production costs the firm EUR 125 per MWh at an emissions price of EUR 75 per ton of carbon dioxide equivalent, adding that it is more competitive than other coal plants in Bulgaria. The CEO noted that coal plants emit four times more CO2 than gas-fired facilities.
“Coal plants in Bulgaria generated a net 20 TWh of electricity in 2022. In 2023, coal plants produced less than 11 TWh of electricity. A total of 6 TWh is expected to be produced in 2024 over the whole year, mainly due to warmer weather, low gas prices and reduced industrial production,” he stressed.
Capacity mechanism could keep coal sector above water
Shtonov acknowledged that the space for coal plants is narrowing and suggested that it could lead even ContourGlobal Maritsa East 3 to shut down a part of its facility. On the other hand, if Bulgaria wants to be energy independent, it must help coal plants until large gas power plants are built, he warned and claimed there is no other option.
“What if a severe winter comes? If the economy grows faster than expected? If the price of gas rises or if some reactor in Kozloduy NPP goes into longer repair?” Shtonov asked. He said the optimal approach for the government would be to introduce a capacity mechanism with “relatively small payments” to all three big coal power plants.
Only solar power works without subsidies
ContourGlobal is interested in building a gas power plant, the head of operations in Bulgaria added. But it would take four years and the European Union may decide to close such facilities, he pointed out.
Like some of the other coal plant and mine operators in Bulgaria and Southeastern Europe, the firm is working on energy transition projects and decarbonization. Shtonov said it submitted proposals for photovoltaics, batteries, waste incineration and gas to tap into the EU’s Just Transition Fund. He estimated that only solar power plants can be built without subsidies.
Even the relatively recently reconstructed coal-fired power units are being shut down all over Europe, so very few countries are set to still have them in ten years. Investors are losing confidence in the technology because of emission costs and ever stricter environmental and state aid rules. They hesitate even to finance smaller overhauls and upgrades.