Thermal power plants market in Bulgaria

EnergyBusinessSouth-East European INDUSTRIAL Мarket - issue 2/2010

The power sector in Bulgaria is complex and dynamically developing and thus offering variety of opportunities to local and international companies. Bulgaria is situated in Southeastern Europe, where both energy deficiency and demand are growing. In the recent years, the country has been an important regional electricity supplier.
Electricity in Bulgaria is produced largely by thermal plants. The main thermal power plants in the country are Maritsa Iztok Complex, TPP Varna, TPP Rousse, TPP Bobov dol, TPP Maritza-3 Dimitrovgrad.

Maritsa Iztok Complex
The Maritsa Iztok Complex is the largest energy complex in South Eastern Europe. It is located in Stara Zagora Province, south-central Bulgaria. It consists of three lignite-fired thermal power stations. All power plant facilities (Maritza East 1 (ME-1), Maritza East 2 (ME-2), and Maritza East 3 (ME-3) are fired using lignite from the Maritza East mines.
The complex is located in a large lignite coal basin, which includes several mines, enrichment plants, a briquette plant and its own railway system. The development of the thermal power and mining complex at Maritsa Iztok began in 1952, but the lignite deposits used to be known well in the mid 19 century. The Maritsa Iztok mines and power plants are interdependent as the only market for coal is the power plants, while the power plants have no other supplier of coal but the mines.

Maritsa Iztok-1
Maritsa Iztok-1 is located near the town of Galabovo. It was constructed and began operation in the early 1960s. Between 1959 and 1962 the first 200 MW power generating facility was constructed. This facility consisted of lignite drying plant, six boilers, four 50 MW steam turbine generators and associated steam extraction equipment. In addition to generating electrical power, the 200 MW facility provided steam for district heating (for the town of Galabovo) and steam used for the lignite drying process at the adjacent briquette manufacturing facility. Between 1962 and 1964, an additional 300 MW of generating capacity was added, consisting of four boilers and two 150 MW steam turbine generators.
The existing 200 MW power plant/steam heating plant (Boilers 1 through 6 and Turbines 1 through 4) continues to operate, providing both electrical power and steam for district heating and for the briquette manufacturing facility. With the closing of the lignite drying plant, the mix of lignite supplied to this power plant has been modified to improve combustion efficiency. High moisture content raw lignite from the mines is now mixed with high calorific value (high sulphur content) lignite briquettes from the briquette manufacturing facility, improving burning efficiency but adversely affecting sulphur dioxide air emissions.
The plant’s hazardous materials are stored in several indoor and outdoor locations, typically in close proximity to the locations where they are being used. The primary hazardous material storage area is adjacent to the existing heavy fuel oil storage tanks. This area is used to store drums of fresh (unused) oil and hazardous material. Adjacent to the drum storage area is a tank farm, with nine aboveground storage tanks. The tanks are used to store fresh and used turbine oil. The plant’s waste oils are collected in drums and tanks and taken by the plant’s oil supplier for recycling.
The existing Maritza East 1 thermal power plant does not maintain records regarding spills/releases of oil or hazardous materials. Facility management indicate that there have been oil spills at the site as well as several incidents involving the plant’s transformers.
The power block and principal facilities of the existing power plant are located to the north of Rozov Kladentz Lake, the man-made cooling water reservoir for the facility. Ash ponds for the existing facility extend for several kilometres to the west of the main power plant area. Ash Pond 1 and Ash Pond 2 have been closed, reclaimed, and revegetated. Ash Pond 3 is currently used by the existing ME1 facility. The Sazlijka River (a north to south flowing tributary of the Maritza River) serves as the western boundary of the ash ponds.

TPS AES Galabovo
In October 1998, the old power plant with a capacity of 500 megawatts (MW) was privatized and sold to Consolidated Continental Commerce (3C), later purchased by AES Corporation. On 15 February 2000, AES and the Bulgarian grid operator Natzionalna Elektricheska Kompania EAD (NEK) signed a 15-year tolling agreement, according to which AES has an obligation to replace the old power station with a new facility. In June 2006, AES started construction of the new power station, which costs 1.2-1.4 billion Euros. It will be the first large-scale power plant to be built in Bulgaria in the last 20 years, and the single largest foreign investment in Bulgaria and one of the largest green field investments in South East Europe. The new power station will consist of two pulverised coal boilers of 335 MW each, two steam turbines, two generators and desulphurisation facilities.
The new TPP will provide one of the lowest European production costs due to cheap local coal, newest technology and highest efficiency. This power plant will not only help for the development of the Stara Zagora region but also have a crucial importance for the whole county’s economy. Bulgaria will be soon facing power shortage because of the recently decommissioned units and Maritza East 1 is the best and timely solution to this situation. The new capacity will also secure Bulgaria’s leading position in the power market for 3 to 5 years before a new plant is constructed in other countries.
The Maritza East 1 Project is to build and operate a 670 MW gross lignite fired power plant adjacent to the existing Maritza East 1. The Project will replace the old, polluting and inefficient 500 MW Maritza East 1 plant, of which 300 MW has already been phased out and dismantled. Upon completion, the baseload facility will serve as source of electricity for Bulgaria and Southeastern Europe.
The Project will also secure the future of the Bulgarian coal mines as it will utilize lignite coal extracted from the Maritza East mines. Lignite will be supplied under a 15 year Lignite Supply Agreement with Maritza East Mines. AES has also signed 15 year power purchase agreement with NEK, and with Kaolin for limestone supply.
The design, construction, demonstration, testing and commissioning of the Project will be conducted by subsidiaries of Alstom Power – a world leader in power plants building and engineering. The Project is designed to meet World Bank, Bulgarian and EU guidelines.

Maritsa Iztok-2
Maritsa Iztok-2 is the largest thermal power plant in the Balkans. It is located 60 km from Stara Zagora in the vicinity of the village of Radetski and the dam lake Ovcharitsa. The construction of Maritsa Iztok-2 started on 7 May 1962; it was inaugurated on 10 November 1966. Between 1979 and 1995 the power station was expanded by four additional units. Maritsa Iztok-2 has a total installed capacity of 1,465 MW and generates 30 % of Bulgaria’s electricity. It consists of eight generating units, two of which are equipped with flue gas desulphurization plants. The rehabilitation of the older power units, including construction of FGD plants for units 1 to 6, are in progress.
Maritsa Iztok-2 is wholly state-owned. It is a subsidiary of Bulgarian Energy Holding EAD.

Maritsa Iztok-3
Maritsa Iztok-3 is Bulgaria’s third-largest power plant. It is located 40 kilometres (25 mi) from Stara Zagora. The power plant has an installed capacity of 900 MW, which is produced by four units of each 225 MW. It has a 325 metres (1,066 ft) tall chimney. Construction of the Power Plant started in 1973 and the first generating unit was commissioned in 1978. Over the next three years subsequent units were gradually brought into service and in 1981 the power plant reached its full capacity of 840 MW.
In 1998, the United States power utility Entergy Corporation purchased 73% of Maritsa Iztok-3 shares for USD 375 million from the Bulgarian state. Entergy also has the obligation to modernize the power station. In 2002, the Italian power company Enel joined the project and in 2006 Enel acquired Entergy’s stake. At present, Maritsa Iztok-3 is owned and operated by Energiina Kompaniya Maritsa Iztok 3 AD, a joint venture of Enel (73 %) and NEK (27 %).
In February 2009 Enel Maritza East 3 power plant completed a major investment program for rehabilitation and modernization. It was carried out by a Consortium between Enel Produzione and E&Z under an Engineering Procurement and Construction Contract. The main goals of the project were to increase the efficiency and the capacity of the power plant, to extend its operational life and most importantly to bring in line with European environmental standards.
On December 21, 2009 Enel Maritza East 3 received the ISO 14001:2004 certificate from SGS Bulgaria attesting that the power plant operates in line with the world’s best environmental management practices. The certificate was issued following successful evaluation of Enel Maritza East 3’s activities and documentation against ISO requirements.
Enel Maritza East 3 TPP is the first and only lignite power plant in the Balkans in full compliance with the European Environmental Standards.

TPP Varna
TPP Varna is the second largest thermoelectric power plant in Bulgaria and on the Balkan Peninsula. The core activity of the plant is generation of electricity and heat, transmission and distribution of heat, construction works and repair activities in the field of electricity and heat generation.
The plant is located in Northeast Bulgaria, 10 kilometers west of the town of Varna. The nearby Varna Lake enables it to take advantage of Port Varna. As of October 2, 2006, the thermal coal-fired power plant is a subsidiary of CEZ AS. Czech utility company CEZ wrapped up the 206 million euro ($258.6 million) acquisition of 100% in the Varna TPP. The plant has a total installed capacity of 1,260 MW. It has six 210 MW units, which were commissioned in the 60’s and the 70’s under Russian design and technology. This capacity ranks the company among the leading generators of electricity from coal in Bulgaria and on the BalkanPeninsula. Imported Ukrainian coal with high calorific value and low sulphur content is burned in the power plant. The thermal plant in Varna was historically dispatchedat a low rate, covering the intermediate load of the domestic power system. In 2002 the production reached 2,300 GWh. The projected demand for TPP Varna’s energy output will be increased at some 4,000 to 6,000 GWh in the next few years. The license for generation of electricity is No L-086-01 issued on 21 February 2001 and valid for a period of 20 years. TPP Varna was designed to burn imported coal with high calorific value (6,000 kcal/kg) and low sulphur content (less than 1.5%).
Rousse power plant
The Rousse power plant is located at the bank of Danube, in close proximity to the harbor of the city. The installed electric power potential capacity of the thermal power plant’s generators is 400 MW and it has total heat capacity of 35 Gcal/h and a staff of more than 700 employees. At this moment, only some of the plant’s generators are producing electric power. Currently, the plant generates electric power of 290 MW. To achieve its full-scale electric power generation capacity of 400 MW, part of the installed equipment at the Rousse power plant will need to be modernized.
On December 14, 2007, Mechel International Holdings, acquired 49% of the shares of TPP Rousse from its 100% owner, Holding Slovenske elektrarne d.o.o (HSE) of Slovenia. The transaction amount was approximately EUR 50.2 million.

TPP Bobov Dol
TPP Bobov Dol is located in Southwest Bulgaria, 70 kilometers south of Sofia. The power plant was built between 1973 and 1975. It has three 210 MW units, therefore the total installed capacity is 630 MW, while the available capacity is 570 MW. The units were initially designed to burn indigenous brown coal with high ash content. Later the combustion units were adapted to burning blended coal.
Currently the power plant operates on coal supplied by 12 mines, located in South western and Western Bulgaria where only 3 of the mines are complying with those initially designed for the combustion systems of the power plant. The plant is located near gas pipelines, therefore in the future gas could become alternative fuel for supply. Because of the sub optimal fuel base compared to design, the availability per unit stands at 190MW, which is about 90 percent of designed capacity. The expensive and inefficient generating process leads to one of the lowest annual load factors (50% to 60%) in the domestic power sector, placing the plant at the high end of the merit order, basically covering intermediate to peak load and acting as reserve capacity for the system. By 2002, TPP Bobov Dol was dispatched as a sub-peak power plant with an annual average availability of 5,000 hours. The annual output is roughly 2,000 GWh against 2 million tons of coal burned.

TPP Maritza-3 Dimitrovgrad was privatized through the stock exchange in 2003. Located in Southeast Bulgaria, it burns domestic lignite and covers the intermediate load.
The establishment of ECME-3 JSC for implementing an investment project under the BOT scheme in 2003 is the biggest completed deal: 100 million EUR monetary instalment of the Italian investor ENEL +600 million EUR secured investments and represents the first ever private equity involvement without state guarantee in the Bulgarian power generation segment.

Source: Bulgarian Ministry of Economy, Energy and Tourism, AES Corporation presentation, listed power plants web-pages, EBRD.