November 6, 2017 Read More →

Endesa May Never Recover €400 million Cost of Upgrading Spanish Coal Plant

Platts:

Endesa may never recover the €400 million cost of upgrading three of its Spanish coal-fired power stations, the Institute for Energy Economics and Financial Analysis said October 27.

A report from the US-based sustainable energy think-tank says the utility, majority owned by Italy’s Enel, is planning to invest €100 million in upgrades at the 530 MW Alcudia plant on the island of Mallorca, and a total of €300 million at the 1,469 MW As Pontes plant in Galicia and 1,159 MW Litoral plant in Andalucia.

“The Endesa investment is likely to end up stranded if the European Union, as expected, proceeds with commitments related to the 2015 Paris Agreement on climate change,” report co-author Paolo Coghe said. The Paris Agreement effectively mandates phase-out of coal-fired generation across the EU by 2030 or soon after, he said.

The upgrades are intended to achieve compliance under the EU’s Industrial Emissions Directive and recently revised air quality standards known as the LCP BREF, to take effect in 2021.

Under the IED, the European Commission must update BREF standards at least every eight years, so the next tightening of emission standards should occur before 2030. Endesa has confirmed that the upgrades aim to extend operational lives at the plants to 2030-2035.

At Litoral, investment of €100 million was approved in 2014. IED compliance work is to be finalized this year and life extension work by 2021, with improvements focused on an existing desulfurization system in Unit 2 and addition of denitration systems in both units.

For As Pontes, €200 million was approved in 2016. IED compliance work is to be completed by 2020, with investment in both denitration and desulfurization units.

Finally, at Alcudia, €100 million is to be spent between now and 2021, again on installation of a denitration system and improvements to an existing desulfurization system, the report said.

Co-author Gerard Wynn said Endesa should reconsider the Litoral investment, given that its emissions rate sat above the median for European coal-fired power plants, and far above the new BREF limits.

As Pontes was “no worse than many European plants”, sitting around the median of EU coal-burning installations for SOx and NOx emissions.

“But it is well above the new BREF standards, and coupled with its age (43-46 years in 2021) and low implied energy efficiency, expensive upgrades to meet the new rules simply may not be economically justifiable,” Wynn said.

Emissions rates at Alcudia, like Litoral, were far above the revised BREF limits and the median of EU power plants.

“Again, we would argue against its upgrade, while acknowledging the uniqueness of its island location and possibly limited alternatives in the near term,” Wynn said.

A growing number of European countries have announced plans to end coal generation.

On October 24, Italy’s government outlined an intention to phase out coal generation by 2025 or 2030 in an energy strategy to be adopted next month.

Meanwhile the Netherlands’ new coalition government plans to phase out coal in 2030, following commitments in the UK and France to do the same by 2025 and 2022 respectively.

Developments in Germany are awaited. The likely return of the Greens into government has placed a coal phase-out and higher carbon prices firmly on the agenda as negotiations proceed to form Chancellor Angela Merkel’s fourth coalition.

Endesa coal upgrades ‘risky’: IEEFA

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