Mickoski: Investor interested in building cogeneration facility in North Macedonia

North Macedonia is developing several projects for gas-fired cogeneration facilities and there is already an investor interested in building one, according to Prime Minister Hristijan Mickoski. He also revealed that the country started receiving natural gas from Azerbaijan. At the same time, state-owned power utility Elektrani na Severna Makedonija has signed a memorandum of cooperation with the Azerbaijani state oil and gas company SOCAR.

North Macedonia wants gas power plants to contribute to the decarbonization of the energy sector, but it hasn’t yet had success in such projects. In January, the previous government tasked Elektrani na Severna Makedonija (ESM) with starting negotiations with a potential strategic partner on the construction of the Negotino power plant of 800 MW, and a 250 MW to 300 MW unit in Bitola. Both would use gas and hydrogen.

There was also an idea to offer neighboring countries to participate in the investments. To secure enough natural gas, in April 2021 the country signed with Greece a memorandum on deliveries from the liquefied natural gas (LNG) terminal in Alexandroupolis. The facility began commercial operations last month.

Investors were interested in the construction of gas power plants, so the government said in December 2020 that talks were underway with United States–based engineering giant General Electric.

The government is considering several projects for gas power plants

Now, at the business forum called Dialogue of the Business Sector and the Government, Prime Minister Hristijan Mickoski claimed that a potential investor is willing to invest EUR 1 billion in a cogeneration facility. He said that immediately after the forum he was going to meet the investor in the the government’s building.

Several projects are underway for cogeneration plants, according to Mickoski. In his words, it is the only way to reduce pollution from heating homes with wood, wood waste, and often tires.

The cheapest model to replace it would be a district heating system supplied by gas-fired cogeneration facilities, Mickoski said.

The implementation of the project could start next year

He claimed the investment wouldn’t be eligible for privileged prices and that it would be conducted under market conditions. The goal is for the government to be a co-investor with its land and grid connections, Mickoski added.

The government estimated that private investors could secure gas supplies more easily than itself, the prime minister asserted.

If everything goes according to planm the implementation of the project should start during the next year and finish in three years, he said.

Of note, the previous government was very close to signing a contract on the construction of a cogeneration facility with Mytilineos. The agreement with the Greek firm, now called Metlen Εnergy and Metals, was part of a strategic investment package in the energy sector. Laws and agreements were prepared to facilitate the projects.

The proposal for the gas power plant deal was criticized and, in the meantime, elections led to a change of government.

The construction of gas power plants is becoming very popular in the region. This week Serbia’s president Aleksandar Vučić said the government is starting talks with Azerbaijan on a 1 GW gas power plant or two smaller ones.

A memorandum with SOCAR

Strengthening the country’s energy stability was the main purpose of the memorandum of understanding with State Oil Company of Azerbaijan Republic (SOCAR), according to ESM.

The move is aimed at improving the availability of natural gas and expanding purchasing options to ensure a stable supply at competitive prices, the North Macedonian utility added.

The deal is part of SOCAR’s push to increase its presence in the regional market.

Mickoski said he expects his country to get cheaper natural gas thanks to the memorandum. He revealed that SOCAR has started to supply gas to ESM for heating and electricity production.