Valka to increase biofuel power capacity

  • 2011-02-02
  • From wire reports

WASTE NOT: Raine Pajo claims that small co-generation energy plants would cut costs for consumers.

TALLINN - Estonian state-owned energy giant Eesti Energia has acquired a majority holding in a heating company in the Latvian town of Valka - Valkas Bioenergo Kompanija (VBEK) - and plans to establish a new biofuel-based co-generation plant in 2012, the company announced on Jan. 25, reports news agency LETA. The new name of the enterprise that will provide heat to the city of Valka is Enefit Heat&Power Valka.

The majority holding in VBEK was acquired from Host Energo (a subsidiary of HoSt B.V.). A minority stake was owned by the city of Valka. In the transaction, Eesti Energia acquired the majority holding from Host Energo and increased the share capital. Eesti Energia now holds 90 percent of the heating outfit and the city of Valka holds ten percent.
Enefit Heat&Power Valka currently generates thermal energy in two boiler plants that operate on biofuel and fuel oil and is developing a new biofuel-fired CHP co-generation plant project. Upon completion of the new co-generation plant in 2012, the previous boiler plants will operate in reserve mode.

“Developing and investing into local small co-generation plants is important as they allow for a reduction in the price of heat for consumers, ensure supply of electricity to small towns and enable a reduction in electricity transmission losses. Both in Estonia and Latvia we see plenty of potential in making the generation of energy and fuel usage in the smaller regions more effective,” said Raine Pajo, member of the Eesti Energia management board responsible for electricity and heat generation. “Therefore we are establishing the new co-generation plant in Valka with great support also from EU structural funds, and as well are preparing several other investment projects in this field.”

A member of the board of Host Energo, Hermanus Klein Teeselink, said: “We have been operating in Valka since 2001 and providing the city with a stable and efficient supply of thermal energy. In Valka we had acted as both a provider of biomass installations in the initial stage and operator of the company at a later stage. However, our core competence has always been as a provider of renewable energy installations, and this divestment will help us concentrate our resources and energy on new projects in the renewable energy industry.”

Eesti Energia also signed an EPC contract (Engineering, Procurement and Construction) with Imtech Industry International for a new co-generation plant. When it is completed in 2012, the plant’s electrical capacity will be 2 MW with a heat capacity of 8 MW. The CHP plant will use biofuel (wood chips, sawdust and peat).
The cost of the existing heating enterprise and the total investment into the new CHP plant will be approximately 10 million euros for Eesti Energia. The investment into the new CHP plant will be 36 percent covered by European Union structural fund assistance earmarked for renewable energy projects.

Eesti Energia is a state-owned Estonian company that manages the complete value chain, from oil shale mining, to electricity and heat generation. This includes shale oil production through to electricity distribution and sales, as well as additional energy-related services.

The power company also sells electricity to retail customers in Latvia and Lithuania, where it trades under the Enefit trademark. Eesti Energia also trades electricity on the Latvian and Lithuanian wholesale markets, and in the Finnish price area of the Nord Pool power exchange; as well, it says it is looking for opportunities to invest in profitable foreign projects. Eesti Energia is also the largest employer in Estonia with over 7,000 staff members.

Host Energo is a Latvian subsidiary of HoSt B.V., which is a Dutch engineering and contracting company specializing in the engineering and supply of biomass energy installations. HoSt has broad experience in energy systems, focusing on biogas installations, wood-fired combined heat and power systems and gasification systems.