Power plant project awaits EC decision

  • 2010-01-20
  • From wire reports

RIGA - The European Commission (EC) will submit its reply on the Liepaja power station project by the end of this month, says Economy Minister Artis Kampars (New Era) in an interview on Latvian State Radio, reports news agency LETA. In September of last year, Kampars and European Commissioner for Competition Neelie Kroes, in discussing the coordination process of the Liepaja power plant project, agreed that the EC would express its opinion before the end of this year as to whether the method of support chosen by Latvia for the implementation of the power plant project - in the form of capacity payments - conformed to European Union (EU) norms.

The EC has promised to report its conclusions on Jan. 26, said Kampars.
As noted by the minister, the power plant project has been defined as a priority project in Latvia, and the decision by the EC will also be dependent on the second stage of the Latvenergo reconstruction project for the Riga TEC-2 heating and power plant in Riga, for which the company expects to borrow 100 million euros.

If the EC’s reply on the Liepaja project is positive, then most likely the TEC-2 reconstruction would not go ahead, said the minister, adding that at the moment the Latvenergo project has not been approved by the government.
Although the European Bank for Reconstruction and Development (EBRD) is prepared to provide a loan for the second round of TEC-2 reconstruction, which foresees the installation of a new gas-steam combined cycle power unit, there are still many questions to be discussed concerning this project, and many uncertainties, explained Kampars.

Some reluctance to proceed with the TEC-2 project centers on its design - this would be a gas-fired plant. Considering that the gas supply is coming from Russia, completion of this project would entail increased reliance on Russian energy supply for Latvia.
Latvia has conceptually decided on the construction of a new solid fuel power station near the seaside city Liepaja, anticipating support in the form of capacity payments, but for Latvia to be able to begin the implementation of the project, it must be agreed upon first with the European Commission.

Liepaja is reported to be the best location for a solid fuel, in other words coal-fired, power station in western Latvia.
On March 11, 2008, the Cabinet of Ministers approved the construction of the new power plant. In order to encourage the progress of the solid-fuel power station project, the Ministry of Economy was asked to evaluate the current situation in Ventspils and Liepaja, specifying possible locations for the power station and sounding out the attitudes of the local government and population concerning possible construction.

On April 1, 2008, Saeima accepted amendments to the electricity market law with which it was promised to promote the security of energy supplies and guarantees for production capacities in Latvia.