Friday, 31 July 2015

In these particular economic circumstances, it is completely irrational for any publically-owned company to disburse 400 million euros for a project that is economically non-viable. Insisting on the construction of Ptolemaida V will entrap Greece into an outdated energy model at a time when the recent technological leaps render clean energy a cost-competitive basis for the reconstruction of the country’s production.

WWF Greece has sent a letter to the new Minister of Reconstruction of Production, Environment and Energy, Panos Skourletis, as well as to the German bank KfW, which co-finances the construction of PPC’s mega-lignite plant “Ptolemaida V”.

The construction of Ptolemaida V is currently at an advanced licensing stage. However, the start of the actual work requires a deposit of 400 million euros within 2015, which will come from PPC’s own funds, at a time when the company is in the worst possible financial state.

The decision to construct Ptolemaida V was taken several years ago, when the status of the Greek economy, as well as that of the European and global climate and energy policy, were very different. During the last year and a half though, the data have changed dramatically, and hence the decision to construct Ptolemaida V requires careful reconsideration.

If finally built, Ptolemaida V will be the country's largest lignite-fired plant, with a capacity of 660 MW and an installation cost of at least 1,4 billion euros. Approximately one half of this amount will be provided by a syndicated bond loan to PPC under the guidance of the German government-owned KfW-IPEX Bank and guaranteed by the German Export Credit Agency, Euler Hermes. This money will be used to purchase German-made equipment for the new plant. PPC has already commissioned the construction of Ptolemaida V to a consortium led by TERNA.

WWF Greece informed the Minister and the KfW board about the recent developments in European legislation, which will impose a heavy burden on the finances of Ptolemaida V, thus rendering it an economically non-viable investment. In particular, drastic changes in the modus operandi of the EU’s Emissions Trading System, will lead to a significant increase in the price of CO2 emission allowances, which will in turn cause Ptolemaida V’s operating cost to skyrocket. Moreover, the need to comply with the revised emission limit values for other gaseous pollutants* (as determined by the “Seville” process) will require new, expensive anti-pollution technology even before the new plant begins its operation.

Finally, Ptolemaida V is neither unique nor the cheapest solution in terms of covering base load needs for Greece’s electricity system. WWF Greece’s recent scientific report shows that Ptolemaida V’s base load can alternatively be covered by hybrid combinations consisting of wind, PV and Pumped Hydro Energy Storage (PHES) stations. More importantly, the levelised cost of energy (LCOE) for several of these hybrid solutions is shown to be lower than that of Ptolemaida V. It is significant to note that the study proposes the conversion of seven pairs of existing PPC-owned hydropower stations to PHES units, thus minimizing the corresponding installation cost as well as the environmental impact.  Hence, the proposed solution is realistic, economically more favourable and clearly more sustainable, compared to Ptolemaida V, while its implementation will benefit PPC as well. 

“At this very critical moment for Greece and in order to avoid errors with devastating consequences for the citizens and the economy, it is truly necessary that every decision, especially this particular one associated with the country’s largest energy investment, is well documented. During the press conference following the hand-over ceremony at the Ministry of Reconstruction of Production, Environment and Energy, the new Minister correctly stated that: “... the short-sighted logic which, in the name of a short-term effectiveness, undermines the environment and the sustainability of the entire model of development should be set aside”. It is precisely this logic that should be applied in the case of Ptolemaida V. Although lignite is the most polluting and damaging to public health and the environment form of energy, it was also the cheapest so far. However, recent changes in European legislation altered the picture dramatically, thus rendering the planned lignite plant economically non-viable. The new leadership of the Ministry and PPC should take this new reality into account and, in cooperation with the project’s sponsors, seek alternative solutions, before it is too late”, said Nikos Mantzaris, Climate and Energy Policy Officer at WWF Greece. 

• Read the letter to the Greek Minister of Reconstruction of Production, Environment and Energy here.
• Read the letter to the Executive Board of KfW here. 
• Read WWF Greece’s report “Clean Alternatives to Ptolemaida V” here. 

*nitrogen oxides (NOx), sulphur oxide (SO₂), particulate matter (PM), mercury (Hg)