The Šoštanj coal-fired power plant is set to suffer a total net loss of EUR 870 million by 2030, mostly due to high CO2 prices, which may make its closure inevitable even before 2033, currently the most optimistic scenario for Slovenia’s coal phaseout.
Termoelektrarna Šoštanj (TEŠ), part of state-owned Holding Slovenske elektrarne (HSE), is the only coal-fired power plant in Slovenia. The country is in the process of determining the coal phaseout deadline with three options in the game – 2033, 2038, and 2042.
The latest data on the potential future profitability or non-profitability for units 5 and 6 in TEŠ was analyzed by Ember in a document called Projecting potential future profitability of TEŠ from 2021 to 2030.
The analysis includes five scenarios
The report incorporates current and forecast data including electricity production, fuel costs, CO2 costs, power prices and operating costs.
Of the five scenarios, the one with a EUR 870 million loss appears to be the most feasible, the analysis reads.
By 2025, net losses including fixed operation and maintenance costs (FOM) and loan repayments are seen reaching EUR 479 million. By 2030, the gap is projected at EUR 870 million.
Two scenarios envisage profit by 2030
Two scenarios also predict net losses by 2030 – EUR 709 million and EUR 962 million, respectively, while in the remaining two the firm earns profit. The one with EUR 167 million attributes the result to the possibility of high electricity prices, and the best potential outcome, net income of EUR 1 billion, is based on the TEŠ 2014 Investment Plan, which envisages high power prices and low CO2 prices.
The analysis does not include any costs or calculations associated with the Premogovnik Velenje mine. It is only focused on the power plant units.
Plans needed for unannounced closure of TEŠ
Slovenia’s Association for Sustainable Development – Focus noted TEŠ has been in the red in recent years. The utility generated a net loss of almost EUR 20 million in 2019.
CEO of ELES Aleksander Mervar has recently said that TEŠ is on track to lose up to EUR 150 million this year.
The NGO said that Ember’s analysis indicates the possibility of the unannounced early closure of TEŠ. Tomislav Tkalec from Focus said the estimated EUR 870 million loss demonstrates TEŠ is on the path of unsustainability by 2030.
The analysis backs up the 2033 scenario as a best for a coal phaseout
It is a clear signal that it is necessary to prepare an additional scenario for managing the risk of phasing out coal and a just transition of the region in the situation of unannounced closure of TEŠ, he said.
The analysis adds weight to the argument that a coal phaseout by 2033 is the least harmful scenario in financial terms, because the longer the coal-fired power plant operates, it will generate a greater loss.
TEŠ recently discontinued efforts to obtain an environmental permit for its project to burn solid waste.