Cleaner Fossil Fuel OPET – Contract No. NNE5/2002/97

WorkPackage # 3: Promotion of CCT Implementation Options in Existing Coal-Fired Power Plants

Annex 1.

Report Solid Fuel Power Sector of India, China, East European, South Caucasus and Balkan Countries Current Situation – CCT Implementation Possibilities

EXECUTIVE SUMMARY

The aim of this Report is the analytical data collection and inventory of the current situation in Coal-Fired Power Sector and future trends in East European countries and new promising markets. The Report is released in the frame of the CFF-OPET Project WP3 (“Promotion of CCT implementation options in existing coal-fired power plants”).

The Report consists of 13 parts devoted to the analytical description of the coal-fired power sector of each country. In each part there are sections describing the electricity generation status, the coal-fired power plant park, the ownership and technical status, fuels used for electricity generation and future trends. Especially for Russia there is a section devoted to the potential of introduction of renovation activities.

The countries that are under investigation are: Russia, Bulgaria, and Montenegro, Romania, FYR of Macedonia, Estonia, Lithuania, Latvia, Poland, Georgia, Azerbaijan, India and China.

In terms of coal reserves the above mentioned countries own more than one third of the world total coal reserves (BP statistical review 2003) with Russia, India and China owning 15.9%, 8.6% and 11.6%, respectively. As far as electricity production is concerned the countries that are under investigation produce more than 21% of the world- produced energy.

ii

CONTENTS

Part I. – Russia Part II. – Bulgaria Part III. – Serbia and Montenegro Part IV. – Romania Part V. – FYR of Macedonia Part VI. – Estonia Part VII. – Lithuania Part VIII. – Latvia Part IX. – Poland Part X. – Georgia Part XI. – Azerbaijan Part XII. – India Part XIII. – China

iii CENTRE for RESEARCH and TECHNOLOGY HELLAS INSTITUTE for SOLID FUELS TECHNOLOGY and APPLICATIONS (CE.R.T.H. / I.S.F.T.A.)

All-Russian Thermal Engineering Institute (V.T.I.) (sub-contractor of CERTH/ISFTA)

Report Solid Fuel Power Sector of India, China, East European, South Caucasus and Balkan Countries Current Situation – CCT Implementation Possibilities

Part I. Russian Coal-Fired Power Sector Current Situation – Renovation Options Analysis Prepared by E. Nanos & A. Dimitriou

Report prepared for

ISFTA – April 2004

1 Electricity Generation Figure 1 illustrates the power generation mix of the Russian energy sector in terms of installed capacity. 43% of the installed capacity corresponds to Natural Gas-fired power plants, while 21%, 19%, 10% and 7% correspond to Hydro, Coal, Nuclear and Oil-fired power plants respectively.

Power Generation Mix [%]

0,02% 20,57% Hydro Nuclear 43,33% Coal 10,09% Oil Natural Gas 7,28% 18,72% Other

Source VTI

Figure 1: Russia’s power generation mix in terms of installed capacity (year 2000).

2 Power Plant Park The Russian coal-fired power plant park is subdivided into 25 thermal power stations (180 Units) of total capacity 29298 MWel. Figure 2 illustrates the distribution of the Russian coal-fired Units and capacity in the regions that the power plants parks are located.

) 5000 25 el s W t

4000 20 i

(M 3000 15 Un f ty i

c 2000 10 o a

p 1000 5 No a

C 0 0 a y y k y y k y k iy k y y i y iy i y ha iy s ki i s i k s k 's k k a r t k l s i s ski s s ski ' skiy vs s a S b vski vski r n vski yat vsk Om o in ku i an c r ar o o o r i si o rm it Ir l y l u Tul e our god st ar h o d B im sko vo n o r yab o yaz Pe m r l C o o e h ab e R P R el o pub v z N h K M asn e V h S r u K R C K Y Region

Figure 2: Distribution of coal fired power plants

Part I – 1 Figure 3 illustrates the distribution of number of Units and installed capacity as a function of the Units electric capacity in MWel. 30 of 180 units have 300 MWel capacity which is the most preferable boiler dimension.

Percentage of Capacity Number of Units

e

g 70 a t n

e 60 60 c r 52 e 50 51 y t i P c

& 40 s pa it a

n 30 C U f of 20 o r e 10 9 2

mb 0 0 u N ≤100 >100 & >200 & >300 & >500 & ≥700 ≤200 ≤300 ≤500 ≤700

Capacity Range (MWel)

Figure 3: Distribution of capacity in capacity ranges

In table 1 the Russian coal-fired power plant park is presented with information about the installed capacity, ownership status and location.

Coal-fired Power Station Park

Name of Power Location/ Installed Capacity No of No Ownership Coal Units (Total) Comments Station Region MWe/MWth Units

t. Inskoj, 652644, 1 Belovskaya Utility RAO EES c.Belov, 1200/143 (1200/143) 6 reg.Kemerovskiy

t. Sharypovo, In fact N≤1300 2 Berezovskaya Utility-1 RAO EES 662320, 1600/442 (1600/442) 2 MWel (because reg.Krasnoyarskiy of slaging) Only first 13 t. Verxniy Tagil, drum boiler bun 3 Verxnetagil’skaya Utility* RAO EES 624151, 962/558 (1577/558) Main tube coal. The others reg.Sverdlovskiy burn gas t. Gusinoozersk, 4 Gusinoozerskaya Utility RAO EES 1260/257 (1260/257) 6 671280, Buryatiya There are some t. Kashira, 142900, 5 Kashirskaya Utility-4* RAO EES 900/193 (1880/500) 3 gas or oil units reg.Moskovskiy also t.Zelenogorsk, 1250/1798 6 Krasnoyarskaya Utility-2 RAO EES 663690, Main tube (1250/1798) reg.Krasnoyarskiy t.Nazarovo, 662200, 1120/1012 7 Nazarovskaya Utility RAO EES 7 reg.Krasnoyarskiy (1120/1012) t. Serebryaniy bor, 8 Neryungrinskaya Utility Yakutskenergo 678924, Republic 570/605 (570/605) 3 Saha

Part I – 2 Coal-fired Power Station Park

Name of Power Location/ Installed Capacity No of No Ownership Coal Units (Total) Comments Station Region MWe/MWth Units

Sinyushina gora, 9 Novoirkutskaya CHP Irkutskenergo 655/1328 (655/1328) Main tube 664043, t.Irkutsk Sverdlov st. 15, Novosibirsk- 10 Novosibirskaya CHP-5 630028, 900/1515 (900/1515) 5 energo t.Novosibirsk c. Novocherkassk, 11 Novocherkasskaya Utility RAO EES 346415, 2400/87 (2400/87) 8 reg.Rostovskiy

12 Omskaya CHP-5 Omskenergo c. Omsk, 664009 695/1633 (695/1633) Main tube

t. Luchegorsk, 13 Primorskaya Utility RAO EES 692024, 1467 9 reg.Primorskiy t. Asbest, 624065, 14 Reftinskaya Utility RAO EES 3600/407 (3600/407) 10 reg.Sverdlovskiy

t.Novomichurinsk, There are some 15 Ryazanskaya Utility* RAO EES 391098, 1200/70 (2800/140) 4 gas or oil units reg.Ryazanskiy also

t. Myski, 652860, 16 Tom’-Usinskaya Utility Kuzbassenergo 1272/306 (1272/306) 9 reg.Kemerovskiy

t. Troick, 457100, 17 Troickaya Utility RAO EES 2155/366 (2155/366) 8 reg.Chelyabinskiy t. Dzerzhinskiy, 1310/2495 18 CHP-22 Mosenergo Mosenergo 140056, 11 (1310/2495) reg.Moskovskiy t. Berezovka, Khabarovsk- 19 Khabarovskaya CHP-3 682314, 540/907 (540/907) 3 energo reg.Khabarovskiy t.Yasnogorsk, 20 Kharanorskaya Utility RAO EES 674520, 430/972 (430/972) 2 reg.Chitinskiy Ostrovskiy st. 1a, 21 Cherepetskaya Utility RAO EES 301400, t.Suvorov, 1500/109 (1500/109) 7 reg.Tul’skiy Promyshlennaya st. 22 Cherepoveckaya Utility RAO EES 2, 162510, t.Kaduy, 630/45 (630/45) 3 reg.Vologodskiy Chernoozerskiy av. There are some 5, 140700, 23 Shaturskaya Utility-5* RAO EES 600/42 (1100/284) 3 gas or oil units t.Shatura, also reg.Moskovskiy Sportivnaya st. 1, There are some 24 Yuzhnoural’skaya Utility* RAO EES 457040, 482/459 (882/459) Main tube gas or oil units t.Yuzhnoural’sk also

t. Yajva, 618340, 25 Yajvinskaya Utility RAO EES 600/80 (600/80) 4 reg.Permskiy

Main tube: Several boilers connected to the same steam turbine

Table 1: Russian Coal-fired Power Plant Park

3 Ownership of Power Stations Almost 80% of the power plants (in terms of installed capacity) belong to RAO EES (RAO EES provides about 70 % of the total electricity in Russia and controls 70% of the

Part I – 3 total installed capacity). Figure 4 presents the share of all companies in the installed capacity of the Russian coal-fired power plant park. As far as the number of stations is concerned RAO EES owns 18 power plant and the rest of the companies own one each. Following RAO EES in installed capacity is Mosenergo and Kuzbassenergo with 1310MWel and 1272 MWel respectively.

Ownership of Power Plants [MWel / % ] 540 570 655 1272 1,8% 1,9% 2,2% 4,3% 1310 4,5% 900 Irkutskenergo 3,1% 695 Khabarovsk-energo 2,4% Kuzbassenergo Mosenergo Novosibirsk-energo Omskenergo 23356 RAO EES 79,7% Yakutskenergo

Figure 4: Ownership status of the Russian coal-fired power plants

4 Technical Data of Thermal Units

In the next paragraphs the general status of the Russian coal-fired power sector is analysed. The analysis is based on the data collected from the power plants and concern with the environmental performance, the achieved efficiencies, availability etc of the power plants.

4.1 Age of coal-fired units in Russia The Russian coal-fired power Units are characterized as of advanced age. More than 50% of the installed capacity corresponds to Units older than 30 years old, while about a quarter of the fleet’s installed capacity is in the range of 20 to 30 years. As far as the number of the units is concerned more than 60% are older than 30 years old while about 20% is in the range of 20 – 30 years (figure 5).

Part I – 4 Percentage of Electric Capacity [%] Number of Units 40 80

f ] d o % lle

30 60 its e

[ 55 a n g t y 49 t a t U 20 36 40 f aci l Ins o p cen a 27 o r a e N

C 10 20 P Tot 5 0 2 0 0-10 10-20 20-30 30-40 40-50 >50 Years

Figure 5: Classification of units according to their age.

4.2 Availability of coal-fired units in Russia The availability of the Russian coal-fired power plants is considered to be quite low. As it is obvious from the next diagram which illustrates the availability of the Russian coal- fired Units as a function of their commissioning year, most of the Units are in the range of 30 to 70%. It should be noticed that the availability is the actual operating time per year. As a result since in Russia there are many units that operate only in specific times every year when the demand is high the availability seems to be very low.

100

80 ) % (

y 60 t i l i b

ilia 40 a v A

20

0 1950 1960 1970 1980 1990 2000 Commissioning Year

Figure 6: Availability of the Russian coal-fired Units versus the commissioning year

Part I – 5

4.3 Efficiency of the coal-fired units in Russia The Russian coal-fired power plants suffer from low efficiency mainly because of the advance age of the power plant fleet but also because of the very few renovation activities that took place during the last decades. The efficiency versus the commissioning year is depicted in figure 7. Most of the Units have efficiencies varying between 30 and 35 %. Very few Units achieve efficiencies above 38%.

45

40 ) (% y c

n 35 e i c Effi

30

25 1940 1950 1960 1970 1980 1990 2000 2010 Commissioning Year

Figure 7: Efficiency of the Russian coal-fired Units versus the commissioning year

4.4 Environmental performance of the Russian coal-fired units In table 2 the environmental performance of the Russian coal-fired power plants are presented. For each pollutant (NOx, SO2, dust, CO2) the emitted amounts are presented in tones per year and for each power plant. Annually in Russia the coal-fired power plants emit in the atmosphere about 300 kt of NOx, about 600 kt of SO2, about 400 kt of dust and 100000 kt of CO2 (figure 8). СO NO SO Dust 2 No Power Plant x 2 (thous.t/y) (t/y)* (t/y)* (t/y)* * 1 Belovskaya Utility 10330 13100 16411 5940 2 Berezovskaya Utility-1 11015 13016 2687 4761 3 Verxnetagil'skaya Utility 9945 27151 35459 4947 4 Gusinoozerskaya Utility 7586 13540 6693 2515 5 Kashirskaya Utility-4 17237 10437 16524 4946 6 Krasnoyarskaya Utility-2 6275 16408 17164 4946 7 Nazarovskaya Utility 6540 27815 18091 4888 8 Neryungrinskaya Utility 3301 2814 4376 3320 9 Novoirkutskaya CHP 6580 13205 8344 2580

Part I – 6 СO NO SO Dust 2 No Power Plant x 2 (thous.t/y) (t/y)* (t/y)* (t/y)* * 10 Novosibirskaya CHP-5 N/A N/A N/A 3746 11 Novocherkasskaya Utility 22202 64608 32197 6698 12 Omskaya CHP-5 9306 22538 22766 3649 13 Primorskaya Utility N/A N/A N/A 5064 14 Reftinskaya Utility 76885 150759 134016 18155 15 Ryazanskaya Utility 9434 23697 7254 6177 16 Tom'-Usinskaya Utility 19725 23920 17519 7753 17 Troickaya Utility 10312 31349 58969 5595 18 CHP-22 Mosenergo 10482 4959 1514 6253 19 Khabarovskaya CHP-3 10214 6238 7256 2926 20 Kharanorskaya Utility 2397 4313 2737 1132 21 Cherepetskaya Utility 9687 22040 140 3034 22 Cherepoveckaya Utility 3158 16755 6128 1899 23 Shaturskaya Utility-5 5339 25791 2253 1745 24 Yuzhnoural'skaya Utility 8156 34833 21010 2743,1 25 Yajvinskaya Utility 3311 7739 2283 2078 Total 279417 577025 441791 117490,1 * Total emissions of Thermal Power Plant, including gas or oil Units. Table 2: Environmental performance of the Russian coal-fired power sector.

700000

600000 577025 year r e 500000 441791 p t k r 400000 o

t 279417 n 300000 s i n o 200000

ssi 117490,1 i

m 100000 E 0 NOx (t/y) SO2 (t/y) Dust (t/y) СO2 (kt/y)

Figure 8: Environmental performance of the Russian coal-fired power sector

As far as the depopulation equipment is concerned the Russian coal-fired power plants are equipped with ElectroStatic Precipitators, Cyclones, Scrubbers and combinations of the above mentioned equipment. About 50% of the power plants are equipped with ESPs, about 40% with scrubbers, about 30% with cyclones and of course combinations of the above mentioned measure (figure 9).

Part I – 7 Scrubber + Cyclone Scrubber 3% Cyclone 24% 25%

Scrubber + ESP ESP 31% 17%

Figure 9: De-pollution equipment of the Russian coal-fired power sector.

5 Fuels Used For Power Generation The Russian coal-fired power plants utilize low and high rank coal. In the table for each power plant the name of the mine, the coal type (classified according to Russian standards), the annual coal consumption as well as the characteristics of the utilized coal (composition, LHV etc) are presented. The Lower Heating Value of the used Russian coal varies between 7 MJ/kg and 25 MJ/kg. The biggest part (47.74%) of the annually consumed coal from the Russian power plants has Lower Heating Value that varies between 15 MJ/kg and 20 MJ/kg. Moreover 29.80% has L.H.V. that varies between 20 MJ/kg and 25 MJ/kg. Finally only 3.9% of the consumed coal corresponds to low rank coal with L.H.V. less than 10 MJ/kg. The sulfur content of the coals is relatively low (varying from 0.1% to 3%). 52.68% of the annually consumed coal has sulfur content less than 0.5% and 40.36% of the consumed coal has sulfur content that varies between 0.5% and 1%. The rest of the consumed coal (6.96%) has sulfur content between 1% and 3%. The average L.H.V. and Sulfur content of the coal consumed in Russia is 16.35 MJ/kg and 0.69% respectively.

Part I – 8 100

] 80 % [ l a

o 60

C 47,74 d e 40

um 29,80

ons 20 C 13,03 3,90 5,53 0 5 to 10 MJ/kg 10 to 15 MJ/kg 15 to 20 MJ/kg 20 to 25 MJ/kg 25 to 30 MJ/kg L.H.V. [MJ/kg]

Figure 10: Distribution of the Russian consumed coal in ranges of L.H.V.

100

] 80 % [ l a

o 60 52,68 C d

e 40,36 40 um ons

C 20 5,85 1,11 0 < 0.5% 0.5% to 1% 1% to 2% < 3% Sulfur Content [%]

Figure 11: Distribution of the Russian consumed coal in ranges of sulfur content.

6 Renovation needs of the Russian coal-fired power sector Based on the collected data from the Russian coal-fired power plants in order to provide comprehensive evaluation tools towards quantification and qualification of the projects for renovation activities ISFTA has performed a multi-criteria analysis. Towards this

Part I – 9 purpose, 2 different and progressive approaches are examined and summarised. Firstly, the demand of the power production system for modernisation is determined providing also indication for the most effective application among the retrofit, repowering and reconstruction options. Secondly the demand for the application of special fuel treatment systems (denitrification and desulfurisation) is quantified.

♦ Retrofitting - Repowering - Reconstruction Prospects ♦ Flue gas treatment prospects

6.1 Retrofitting, Repowering and Reconstruction Activities Prospects

The age of a plant is used hat this study as the primary parameter of determining the possible needs for applying modernisation activities on a power plant. The higher the age, the lower the cost-effective results from retrofitting and the higher the benefits from repowering or reconstruction application. In order to quantify the average potential for each of these three possibilities, two scenarios are examined. In the first (more conservative scenario) the total renovation needs are assumed lower and the retrofitting actions are preferable where possible to extend the remaining life of a unit against repowering and/or reconstruction. In contrary, the second scenario (more dynamic options) includes generally higher renovation needs and opposite trends for obsolete units, where the reconstruction or repowering are the major concepts. In order to take into account the efficiency before estimating the potentiality of the three renovation options, the former is introduced as a weighting factor. Considering the current efficiency data of all the operating plants in comparison to their age, the weighting values are estimated for several efficiency classes. In case that high ineffective performance is experienced, the efficiency is the governing parameter in designing the modernisation actions. The smaller the plant age experienced low efficiency, the higher the potentiality for implementation of improving activities. Particularly, the retrofitting is again the most attractive renovation option for power plants of such small ages. The evaluation is executed considering the influences both of the age and of the efficiency, therefore all the units from Russia (180 units) are considered in the investigation. The information from the results indicates high potentiality for renovation applications for the Russian units. The explanation for this outlook is the older status of the examined Russian energy sector. The aging of the power fleet is therefore the critical parameter to impel modernisation actions. The results are presented in the next figure (Figure 12). The specific characteristics of the used coal type and in some extent the implemented firing system determine at a major degree the needs for installing flue gas treatment systems on units. The case of SOx emissions are considered in this study and its adequate reduction depends on the incorporation of new DeSOx clean coal technologies. The primary measures include spray-dry, low S coals or mixtures, and extra cleaning and control systems, whereas the secondary DeSOx process is usually performed by wet FGD units. The primary techniques can be implemented at a lower cost but their reduction efficiency is quite smaller comparing to the more expensive and difficult to install secondary systems. The results indicate remarkable actions for primary desulfurisation and in some extent secondary desulfurisation of the flue gas.

Part I – 10 Conservative options Dynamic options

r 45%

40%

35%

30%

25%

20%

15%

10%

5%

Percentage of Russian coal-fired power secto 0% Retrofit Repowering Reconstruction No Measures

Figure 12. Flue Gas Treatment Prospects

Part I – 11 REFERENCES

1. “BP Statistical Review of World Energy”, 2003 2. Kakaras, E., Efficiency Improvements of Existing Lignite-Fired Power Plants, VGB PowerTech, 9, 1999, pp. 37-40. 3. Tumanovski A., “The new Technologies in Repowering their Coal-Fired Plants in Russia”, June 19/20 2001, WEC Coal Dialogue, Warsaw Poland 4. “Study on the Renovation Options for the Power Plants Burning Indigenous Solid Fuels in an Enlarged European Union, Taking into Account Environmental and Economic Factors”, Final Report submitted by CERTH / ISFTA & VGB, December 2000.

5. “Size and Type of Existing Electricity-Generating Capacity Using Solid Fuels within an Enlarged EU”, Final Report submitted by CERTH / ISFTA & VGB, December 2000

Part I – 12

CFF OPET Project Partner No 10 – Sofia Energy Centre

Report Solid Fuel Power Sector of India, China, East European, South Caucasus and Balkan Countries Current Situation – CCT Implementation Possibilities

Part II. Report on Current Situation in Bulgarian Solid Fuel-fired Power Plants and the Implementation Possibilities for Clean Coal Technologies

European Commission (Directorate – General for Energy and Transport) Contract No NNE5/2002/97: CFF OPET

CFF OPET – WP3 - Report on the Current Situation in Bulgarian Solid Fuel TPPs and the Implementation Possibilities of CCT

Table of Contents

1. Energy generation 2

1.1. Energy Balances 2

1.2. Electricity generation 5

2. Thermal Power Plants in Bulgaria 8

3. Ownership of Power Stations 10

4. Technical Data of the Thermal Units (Age, Efficiency, Availability, Environmental performance) 11

5. Fuels used for Power Generation (Fuel Type/Characteristics) 17

6. Problems Encountered in Power Plants and Projects for Rehabilitation of the Thermal Plants 20

7. Future trends in the Power Sector 21

Part II – 1 CFF OPET – WP3 - Report on the Current Situation in Bulgarian Solid Fuel TPPs and the Implementation Possibilities of CCT

Bulgaria 1. Energy generation 1.1. Energy balances The overall energy balance of Bulgaria for the year 2000 is presented in diagram 1:

Energy Balance

Nuclear energy Nuclear energy (25,1%) Other (0,1%) (25,1%) Hydro energy (1,2%) Coal (34,4%) Biomass (2,8%) Oil (21,5%) Hydro energy (1,2%) Natural gas (14,9%) Natural gas (14,9%) Biomass (2,8%) Coal (34,4%) Oil (21,5%) Other (0,1%)

Figure 1.: Share of different energy sources in the overall energy balance of Bulgaria for the year 2000.

In the following table and figure are presented the different fuels used for electricity and heat production in power plants.

Table 1.: Fuel used for electricity and heat production in power plants. Thousand tons of oil equivalent Year 1998 1999 2000 Total 11 613 10 478 11 043 Nuclear energy 4 727 4 354 4 924 Coal 5 552 4 686 4 851 Petroleum products 283 263 176 Natural gas 919 898 806 Other fuels 132 277 286

It is seen from the table that about half of the electricity produced in Bulgaria (excluding the HPP), on the base of the different fuels, is produced from solid fuels – lignite and coal.

Part II – 2 CFF OPET – WP3 - Report on the Current Situation in Bulgarian Solid Fuel TPPs and the Implementation Possibilities of CCT

13 100

12 100

11 100

10 100

9 100

8 100

7 100 1998 1999 6 100 2000

5 100

4 100

3 100

2 100

1 100

100 Total Nuclear Coal Petroleum Natural gas Other Fuels energy products

Figure 2.: Fuel used for electricity and heat production in power plants.

The following table presents in percents the distribution of the different types of fuels in the different power plants – Public electric plants, CHP plants, Auto-producers (Industrial Plants) and District heating plants.

Table 2.: Fuel structure in power and heat plants*. Total Public electric CHP plants Auto- District heating plants producers plants 1999 2000 1999 2000 1999 2000 1999 2000 1999 2000 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Hard coal 9.4 8.9 5.7 4.4 22.9 26.4 18.2 21.2 - - Total 35.4 35.0 40.3 38.5 23.2 27.5 3.0 - 0.3 0.3 lignite Other solid 2.1 2.0 - - 10.8 10.7 4.7 3.6 - - fuels Petroleum 2.5 1.6 0.2 0.2 2.7 1.6 35.9 28.3 15.0 12.0 products Natural 8.6 7.3 - 0.0 40.4 33.8 28.5 33.0 84.7 87.7 gas Other 0.5 0.6 - - - - 9.7 13.8 - - gases Nuclear 41.6 44.6 53.8 56.9 ------energy * Excluding Hydro-power Plants

Part II – 3 CFF OPET – WP3 - Report on the Current Situation in Bulgarian Solid Fuel TPPs and the Implementation Possibilities of CCT

It is seen from the table that hard coal is not utilized in district heating plants, while lignite is used in all types of plants, although their utilization in district heating plants is symbolical. The production of primary energy in a country is also a very indicative factor. From the following table could be seen that the main energy source in Bulgaria is coal, and mainly low-grade brown coal and lignite.

Table 3.: Production of primary energy in Bulgaria. Thousand tons of oil equivalent Year 1998 1999 2000 Total 10 541 9 411 10 282 Coal 5 079 4 341 4 520 Crude oil 33 44 46 Natural gas 23 22 12 Other solid fuels 413 413 550 Nuclear and hydro-energy 4 993 4 591 5 154

In the following table is presented coal and coal fuels balance sheet for the year 2000, from which is seen that the mined, in the country, brown coal and lignite, are utilized mainly in the plants for electricity production.

Table 4.: Coal and coal fuels balance sheet for the year 2000. Thousand tons of oil equivalent Hard coal Brown coal and lignite Primary production - 4 520 Imports 2 381 - Stock change - 101 - 74 Gross inland consumption 2 279 4 446 Thermal power plants 986 3 865 Incl.: - public 890 3 865 - industrial 95 - Briquetting plants - 432

From the data in the above-mentioned tables is seen that the main energy source in Bulgaria is the low-grade brown coal and lignite. The Republic of Bulgaria disposes of limited hydro-energy potential. The renewable energy sources, mainly biomass, geothermal and solar energy are at an initial stage of their utilization.

Part II – 4 CFF OPET – WP3 - Report on the Current Situation in Bulgarian Solid Fuel TPPs and the Implementation Possibilities of CCT

1.2. Electricity Generation On the map below are presented the main TPPs, HPPs and the nuclear power plant. Shown are also the main transmission lines on 750 kV, 400 kV, 220 kV and 110 kV.

Map1.: Map of the Electricity System of Bulgaria Natsionalna Elektricheska Kompania EAD (NEK EAD) was established as a single-owner joint-stock company, 100% held by the State. Its seat of business is in Sofia. The main functions of the Company are detailed below:

Generation and transmission of electric power; Centralised purchase and sale of electric power; Supply of electric power to customers connected to the transmission network; Import, export of electric power and energy resources; Construction and maintenance of power generation and transmission facilities; Investment; Introduction and promotion of energy efficiency in the generation and transmission of electric power; On-line control and supervision of the operation of the national power system through the National Dispatch Centre.

Part II – 5 CFF OPET – WP3 - Report on the Current Situation in Bulgarian Solid Fuel TPPs and the Implementation Possibilities of CCT

The single-owner rights are exercised by the Minister of Energy and Energy Resources. The bodies managing the joint-stock company are the General Assembly, a five-member Board of Directors and a Procurator. On the following figure could be seen, in the sequence of the last years, the development of the Electricity Generation and Demand in Bulgaria.

Figure 3.: Electricity Generation and Demand in Bulgaria

On the following figures is presented the structure of the Electricity Generation by the main types of plants, thermal, nuclear and hydro, during the last ten years, as well as the per cent distribution for the year 2002.

Figure 4.a.: Electricity Generation Structure in Bulgaria

Part II – 6 CFF OPET – WP3 - Report on the Current Situation in Bulgarian Solid Fuel TPPs and the Implementation Possibilities of CCT

Figure 4.b.: Electricity Generation Structure in %

On the following figure could be seen the electricity generation of the plants of NEK Jsc. and of Independent Power Plants (IPP). The year 2000 is characteristic, when the main Thermal Power Plants and the NP Plant Kozloduy were separated as independent economy units.

Figure 5.: Electricity Generated by NEK and Independent Power Producers.

Part II – 7 CFF OPET – WP3 - Report on the Current Situation in Bulgarian Solid Fuel TPPs and the Implementation Possibilities of CCT

2. Thermal Power Plants in Bulgaria In the following table 5 are presented the Coal-fired power plants in Bulgaria: Table 5.: Coal-fired power plants in Bulgaria No Name of Power Ownership Location / Installed Commissioning No of Total Comments Plant Region Units year Units capacity MW 1. TPP Maritza Public Galabovo 4x50 1960 – 1962 4 200 East 1 2. TPP Maritza Public Radnevo 4x150 1966-1969 8 1450 East 2 2x210 1985-1990 2x215 1995 3. TPP Maritza JVC Mednikarovo 4x210 1978-1981 4 840 East 3 4. TPP Maritza 3 Public Dimitrovgrad 2x25 1951-1954 3 170 1x120 1971 5. TPP Bobov dol Public Bobov dol 3x210 1973-1975 3 630 6. TPP Varna Public Varna 6x210 1968-1970 6 1260 1977-1979 7. TPP Russe Public Russe 2x30 1964-1966 6 400 2x110 1971-1983-1984 2x60 District Heating Plants 1. TPP Republica Public Pernik 1x50 3 100 Indigenous 2x25 coal 2. TPP Sliven Public Sliven 1x30 1 30 Indigenous coal 3. TPP Gabrovo Public Gabrovo 3x6 3 18 Indigenous coal; fuel oil

On figure 6 are given the installed capacity (MW) of the coal-fired power plants in Bulgaria.

1600

1400

1200

1000 2 t

800 s a a E tz i a r a rn

600 M Va 3 t s a Capacity (MW)

400 a E tz i r dol a M obov B a 200 sse 3 c i

Ru s st 1 ritza ritza epubl Ea Ma Ma R Other 0 Power Plants Figure 6: Installed capacity (MW) of the coal-fired power plants in Bulgaria.

Part II – 8 CFF OPET – WP3 - Report on the Current Situation in Bulgarian Solid Fuel TPPs and the Implementation Possibilities of CCT

Figure 7 shows the distribution of units in three ranges of capacity. The maximum value of a unit is 215 MW (there are two of them) and there are other 15 units with capacity of 210 MW, so that the total power is 3580 MW (72,3 % of the total installed capacity). There are seven units between 100 and 200 MW covering 21,4% of the total installed capacity and 10 units less than 100 MW covering 6,3 %.

80,00 18 17 16 70,00 72,32 14 60,00 12 50,00 10 10 % 40,00 8 No units 30,00 7 6 umber of units 20,00 % of total installed capacity 21,41 4

10,00 2 6,26 0,00 0 <100 100-200 200-300 Unit Capacity (MW)

Figure 7.: Distribution of units by capacity in three ranges of the Bulgarian coal-fired power plants for electricity production

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3. Ownership of Power Stations Until the year 2000, NEK was a state-owned monopoly utility responsible for generation, transmission and distribution throughout Bulgaria. In the year 2000 were made organizational changes, comprising decentralization of the vertically integrated Nationalna Elektricheska Kompania EAD and establishment of 15 independent companies: generating, transmitting and electricity distributing. NEK owned the seven big thermal power plants in Bulgaria, and namely: Maritza East 1, Maritza East 2, Maritza East 3, Bobov dol, Maritza 3, Varna and Russe. Now, all the big thermal power plants are independent legal entities. The energy sector needs significant investments for the improvement of the existing infrastructure whose current status is a result of low levels of investments during the past decade. Privatization represents a powerful instrument through which this goal can be achieved. For this reason, the government intends to step up to the maximum the pace of the privatization process in all energy sectors, including TPPs. During the year 2002 Maritza East 3 Power Company AD was established and was granted a license as a joint venture with the majority stake belonging to the US company Entergy, which represents the first large-scale privatization deal in the energy sector. The joint venture has entered into a fifteen-year power purchase agreement with the Nationalna Elektricheska Kompania (NEK). The privatization of TPPs will continue with the key power plants and will involve strategic investors. In 2004 sub-peak power plants in Bobov dol, Russe and Varna will be privatized. With regard to the District Heating Plants, they are to the respective District Heating Companies. The District Heating Companies, with the exception of Sofia DH Company are state-owned.

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4. Technical Data of the Thermal Units (Age, Efficiency, Availability, Environmental performance) The Thermal Power Plants in Bulgaria are designed for normal life of exploitation of 30 years. It is foreseen after that, through rehabilitation, their life to be extended. In table 6 are presented the coal-fired power plants ordered by age. From the table could be clearly seen the age of the separate units of the Coal-fired power plants in Bulgaria. Table 6.: Coal-fired power plants ordered by age No Power Plant Identification Capacity Commissioning Age unit (MWt) year 1. Maritza 3 1 25 1951 52 2. Maritza 3 1 25 1954 49 3. Maritza East 1 1 50 1960 43 4. Maritza East 1 1 50 1961 42 5. Maritza East 1 2 50 1961 42 6. Russe 1 30 1964 39 7. Russe 1 30 1964 39 8. Maritza East 2 1 150 1966 37 9. Maritza East 2 1 150 1966 37 10. Maritza East 2 1 150 1967 36 11. Varna 1 210 1968 35 12. Maritza East 2 1 150 1969 34 13. Varna 1 210 1969 34 14. Varna 1 210 1970 33 15. Maritza 3 1 120 1971 32 16. Russe 1 110 1971 32 17. Bobov dol 1 210 1973 30 18. Bobov dol 1 210 1974 29 19. Bobov dol 1 210 1975 28 20. Varna 1 210 1977 26 21. Varna 1 210 1979 24 22. Maritza East 3 1 210 1978 25 23. Varna 1 210 1979 24 24. Maritza East 3 1 210 1979 24 25. Maritza East 3 1 210 1980 23 26. Maritza East 3 1 210 1981 22 27. Russe 1 110 1984 19 28. Russe 2 60 1985 18 29. Maritza East 2 1 210 1985 17 30. Maritza East 2 1 210 1990 13 31. Maritza East 2 2 215 1995 8

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From the attached figure 8 could be seen, that only 8.69% of the coal-fired power plants in Bulgaria are under the age of ten. The main part, 42.42% are between 20 and 30 years old, and 35.76% are over 30 years. That is why for most of them are foreseen the respective rehabilitations. In the oldest plant TPP Maritza 3 are led out of exploitation two small units of 25 MW, and the rehabilitation is completed for the boiler and the turbine of the unit with capacity of 120 MW, while new investments are not foreseen. For TPP Maritza east 1 is foreseen after the year 2005 the old units to stop operating. A new company has been established “AES-3C” – TPP Maritza East 1. The new plant will be constructed as an entirely independent administrative unit with capacity of 670 MW.

50,00 20 17

40,00 42,42 15 35,76 30,00 10 10

capacity 20,00

5 No of units 5

% of the total installed 10,00 2 13,13 8,69 0,00 0 0-10 10-20 20-30 >30 Years

% No units

Figure 8.: Distribution of Bulgaria coal-fired power plants according to their age, in four ranges, below 10 years, between 10 and 20 years, between 20 and 30 years and over 30 years.

Efficiency of Coal-fired Power Plants in Bulgaria In the following table 7 are presented the summarized data for the coal-fired power plants in Bulgaria in the year 2000. The installed electrical capacity is presented, as well as the installed heating capacity for the separate plants, since in some plants the heating capacity is not a block one, but collector one, i.e. all operating boilers feed simultaneously the operating steam turbines and it is impossible to make distinction between the separate electricity generating capacities.

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Table 7.: Efficiency of Coal-fired Power Plants in Bulgaria for 2000: No Name of Installed Installed Generated Generated Total Input Gross power electrical heating electrical heat energy energy efficiency plant capacity capacity energy energy generated of fuels coefficient MW MW GWh GW h GWh GW h t t t % 1. TPP 200 865,2 1045,1 1032,0 2077,1 4348,5 47,77** Maritza East 1 2. TPP 1450 4312 3901,6 - 3901,6 14191,0 27,49 Maritza East 2 3. TPP 840 2420 4186,4 - 4186,4 13120,3 31,91 Maritza East 3 4. TPP 120 403 201,6 - 201,6 764,1 26,38 Maritza 3* 5. TPP Bobov 630 1404 1547,0 - 2041,0 6467,0 31,56 dol 6. TPP Varna 1260 3582 2041,0 - 1547,0 4560,0 33,93 7. TPP Russe 400 1333 385,0 418,0 803,0 1852,0 43,36** * The two units of 25 MW are decommissioning. ** TPP Maritza East 1 and TPP Russe have higher efficiency, since they are CHP Plants. From the table could be seen, that TPP Maritza East 1 and TPP Russe have the greatest total gross efficiency since they are CHP Plants. The efficiency of the rest of the plants in 2000 has been determined not only by the commissioning year, but mainly by the degree of loading of the separate plants during the year, and also by the quality of the coal or the lignite they work with.

Availability of Coal-fired Power Plants in Bulgaria In table 8 are given for the separate plants the operation hours for the year 2000 and the availability, as well as the Total Gross Efficiency in %. Table 8.: Coal-fired Power Plants in Bulgaria and their operational characteristics in the year 2000. No Power Plant Capacity Operation in Availability Total efficiency (MWt) 2000 (hours) (%) (%) 1. TPP Maritza East 1 200 5225 59,6 47,77 2. TPP Maritza East 2 1450 2691 30,7 27,49 3. TPP Maritza East 3 840 4984 56,9 31,91 4. TPP Maritza 3 120 1680 19,2 26,38 5. TPP Bobov dol 630 3240 37,0 31,56 6. TPP Varna 1260 1228 14,0 33,93 7. TPP Russe 400 963 11,0 43,36

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From the table could be seen that the thermal power plants in Bulgaria are not quite utilized in the year 2000. This is due to the reduced consumption of electrical energy, which is a consequence mainly to the drop in the industry. TPP Russe and TPP Varna have operated the least, since they work with imported coal. After them follows TPP Maritza 3 with 1680 hours, as its unit of 120 MW is 32 years old.

Environmental performance The energy industry is the main source of emissions of carbon dioxide and sulphur oxides in the country. Thermal power plants within the energy sector are also a relatively significant source of nitrogen oxides, non-toxic dust, dioxins and furans. The coal-fired Thermal Power Plants (TPPs) emit about 80% of the country’s emissions of sulphur oxides and about 60% of the emissions of carbon dioxide. In 1995 Bulgaria ratified the UN Framework Convention on Climate Changes. In accordance with the Kyoto Protocol signed under the Convention in December 1997, Bulgaria made the commitment to reduce anthropogenic emissions of greenhouse gases by 8% compared to the emissions of 1998. In case of the Kyoto Protocol ratification, in conformity with the commitments arising from the Protocol, strategy provides for the provisions to undertake in the following areas. Increase in the share in the national balance of the electric and thermal power plants, using natural gas. Priority construction of cogeneration plants. Increase in the share of energy generated by renewable energy sources in the national energy balance through implementation of a preferential policy for their development. Implementation of the rehabilitation of energy capacities in major TPPs which will operate after 2010 more than 20 000 hours.

In tables 9 to 15 are determined and presented for every separate boiler, in each of the plants, the heat capacity (MWt ), the operation hours in 2000 and the fired coal and mazut. Presented are also the emissions of SO2 , NOx, dust, CO2 and CO (in tons), during the same year. This corresponds to the requirement of the Directive 2001/80 of the European Commission.

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It should be mentioned that for every plant are elaborated technological and investment programs, with view to reduction of the harmful emissions after the year 2007 to the levels determined in the Directives of the European Union. These programs have been approved by the Ministry of Environment and Waters, Ministry of Energy and by the Ministry of Industry.

Table 9.: TPP Maritza East 1 – Environmental performance of Steam Generators, year 2000: Steam Thermal Operated Fired coal Fired mazut Emssions of Emissions of Emissions of Emssions of Emissions of generator capacity hours (tons/year) (tons/year) SO2 NOx dust CO2 CO No (MWt) (hours/year) (tons/year) (tons/year) (tons/year) (thousands (tons/year) tons/year) 1. 144.2 3659 200896 236 11416 344 586 200 29 2. 144.2 5008 274928 215 15622 470 801 273 39 3. 144.2 6122 336098 141 19100 574 981 334 47 4. 144.2 3363 184629 123 10492 317 538 184 26 5. 144.2 5750 315675 161 17939 540 919 314 145 6. 144.2 6347 348434 160 19800 595 1015 347 49

Table 10.: TPP Maritza East 2 – Data on the Steam Generators, year 2000: Steam Thermal Operated Fired coal Fired mazut Emssions of Emissions of Emissions of Emssions of Emissions of generator capacity hours (tons/year) (tons/year) SO2 NOx dust CO2 CO No (MWt) (hours/year) (tons/year) (tons/year) (tons/year) (thousands (tons/year) tons/year) 1. 236 5704 710313 305 24904 1185 724 436 62 2. 236 5912 736217 271 25810 1227 1073 452 64 3. 236 1542 188621 82 6613 315 275 116 17 4. 236 1485 181649 160 6373 1105 265 112 16 5. 236 5613 663476 256 23261 1106 97 407 58 6. 236 5095 602241 300 21117 1005 88 370 53 7. 236 4653 570879 356 20021 953 166 350 50 8. 236 5026 616647 215 21618 1028 449 378 54 9. 606 2504 2408326 1290 80597 4021 352 1410 201 10. 606 6419 1221055 657 40864 2039 357 715 102 11. 606 6827 1931397 1040 64637 3225 282 1131 161 12. 606 6028 2132270 1145 71359 3560 312 1249 178

Table 11.: TPP Maritza East 3 - Data on the Steam Generators, year 2000: Steam Thermal Operated Fired coal Fired mazut Emssions of Emissions of Emissions of Emssions of Emissions of generator capacity hours (tons/year) (tons/year) SO2 NOx dust CO2 CO No (MWt) (hours/year) (tons/year) (tons/year) (tons/year) (thousands (tons/year) tons/year) 1. 605 5264 1659593 1123 52100 2868 935 912 130 2. 605 5255 1628133 1102 51113 2814 918 894 127 3. 605 5745 1837029 1243 57671 3175 1035 1009 144 4. 605 6194 1980807 1340 62185 3423 1116 1088 155

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Table 12.: TPP Maritza 3 - Data on the Steam Generators, year 2000: Steam Thermal Operated Fired coal Fired mazut Emssions of Emissions of Emissions of Emssions of Emissions of generator capacity hours (tons/year) (tons/year) SO2 NOx dust CO2 CO No (MWt) (hours/year) (tons/year) (tons/year) (tons/year) (thousands (tons/year) tons/year) 4. 300 2332 382870 1157 20814 730 233 192 27

Note: Steam generators No 1,2 and 3 together with two steam-turbines of 25 MWt are led out of exploitation due to their full amortization and falling off of the industrial consumers of heat energy.

Table 13.: TPP Bobov dol - Data on the Steam Generators, year 2000: Steam Thermal Operated Fired coal Fired mazut Emssions of Emissions of Emissions of Emssions of Emissions of generator capacity hours (tons/year) (tons/year) SO2 NOx dust CO2 CO No (MWt) (hours/year) (tons/year) (tons/year) (tons/year) (thousands (tons/year) tons/year) 1. 468 3900 782801 315 25601 1882 1035 630 56 2. 468 2974 597058 240 19526 1435 789 480 42 3. 468 5352 1074361 433 35136 2583 1420 864 77

Table 14.: TPP Varna - Data on the Steam Generators, year 2000: Steam Thermal Operated Fired coal Fired mazut Emssions of Emissions of Emissions of Emssions of Emissions of generator capacity hours (tons/year) (tons/year) SO2 NOx dust CO2 CO No (MWt) (hours/year) (tons/year) (tons/year) (tons/year) (thousands (tons/year) tons/year) 1. 597 85 5910 272 59 10 2 4 0.2 2. 597 455 32064 414 315 61 8 21 9 3. 597 79 5319 152 53 10 2 4 0.2 4. 597 2378 174020 504 1721 333 45 117 15 5. 597 3888 280800 401 2778 538 73 189 18 6. 597 2489 165365 990 1642 318 43 112 5

Table 15.: TPP Russe - Data on the Steam Generators, year 2000: Steam Thermal Operated Fired coal Fired mazut Emssions of Emissions of Emissions of Emssions of Emissions of generator capacity hours (tons/year) (tons/year) SO2 NOx dust CO2 CO No (MWt) (hours/year) (tons/year) (tons/year) (tons/year) (thousands (tons/year) tons/year) 1. 158 1262 27232 204 825 204 68 54 2.3 2. 158 810 17480 130 530 131 43 35 1.5 3. 273 ------4. 273 297 11688 181 361 88 29 24 1.0 5. 157 3995 86209 639 2614 644 214 173 74.0 6. Dismantled ------7. 157 1278 27579 215 837 206 68 55 2.3 8. 157 3853 83133 639 2522 621 206 166 71.0

Note: Steam generator No 3 has been led out of exploitation, due to a forthcoming rehabilitation, and steam generator No 6 has been dismantled after a great failure.

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5. Fuels used for Power Generation (Fuel Type/Characteristics) The Republic of Bulgaria is poor in energy resources. The deposits of oil and natural gas discovered so far are without any practical significance to the national economy. The extraction of uranium has been 100% terminated. From the point of view of the energy potential of the country, coal occupies an important place as far as long-term own energy resources are concerned. The deposits of coal in the operating mines amount to about 3 billion tons, of which 88.7% are lignite, 10.9% are brown and 0.4% are black and hard. In the following table are presented the proven reserves. Table 16.: Lignite and coal reserves in Bulgaria: No Type of coal Proven reserves in the year 2000, in 103 tons In operation Without operation 1. Lignite 2 667 260.7 3 612 282.9 2. Brown coal 421 869.5 12 697.9 3. Black coal 25 246.7 417 603.9 4. Hard (Antrazit) 23 082.8 1 124.4

In the following table are presented the fuels used for the Power Plants. Table 17.: Fuels used in Thermal Power Plants in Bulgaria No Power plant Fuel type Location / Mine Source Proven Region name or (indigenous reserves in lignite or 103 tons type imported) 1. TPP Maritza East 1 Lignite Galabovo Maritza Indigenous Total for East Maritza East Coal 2. TPP Maritza East 2 Lignite Kovachevo Maritza Indigenous Field – East 1640000 3. TPP Maritza East 3 Lignite Mednikarovo Maritza Indigenous East 4. TPP Maritza 3 Lignite Dimitrovgrad Marbas Indigenous 104 500 and imported 5. TPP Bobov dol Brown coal Bobov dol Bobov dol Indigenous 190 000 and imported 6. TPP Varna Imported coal, Varna - Imported gas 7. TPP Russe Imported coal Russe - Imported

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The lignite coal mining in the Maritza East Coal Field is carried out in three mines – Troyanovo-1, Troyanovo-North and Troyanovo-3, which comprise the Maritza East Mines Plc. They are equipped with the necessary mechanization for the extraction of coal to reach the amount of more than 30 million tons/year. This potential is currently being used only at a level of 65%. In the last few years, coal output varies within the range of 20.5 – 22.1 million tons/year. The consumption of electricity on a national scale has decreased considerably, because of the shut-down of the majority of the industrial enterprises and now it depends primarily on the household sector. As a result, the coal-fired power plants in the region of Maritza East, which are the main consumers of lignite, utilize up to about 60-65% of their capacity. The perspectives of the mines with underground extraction are associated with Bobov dol TPP, which was built with equipment and technology for burning of local brown coal with calorific value of 2400-2800 Kcal/kg. Given an annual utilization of the power plant at a level of 3000-3300 hours and installed capacity of 630 MW, about 2.5 million tons/year of energy coal, including brown and lignite, are necessary. They can be extracted by the Bobov dol Mines, the Pirin Mine, Vitren Mine and the lignite mines from the Sofia basin.

On the following tables are presented the data for the fuel characteristics. Table 18.: Fuel characteristics: Fuel characteristics – Low No Power plant Fuel Mine Proximate analysis heating type name (% as received) value Moisture Ash Fixed (MJ/kg) carbon 1. Maritza East 1 Lignite 2. Maritza East 2 Lignite Maritza 56.4 29.6 20.4 6.5 East 3. Maritza East 3 Lignite 4. Maritza 3 Lignite Marbas 40.4 33.7 27.3 6.8 5. Bobov dol Brown Bobov 13.1 38.6 39.2 11.3 coal dol 6. Varna Black Imported coal 7.5-10.2 22.0-17.1 24.0-26.0 7. Russe Black Imported coal

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Table 19.: Fuel characteristics: Fuel Characteristics – Ultimate analysis (% dry) No Power plant Fuel type Carbon Hydrogen Oxygen Nitrogen Sulphur 1. Maritza East 1 Lignite 2. Maritza East 2 20 1.7 7.3 0.3 1.7 (Maritza 3. Maritza East 3 East) 4. Maritza 3 Lignite 19.6 1.7 5.8 0.4 3.5 (Marbas) 5. Bobov dol Brown coal 29.4 2.4 8.5 0.6 2.2 6. Varna Imported 67.5 1.3 1.1 0.6 1.7 black coal 7. Russe Imported 67.0 3.1 1.6 1.1 1.7 black coal

Part II – 19 CFF OPET – WP3 - Report on the Current Situation in Bulgarian Solid Fuel TPPs and the Implementation Possibilities of CCT

6. Problems Encountered in Power Plants and Projects for Rehabilitation of the Thermal Plants All thermal power plants in Bulgaria use conventional technology of pulverized coal combustion. Besides, the seven coal-fired power plants have electrostatic precipitator (ESP). The projected life of the thermal power plants in Bulgaria is 30 years, while it is foreseen through rehabilitation, that it is extended. It is seen from diagram 8 that 35.76% of the total installed capacity of the coal-fired power plants are over 30 years and therefore are subject to rehabilitation. For the oldest TPP Maritza 3, the two units of 25 MW have already been led out of exploitation. The steam generator and the turbine of the unit of 120 MW have already been rehabilitated, and no more investments are foreseen. For TPP Maritza East 1 is foreseen, that after 2005 the present units will stop operating and new capacities of 670 MW will be constructed (two units of 335 MW each). For TPP Maritza East 2 is foreseen rehabilitation of the four units of 150 MW each, with increase in the capacity from 150 to 177 MW. The rehabilitation will comprise replacement of the turbines, generators and the whole regenerative system by the Japan Company “Toshiba”. The rehabilitation of units 5 and 6 and the increase of the capacity from 210 MW to 225 MW, through entire replacement of the blade apparatus of rotors high, medium and low pressure, as well as improvement of the cooling of generators. In parallel with the rehabilitation of units 1 to 6 is foreseen the construction of 3 desulphurisation systems. For the rehabilitation of TPP Maritza East 3, in the beginning of the year 2003, started a project for refurbishment and modernization of the four generation units of the plant and construction of flue-gas desulphurisation facilities to each of them. Its total cost amounts to 600 million Euro. The project will be managed by Maritza East 3 Power Company AD – a joint- venture company between Energy Power Holdings Maritza BV (the shareholders are ENEL Produzione S.p.A. holding 60%, and Entergy – 40%) and NEK EAD. Entergy Power Holdings Maritza BV owns 73% and NEK EAD – 27% of the JVC share capital. For the rest of the old units is also foreseen respective rehabilitation.

Part II – 20 CFF OPET – WP3 - Report on the Current Situation in Bulgarian Solid Fuel TPPs and the Implementation Possibilities of CCT

7. Future trends in the Power Sector In the energy sector, Bulgaria is confronted with a series of major challenges stemming from both objective causes and circumstances and the delay in carrying out the reforms during the years of transition. Bulgaria is heavily dependent on energy as it imports more than 70% of its primary energy sources. The only significant domestic energy source is low- quality lignite coal with high content of sulphur. Unlike in many EU Member States and applicant countries where the local coal-mining industry has no perspectives in economic terms, in Bulgaria the local lignite coal has a strong position as a resource for electricity generation. This, combined with its importance for the security of energy supply, determines the significant role of the Maritza-East complex of mines and power plants in the future development of the energy sector. The energy industry is the main source of emissions of carbon dioxide and sulphur oxides in the country. Thermal power plants within the energy sector are also a relatively significant source of nitrogen oxides, non-toxic dust, dioxins and furans. The coal-fired Thermal Power Plants (TPPs) emit about 80% of the country’s emissions of sulphur oxides and about 60% of the emissions of carbon dioxide. The energy strategy of Bulgaria, taking into consideration the above stated, provides for the following provisions: All new coal-fired power units to be supplied with desulphurisation facilities and low-NOx burners with the appropriate efficiency; All energy units subject to rehabilitation to be supplied with desulphurisation facilities and low-NOx burners with the appropriate efficiency; Development of a Plan for Reduction of Emissions of Sulphur and Nitrogen Oxides by the existing TPPs by 2016, in compliance with the EU Directive 2001/80/EC. At the present moment, under the existing market model (single buyer), foreign investors have no direct access to end-users and hence insist on long- term power purchase agreements guaranteed by the government. The actions by the former government, when contracts for big investments were concluded before the introduction of market relations, concentrated the price and market risks entirely on the state, respectively on end-users. As a result, in case of negative developments on the electricity market the end price for electricity will inevitably grow. Moreover, the long-term agreements signed

Part II – 21 CFF OPET – WP3 - Report on the Current Situation in Bulgarian Solid Fuel TPPs and the Implementation Possibilities of CCT for the new Maritza East 1 power plant (670 MW) and for the rehabilitation of Maritza East 3 plant (860 MW) limit the future market segment to 40% of the total electricity consumption (taking into account also the base-load capacities of the nuclear power plant and cogeneration plants). The philosophy behind the new energy law envisages the introduction of authorization regime for construction of new capacities under which the role of the government is limited to issuance of permits for construction of new capacities without assumption of any commitments to purchase this energy for the regulated segment. In parallel with the introduction of the authorization regime, a clear and legally regulated schedule of opening the external and internal electricity market should be developed as well. Thus the investor will be free to make independent decisions and shoulder the market risk resulting from them. Concurrently with the authorization regime, a tender procedure will continue to apply to the construction of new capacities. The government policy in tender procedures will continue the good traditions and will rely on two main sources: Nuclear energy and Local lignite coal. Due to the unreliable nature of long-term projections for demand and the dynamically changing electricity market, the government will be striving for deferment of large-scale projects and, at the same time, for preservation of the key role of Bulgaria in the region through a policy that does not require big investments as extension of the economic life-cycle of key power plants and thermal power plants through privatization with the involvement of strategic investors. Privatization of power plants will start from the key power and thermal power plants and will involve strategic investors. After the year 2003 sub- peak power plants in Bobov Dol, Rousse and Varna will be privatized. Once clear regulatory and market rules are put in place, no obstacles will exist to an open and fair process of selling of all plants without exception.

Part II – 22

Black Sea Regional Energy Centre (B.S.R.E.C.)

Report Solid Fuel Power Sector of India, China, East European, South Caucasus and Balkan Countries Current Situation – CCT Implementation Possibilities

Part III. Overview of the current situation of the solid fuel-fired thermal power plants in Serbia and Montenegro

Contract No NNE5/2002/97: CFF OPET

WP3: Overview of the current situation of the solid fuel-fired thermal power plants in Serbia and Montenegro

Serbia and Montenegro

1. Electricity Generation

The coal share in total primary energy supply of Serbia and Montenegro in 2001 is presented schematically in Figure 1. Share of lignite in the total coal supply is more than 95%. There is no statistical evidence for biomass mainly used as a fuel wood and biomass waste, but some estimates are that the share of biomass in TPES is more than 5%.

Figure 1: Share of different energy sources in the total primary energy supply of Serbia and Montenegro

TPES Energy Share in 2001

Hydro Gas 8% 13%

Coal 53% Oil 26%

Power System of the state union of Serbia and Montenegro with total installed capacity of 9342 MW consists of Power System of Serbia (8474 MW) and Power System of Montenegro (868 MW). Total installed capacity of (solid fuel) lignite-fired thermal power plants (LFTPP) is 5381 MW (Serbia 5171 MW and Montenegro 210 MW). Total installed capacity of hydro-electric power plants (HPP) is 3524 MW (Serbia 2866 MW and Montenegro 658 MW). Total installed capacity of thermal power plants-heating plants (TPP-HP), fired by gas and oil products, is 437 MW. These TPP-HPs are situated in Republic of Serbia.

Power System of Serbia and Power system of Montenegro are operated by Electric Power Utility of Serbia (8355 MW owned by EPS) and Electric Power Utility of Montenegro (868 MW owned by EPCG), respectively. HPP Gazivode in Kosovo (35 MW) and HP Beograd (84 MW) are not owned by EPS. These two plants are owned by local authorities.

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE Part III – 1 Figure 2: The share of power plants in the total installed capacity

TPP-HP 5% HPP 38% LFTPP 57%

Lignite is the primary energy source for electricity production, accounting for about 60% of the total generation. Gas and oil-fired and hydroelectric power stations provide the rest of supply, primarily for peak and intermediate load.

Figure 3: The share of the different energy sources to cover the electricity demand for the year 2002

Import 6% Gas and oil- fired 1% Hydro 32% Lignite-fired 61%

Electricity consumption 37626 GWh

Lignite-fired stations are located close to , Kostolac and Kosovo lignite mining centers. Our government considers the proportion of electricity generation from lignite to decrease gradually due to the introduction of natural gas. The lignite share in electricity generation in 2002 is presented schematically in Figure 3. In 2002 the system of Serbia and Montenegro had electricity production of 35,378 TWh from a total installed capacity of 9342 MW. The distribution of installed capacity and electricity generation per energy source from 1980 to 2002 are illustrated in Figure 4 and Figure 5, respectively.

CFF OPET Project – WP 3 / Serbia and Montenegro 2 Developed by the BLACK SEA REGIONAL ENERGY CENTRE Figure 4: The share of different energy sources in the total installed capacity of Serbia and Montenegro from 1980 to 2002

Installed Capacity

10000 8000 6000 MW 4000 2000 0 1980 1990 2000 2001 2002 year

TPP (coal) HPP (hydro) TPP-HP (gas and oil)

Figure 5: The share of different energy sources in the net electricity production of Serbia and Montenegro from 1980 to 2002

Net generation

40000

30000

GWh 20000

10000

0 1980 1990 2000 2001 2002 year

TPP (coal) HPP (hydro) TPP-HP (gas and oil)

CFF OPET Project – WP 3 / Serbia and Montenegro 3 Developed by the BLACK SEA REGIONAL ENERGY CENTRE 2. Power Plant Park of Serbia and Montenegro

There are 9 LFTPP in Serbia and Montenegro of total capacity 5381 MWe. In our country intensive construction of LFTPP started about 40 years ago. In 1970 LFTPP total installed capacity was only about 1400 MW. There was no LFTPP construction in the last 12 years. Comprehensive pictures of Montenegrin Power System are not available, so please find below picture of Serbian Power System.

The picture below illustrates the locations of all the coal basins (except Pljevlja coal basin in Montenegro), where the largest power plants in the country have been constructed. The power plants are presented in Table 1, reporting in parallel the plant operator, the

CFF OPET Project – WP 3 / Serbia and Montenegro 4 Developed by the BLACK SEA REGIONAL ENERGY CENTRE location, the capacity, number of units and general comments on their status. The capacity per Serbia and Montenegro coal-fired power station is illustrated in Figure 6.

CFF OPET Project – WP 3 / Serbia and Montenegro 5 Developed by the BLACK SEA REGIONAL ENERGY CENTRE

Table 1: Coal-fired power plants in Serbia and Montenegro

Name of Power Company Ownership Location Total Installed Capacity No of Comments Station Name (Public or / Region (MWe/MWth) units Private) LFTPP Existing Planned

TPP Nikola Tesla A EPS Public Central 1502 MWe/ 1502 MWe/ 6 Heating of is foreseen with 720 MWth. City Serbia 170 MWth 780 MWth requests 60 MWth for heating. TPP Nikola Tesla B EPS Public Central 1160 MWe 2 Construction of 3rd Unit (B3) is under consideration Serbia

TPP Kolubara EPS Public Central 245 MWe/ 5 Consideration about phasing out Serbia 30 MWth

TPP Morava EPS Public Central 108 MWe 1 Subject to reconstruction. Serbia Introduction of gas and CC and CHP under consideration TPP Kostolac A EPS Public Central 281 MWe/ 281 MWe/ 2 Heating of cities Pozarevac and Kostolac. Serbia 60 MWth 120 MWth Unit A1 under rehabilitation. TPP Kostolac B EPS Public Central 640 MWe 2 Serbia

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 6 TPP Kosovo A EPS Public South 617 MWe 617 MWe/ 5 Serbia 100 MWth

TPP Kosovo B EPS Public South 618 MWe 2 Serbia

TPP Kolubara B EPS Public Central 700 MWe/ 2 Under construction. Serbia 760 MWth About 35% completed.

TPP Pljevlja EPCG Public Monte- 210 MW 420 MWe/ 1 Consideration about heating of city Pljevlja negro 60 MWth

CFF OPET Project – WP 3 / Serbia and Montenegro 7 Developed by the BLACK SEA REGIONAL ENERGY CENTRE

Figure 6: Installed capacity (MWe) of the coal-fired power stations in Serbia and Montenegro

Coal-fired Thermal Power Plants

1600 1400

W) 1200 1000 (M

ty 800

ci 600 a 400

Cap 200 0

a A B ra va A B lj a a a A B l l ba r ac ac vo vo jev es es lu o o l T T Mo tol tol s s P Ko la la os os Ko Ko o K K iko k N Ni

Figures 7 and 8 show the distribution of the installed power capacity in five ranges based on the size of the lignite-fired power plants. The maximum value appears in the 200-300 MWe range and amounts to 1330 MWe (24,7 % of total installed capacity). Four units are included in the 300-500 MWe range, covering 23,4 % of the total installed capacity, while eight units are between 100-200 MWe, representing 23,1 % of the coal-fired stations. Two units are included in the more than 500 MWe range, covering 21,6 % of the total installed capacity. Units with the installed capacity more than 100 MWe have pretty uniform distribution. Seven oldest units (belonging to the less than 100MWe range) cover only 7,2% of the total installed capacity.

Figure 7: Capacity distribution of the Serbia and Montenegro LFTPP concerning number of units

Number of Units-Capacity Range

9 8 s

it 7 n 6 U f 5 o r

e 4 3 mb

u 2

N 1 0 less than 100 100-200 200-300 300-500 more than 500 Capacity Range (MWe)

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 8

Figure 8: Capacity distribution of the Serbia and Montenegro LFTPP concerning percentage of the total installed capacity of the LFTPP

Percentage of the total installed capacity of the LFTPP-Capacity Range (MWe)

l

f

ta 30,0 o y

t 25,0 i e to P c a

th 20,0 f p a

o 15,0 c e LFTP d e 10,0 h tag t lle n

a 5,0 t e s c

r 0,0 in e

P less than 100-200 200-300 300-500 more than 100 500 Capacity Range (MWe)

3. Ownership of Power Stations EPS and EPCG are the state-owned vertically integrated monopoly utilities responsible for generation, transmission, and distribution throughout Serbia and Montenegro, respectively. They account for over 98% of both total generation and total capacity. Lignite-fired generation accounts for 63,7% of total output, gas and oil-fired generation 1,3% and hydroelectric 35%. EPS is the largest corporation in Serbia and Montenegro and wields substantial commercial and political influence. The Ministry of Mining and Energy of the Republic of Serbia and the Ministry of Economy of the Republic of Montenegro, as owners and establishers of Electric Power Utility of Serbia and Electric Power Utility of Montenegro, respectively, approve the most important activities of these companies and co-ordinate their development plans with state energy policy and overall development policy. Recently adopted Law on Energy of Montenegro defines restructuring process of EPCG and liberalisation of energy market in Montenegro. New Law on Energy of the Republic of Serbia should be adopted very soon, and this Law, prepared in compliance with the EU requirements and especially Directives on Electricity and Gas, will define ″rules of the game″ at the level of primary legislation in Serbian energy sector. Increase in energy prices and losing of jobs in large public utilities due to restructuring process are seen as a very serious social and political issues. Preparation and completion of necessary secondary legislation will be also a great challenge.

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 9 Most generating capacity owned by companies other than EPS and EPCG is industrial combined heat and power (CHP) plants. It is estimated that the total installed capacity in electricity generation stations of industrial thermal power plants is about 335 MWe (311 MWe in Serbia and 24 MWe in Montenegro). State-owned companies in the petroleum and sugar refining industries account for a significant fraction of CHP autoproduction.

4. Technical Data of Thermal Units (Age, Efficiency, Availability, Environmental Performance)

Age of Thermal Units in Serbia and Montenegro

Coal-fired generating plants have traditionally been built with an assumed nominal design and economic life of about 30 years. The power units are ordered by commissioning year in Table 2.

Power plants of Serbia and Montenegro are in average old compared to those of most European countries, as almost half of the capacity is between 20 and 30 years old. In addition, about 22% of the installed power corresponds to units that were constructed before 1973, while another 28% corresponds to units with age that ranges between 12 years and 20 years (Figures 9 and 10). In the year 2011, all our power plants will be in operation more than 20 years. At the same time 51,2 % of the lignite-fired power plants, producing 64,8 % of the electricity in Serbia and Montenegro, will have been in operation more than 30 years. Therefore, taking also into account the forecasts for increase in the electricity demand in the next years, the old and low-efficiency units should either be rehabilitated or replaced by new ones.

Table 2: Coal-fired power plants ordered by age

Identification Capacity Commissioning A/A Power Station Age Unit (MWe) year 1 TPP Kolubara A1 29 1956 47 2 TPP Kolubara A2 29 1957 46 3 TPP Kolubara A3 58 1961 42 4 TPP Kolubara A4 29 1961 42 5 TPP Kosovo A A1 55 1962 41 6 TPP Kosovo A A2 99 1965 38 7 TPP Kostolac A A1 90 1967 36 8 TPP Morava A1 108 1969 34 9 TPP Nikola Tesla A A1 191 1970 33

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 10 10 TPP Nikola Tesla A A2 191 1970 33 11 TPP Kosovo A A3 153 1970 33 12 TPP Kosovo A A4 153 1971 32 13 TPP Kosovo A A5 157 1975 28 14 TPP Nikola Tesla A A3 280 1976 27 15 TPP Nikola Tesla A A4 280 1978 25 16 TPP Nikola Tesla A A5 280 1979 24 17 TPP Nikola Tesla A A6 280 1979 24 18 TPP Kolubara A5 100 1979 24 19 TPP Kostolac A A2 191 1980 23 20 TPP Pljevlja A1 210 1982 21 21 TPP Nikola Tesla B B1 580 1983 20 22 TPP Kosovo B B1 309 1983 20 23 TPP Kosovo B B2 309 1984 19 24 TPP Nikola Tesla B B2 580 1985 18 25 TPP Kostolac B B1 320 1987 16 26 TPP Kostolac B B2 320 1991 12

Figure 9: Age distribution of LFTPP in Serbia and Montenegro concerning the number of units

Age distribution-number of units

14 12 s t 10

uni 8 of r

e 6 b

m 4 u N 2 0 12-20 20-30 more than 30 Years

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 11 Figure 10: Age distribution of LFTPP in Serbia and Montenegro concerning the percentage of the total installed capacity

Age distribution-percentage of the total installed capacity of the LFTPP

l 60 f ta o

y 50 t i e to P c

a 40 th f p a

o 30 c e LFTP d e 20 h tag t lle n a t e 10 s c r in e 0 P 12-20 20-30 more than 30 Years

Efficiency of Thermal Units

Table 4 gives efficiency data for LFTPPs. About 46% of the total energy produced by EPS plants is generated in TPPs N. Tesla A and B. Kosovo A and Kolubara units have a very low efficiency. The same is the case with the 100 MW unit of Kostolac A.

In Figure 11, the efficiency is correlated with the commissioning year of the single boilers. The efficiency of old and lower capacity units drops to levels as low as 25%. Therefore, the rehabilitation of the old units that show poor performance or their replacement by new ones is currently under investigation.

Figure 11 : Efficiency of Serbia and Montenegro LFTPP versus their commissioning year

Efficiency

40 35

) 30 (%

y 25 c 20 en i

c 15 ffi

E 10 5 0 1950 1960 1970 1980 1990 2000 Commissioning year

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 12

Table 3: Units of coal-fired power plants in Serbia and Montenegro

Power Plant Ident. Technology Used Net Installed Capacity Commissioning Expected Year Comments Unit (conventional, FBC, Year of de- supercritical etc.) MWe MWth Commissioning TPP Nikola Tesla A A1 conventional 191 85 1970 Pulverised coal combustion TPP Nikola Tesla A A2 conventional 191 85 1970 Pulverised coal combustion TPP Nikola Tesla A A3 conventional 280 1976 Pulverised coal combustion TPP Nikola Tesla A A4 conventional 280 1978 Pulverised coal combustion TPP Nikola Tesla A A5 conventional 280 1979 Pulverised coal combustion TPP Nikola Tesla A A6 conventional 280 1979 Pulverised coal combustion TPP Nikola Tesla B B1 conventional 580 1983 Pulverised coal combustion TPP Nikola Tesla B B2 conventional 580 1985 Pulverised coal combustion TPP Kolubara A1 conventional 29 1956 2009 Pulverised coal combustion TPP Kolubara A2 conventional 29 30 1957 2008 Pulverised coal combustion TPP Kolubara A3 conventional 58 1961 Pulverised coal combustion TPP Kolubara A4 conventional 29 1961 2007 Pulverised coal combustion

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 13 TPP Kolubara A5 conventional 100 1979 Pulverised coal combustion TPP Morava A1 conventional 108 1969 Pulverised coal combustion TPP Kostolac A A1 conventional 90 1967 Pulverised coal combustion TPP Kostolac A A2 conventional 191 60 1980 Pulverised coal combustion TPP Kostolac B B1 conventional 320 1987 Pulverised coal combustion TPP Kostolac B B2 conventional 320 1991 Pulverised coal combustion TPP Kosovo A A1 conventional 55 1962 Pulverised coal combustion TPP Kosovo A A2 conventional 99 1965 Pulverised coal combustion TPP Kosovo A A3 conventional 153 1970 Pulverised coal combustion TPP Kosovo A A4 conventional 153 1971 Pulverised coal combustion TPP Kosovo A A5 conventional 157 1975 Pulverised coal combustion TPP Kosovo B B1 conventional 309 1983 Pulverised coal combustion TPP Kosovo B B2 conventional 309 1984 Pulverised coal combustion TPP Pljevlja A1 conventional 210 1982 Pulverised coal combustion

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 14

Table 4: Units of coal-fired power plants in Serbia and Montenegro

Power Plant Ident. Operation Gross Self Steam Characteristics Slag Removal Unit (h/y) Efficiency Consumption (ton/h) System [%] (Dry/Wet)

TPP Nikola Tesla A A1 5446 33 4,5 650 Wet TPP Nikola Tesla A A2 6476 33 4,5 650 Wet TPP Nikola Tesla A A3 5456 33 8,2 920 Wet TPP Nikola Tesla A A4 7177 33 2,3 920 Wet TPP Nikola Tesla A A5 6145 33 2,3 920 Wet TPP Nikola Tesla A A6 6196 33 2,3 920 Wet TPP Nikola Tesla B B1 7461 37 6,5 1824 Wet TPP Nikola Tesla B B2 6376 37 6,5 1824 Wet TPP Kolubara A1 6419 25 9,4 110 Wet TPP Kolubara A2 4541 25 9,4 110 Wet TPP Kolubara A3 6287 25 9,4 220 Wet TPP Kolubara A4 6867 25 9.4 110 Wet TPP Kolubara A5 246 30 9,1 380 Wet TPP Morava A1 5305 35 6,1 380 Wet TPP Kostolac A A1 3186 27 10.0 400 Wet TPP Kostolac A A2 3776 31 9,0 660 Wet

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 15 TPP Kostolac B B1 4264 30 8,2 1000 Wet TPP Kostolac B B2 5700 30 8,2 1000 Wet TPP Kosovo A A1 3289 25 15,4 220 Wet TPP Kosovo A A2 380 27 10,0 364 Wet TPP Kosovo A A3 5676 27 10,0 560 Wet TPP Kosovo A A4 4783 27 10,0 560 Wet TPP Kosovo A A5 137 27 10,3 560 Wet TPP Kosovo B B1 4181 33 8,8 1000 Wet TPP Kosovo B B2 4531 33 8,8 1000 Wet TPP Pljevlja A1 4428 31 9,2 660 Wet

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 16

Availability of Thermal Units

The availability of the lignite-fired units in year 2002 is presented in Table 5. Moreover, Figure 12 shows the relation between availability and boiler’s commissioning year. A very low availability of three units in TPP Kolubara can be also noticed. The same is the case with two units in TPP Kosovo A. The availability is not always directly correlated with the age of units as it follows from the data for TPP Kolubara. TPPs N. Tesla A and particularly N. Tesla B are characterised by a comparatively high availability.

Table 5: Availability of the coal-fired power plants in Serbia and Montenegro

Identification Availability Commissioning A/A Power Station Age Unit (%) year 1 TPP Kolubara A1 73,3 1956 47 2 TPP Kolubara A2 51,8 1957 46 3 TPP Kolubara A3 71,8 1961 42 4 TPP Kolubara A4 78,4 1961 42 5 TPP Kosovo A A1 37,5 1962 41 6 TPP Kosovo A A2 4,3 1965 38 7 TPP Kostolac A A1 36,4 1967 36 8 TPP Morava A1 60,6 1969 34 9 TPP Nikola Tesla A A1 62,6 1970 33 10 TPP Nikola Tesla A A2 73,9 1970 33 11 TPP Kosovo A A3 64,8 1970 33 12 TPP Kosovo A A4 54,6 1971 32 13 TPP Kosovo A A5 1,6 1975 28 14 TPP Nikola Tesla A A3 62,3 1976 27 15 TPP Nikola Tesla A A4 81,9 1978 25 16 TPP Nikola Tesla A A5 70,1 1979 24 17 TPP Nikola Tesla A A6 70,7 1979 24 18 TPP Kolubara A5 2,8 1979 24 19 TPP Kostolac A A2 43,1 1980 23 20 TPP Pljevlja A1 50,5 1982 21 21 TPP Nikola Tesla B B1 85,2 1983 20 22 TPP Kosovo B B1 47,7 1983 20

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 17 23 TPP Kosovo B B2 51,7 1984 19 24 TPP Nikola Tesla B B2 72,8 1985 18 25 TPP Kostolac B B1 48,7 1987 16 26 TPP Kostolac B B2 65,1 1991 12

Figure 12: Availability of the coal-fired power plants in Serbia and Montenegro versus their commissioning year

Availability of LFTPP in Serbia and Montenegro

100

) 80 % ( y 60 ilit b 40 ila a v 20 A 0 1950 1960 1970 1980 1990 2000 Commissioning Year

Environmental performance

Through its activities, Power System of Serbia and Montenegro - starting from exploitation of natural resources, coal and hydro potentials until the process of production, transmission and distribution of electric energy - significantly influences the natural conditions of the environment. Attention is always paid to reduce negative impacts of power facilities to environment.

The existing facilities of the Power System of Serbia and Montenegro have been mostly constructed in compliance with technical and technological achievements of the age of their construction and the laws then in force. The facilities of Power System are rather old, so that the applied technical and technological measures do not comply with legislation of today. The present condition is even more unfavourable due to inability to provide a proper maintenance to the systems installed to reduce pollution as per prescribed parameters, financial and political situation in which Yugoslavia was during the past decade, and consequently the situation in which the EPS and EPCG have been as well. The Power System of Serbia and Montenegro has the impact on air, water and soil.

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 18

AIR

While operating, most of the power facilities release pollutants or energy into the natural surrounding. The strongest pollutants of the air are thermal power plants and open-pit- coal mines.

Open-pit-coal mines

The biggest pollution is encountered in the course of coal excavation, transport and transhipment of coal and overburden. Particularly strong pollutants (especially when the strong winds blow) may include overburden deposits if containing larger quantities of sand and other loosening material. During the operation of mining machinery driven by internal combustion engines, harmful gases are discharged such as nitrogen oxides (NOx), carbon monoxide (CO) and sulphur-dioxide (SO2). Protection measures include appropriate technical solutions for transport and transhipping, biological recultivation of overburden deposit, and use of the machinery with a smaller emission of harmful gases.

Thermal power plants

Among all plants and facilities of Serbia and Montenegro Power System, the thermal power plants are the biggest air pollutants. Their main fuel is lignite from the open-pit- mines from Kolubara, Kostolac, Kosovo and Pljevlja basin. Gases SO2, NOx, CO and ash particles are discharged through smoke. The only measures applied to protect the quality of air, in compliance with the world practice until the late seventies of the 20th century, include electric filters, high chimneys, as many facilities as possible connected to one chimney, choice of adequate locations for the facilities. This improved the conditions of pollutant dispersion into atmosphere, and the quality of air has been within the limits allowed by the law.

Electric filters

Electric filters has been installed in the facilities whose construction started before the year 1970 managed to separate ash from 98% to 98.5%, while those in the facilities constructed later are efficient from 99% to 99.83%. As the result of their ageing and especially due to inadequate maintenance in the last ten years (period of sanctions and embargo imposed on FRY) the percentage of the separation efficiency has been significantly decreased. Now, the concentration of ashes in the output exhausting smoke gases is:

Older units ...... from 800 to over 3000 mg/m3

New units ...... from 30 to about 500 mg/m3

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 19 Emission of SO2

Emissions of SO2 are different depending on lignite class and coal mines. They are as follows:

Lignite in Kosovo basin.....from about 600 to 1200 mg/m3

Lignite in Kolubara basin ....from about 1800 to 4000 mg/m3

Lignite in Kostolac basin ..... from about 4500 to 8000 mg/m3

Lignite in Pljevlja basin…..from about 1600 to 3000 mg/m3

Emission of NOx

The emissions of NOx depend on the thermal power plant capacity and content of nitrogen in coal. The values range from about 150 mg/ m3 to 750 mg/ m3 with lignite fired thermal power plants. In thermal power-heat supply plants natural gas fired, the values are slightly bigger for the same capacities. On the average, emissions of NOx from the TPP and TP-HPP are near the allowed limits.

Dispersion of solid particles by wind

Around ash deposits the strong winds very often pollute the air and soil although the protection measures are intensively applied: about 70% of the operating area is kept under water - the rest is water sprayed and the reserve part of deposit is biologically recultivated. Unfortunately, the applied technology of hydraulic transport does not provide technically and economically acceptable solutions.

Quality of air

Measuring carried out for several years shows that the concentration of SO2 and NOx is within the permitted limits. Pollution with particles often overcomes the permitted levels. Near ash deposits, strong winds cause an excessive pollution of air and soil.

WATER PROTECTION

In the production facilities, certain quantities of wastewater with different composition are encountered. Some of them are cleaned, but in most cases they are not cleaned.

Thermal power facilities

The cooling method, type of auxiliary fuel (heavy fuel or heating oil)), technology of transport and ash disposal, as well as chemical water preparation, determine the type and quantity of wastewater.

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 20 In all TPP and TP-HPP, wastewater occurs in the facility for chemical water preparation. After neutralization wastewater is used for hydraulic transport or discharged into rivers. In thermal power plants, which use fuel oils as the auxiliary fuel, certain quantities of waters occur considerably contaminated with heavy fuel. The problem of cleaning this water has not been solved yet. All lignite fired thermal power plants use hydraulic transport for transport of ash, which is from the water pollution standpoint quite inappropriate. No technologically and economically acceptable solutions have been found to protect the water recipients in the surrounding of these waters (about 100 million m3 of water is used for one year, and over 80% penetrate into the natural recipients -rivers and under ground waters). The only realistic solution could be the replacement of transport and disposal technologies. EPS has introduced successfully a new technology in TPP "Kosovo B" which solved the problems of air, water and soil protection. In the thermal power plants with the return cooling, the wastewaters occur in the process of decarbonization. These waters are suitable for ash transport and are used accordingly.

Coal production and processing

During coal production, it is necessary to take water out of mines. Water in underground coalmines could have the increased content of salt and for that reason, they are controlled. In some underground coal mines, wet separation of coal is carried out, producing sediments which could with an improper handling pollute the surrounding area, namely if they are discharged from the slush pit without control.

Several types of wastewaters occur in the facilities for coal processing in coal basins "Kolubara" and "Kosovo" and they require cleaning in several phases. Systems, which are used, are not sufficiently efficient and new better solutions are considered.

SOIL PROTECTION

Power facilities take up the area of about 40,000 ha but their possible impacts take up much broader areas.

Coal production and processing

During coal production, especially in the open-pit exploitation, large areas of soil are polluted; later on, they are through technical and biological recultivation prepared for various purposes. Until now, the open-pit-mines, their deposits, and underground mines deposits took up about 12,000 ha. About 2,000 ha of all polluted areas was recultivated until 1991, when recultivation works stopped completely due to economic reasons. Afforesting resulted in recultivation of about 1,370 ha, and the remaining recultivated areas include fields, meadows, orchards, etc.

Thermal power plants

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 21

Deposits take up about 1,800 ha. Ash dispersed by wind and polluted underground water cause the soil pollution as well. Protection measures include biological recultivation of reserve areas and a part of the operating area not covered with water is sprayed. Drainage channels and wells with pumps are built around depositing areas to prevent pollution spreading and over-moisturising of the surrounding soil.

WASTE AND DANGEROUS SUBSTANCES

Considerable quantities of waste substances: metal, oil, rubber, etc. are the result of the usual operation and maintenance of power facilities. Now, the treatment and use of these substances are not appropriate without a comprehensive approach. In power facilities, various dangerous (toxics, inflammable, explosive) substances are stored (liquid and gas fuels, chemical substances, etc.). These substances are under much better control than the waste.

PLANNED ACTIVITIES TO IMPROVE ENVIRONMENT PROTECTION

After construction of new facilities and rehabilitation of existing ones EPS and EPCG will apply up-to-date, proven technological solutions for environment protection. Considerable efforts are planned to be exerted for a more rational use of natural resources, coal, hydro potentials and for increase of energy efficiency in coal production, electric energy generation, transmission and distribution, development, application and maintenance of environment protection control systems.

Considerable works are planned to be carried out in current power facilities, in particular to improve environment protection: • Where necessary during reconstruction, electric filters will be replaced to comply with statutory requirements regarding emission of particles • To replace transport and ash disposal technology • Whenever possible, the ash will be disposed into free spaces of coal mines • To construct the facilities for cleansing oiled waters in all facilities, which do not have them • To construct new and repair existing drainage systems on ash disposals • Revival of recultivation process of overburden deposits and development of new recultivation technologies • To restore existing coastal and environment protection measures in hydro power plants and implementation of the existing projects and programs • To define strategy of waste and dangerous substances control in order to decrease their occurrence and finding out the possibilities of their usage.

Environmental performance of LFTPP in Serbia and Montenegro is given in Table 6.1 and Table 6.2.

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 22

Serbia and Montenegro has signed the United Nations Framework Convention on Climate Change, but it has not signed yet Kyoto Protocol. Some rough estimates show that CO2 emissions in Serbia and Montenegro in 1990 were about 59 million tons and currently about 53 million tons with the share of different sectors, as follows:

- energy about 66%, - industry about 19%, - transport about 15%.

EPS and EPCG plan, supported by the Government, with relation to reduced CO2 emissions include:

• Increase of natural gas share into the generation mix; • Complete hydroelectric development projects; • Introduction of more energy production plants that utilize renewable energy sources; • Improvement of the efficiency of lignite-fired power generation; • Participation in programs on the rational use of electricity.

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 23

Table 6.1.: Environmental performance of the thermal units of Serbia and Montenegro LFTPP

Power Plant Ident. NOx SO2 Dust CO2 CO Existing Equipment Unit [ton/a 2002] [ton/a 2002] [ton/a 2002] [ton/a 2002] [ton/a 2002] (ESP, FGD, SNCR, SCR, 1 Other)* TPP Nikola Tesla A A1 1480 9836 5293 1250000 72916 ESP TPP Nikola Tesla A A2 1752 11657 6265 1480000 86330 ESP TPP Nikola Tesla A A3 2175 13919 890 1645000 95660 ESP TPP Nikola Tesla A A4 3004 18348 1230 2277240 133000 ESP TPP Nikola Tesla A A5 2486 15185 1024 1895856 110360 ESP TPP Nikola Tesla A A6 2693 15817 1025 1900484 110830 ESP TPP Nikola Tesla B B1 10842 44643 1590 4850000 282800 ESP TPP Nikola Tesla B B2 9361 38007 1375 4188750 244300 ESP TPP Kolubara A1 116 925 520 82570 4660 ESP TPP Kolubara A2 83 660 450 71450 3970 ESP TPP Kolubara A3 226 1805 1420 225500 13070 ESP TPP Kolubara A4 127 1013 716 113645 6530 ESP TPP Kolubara A5 381 3037 1217 340114 19830 ESP TPP Morava A1 784 13948 1130 840000 49000 ESP TPP Kostolac A A1 386 4200 685 438625 25450 ESP

1 ESP: Electrostatic precipitator, FGD: Flue Gas Desulphurization, SNCR: Selective Non Catalytic Reduction, SCR: Selective Catalytic Reduction

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 24 TPP Kostolac A A2 938 10200 1660 1062945 61830 ESP TPP Kostolac B B1 1765 19200 3100 1985000 115730 ESP TPP Kostolac B B2 2427 26400 4300 2780000 162170 ESP TPP Kosovo A A1 448 912 250 415380 24196 ESP TPP Kosovo A A2 96 144 180 299000 17430 ESP TPP Kosovo A A3 2271 4560 743 1235000 71870 ESP TPP Kosovo A A4 1882 3792 618 1026800 58330 ESP TPP Kosovo A A5 64 96 115 191000 10970 ESP TPP Kosovo B B1 3342 6720 1095 1819000 105000 ESP TPP Kosovo B B2 3603 7440 1212 2013700 117380 ESP TPP Pljevlja A1 6570 13500 2100 1580000 92200 ESP

Table 6.2.: Environmental performance of the thermal units of Serbia and Montenegro LFTPP

Power Plant Ident. Unit NOx SO2 Dust 3 3 3 [mg/Nm ] [mg/Nm ] [mg/Nm ] TPP Nikola Tesla A A1 350 1700 900 TPP Nikola Tesla A A2 350 1700 900 TPP Nikola Tesla A A3 400 1800 120 TPP Nikola Tesla A A4 400 1800 120 TPP Nikola Tesla A A5 400 1800 120

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 25 TPP Nikola Tesla A A6 400 1800 120 TPP Nikola Tesla B B1 680 2000 70 TPP Nikola Tesla B B2 680 2000 70 TPP Kolubara A1 300 2000 1320 TPP Kolubara A2 300 2000 1320 TPP Kolubara A3 300 2000 1320 TPP Kolubara A4 300 2000 1320 TPP Kolubara A5 250 2000 980 TPP Morava A1 630 4000 1020 TPP Kostolac A A1 290 5500 1000 TPP Kostolac A A2 290 5500 600 TPP Kostolac B B1 580 5500 400 TPP Kostolac B B2 580 5500 400 TPP Kosovo A A1 440 800 900 TPP Kosovo A A2 440 800 900 TPP Kosovo A A3 440 800 800 TPP Kosovo A A4 440 800 800 TPP Kosovo A A5 440 800 750 TPP Kosovo B B1 490 800 700 TPP Kosovo B B2 490 800 700 TPP Pljevlja A1 300 2000 800

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 26

5 Fuels used for power generation (fuel type/characteristics)

Lignite of low quality used almost exclusively for steam-electric power generation, is Serbia and Montenegro's single most important indigenous energy source. The largest deposits are at Kolubara, Kostolac and Kosovo coal basins, where production is at about 38 million tons per year. The biggest production is in Kolubara with an annual output of more than 26 million tons.

Serbia and Montenegro's lignite is a poor quality fuel. Its calorific value in average is about 7,000 KJ/kg (4700 KJ/kg – 9000 KJ/kg) . The ash content varies between 10-28% , while the moisture varies between 47% - 53% in the vast majority of the lignite fields. Sulphur content usually varies between 0,3 - 0,8% (its combustible part between 0,06% - 0,5%). Lignite prices are directly controlled by the Government.

As Serbia and Montenegro has not hard coal reserves, all demand is mainly satisfied by imports.

Table below shows coal availability in Serbia and Montenegro.

Table 7: Coal availability in Serbia and Montenegro Reserves (million tonnes) Coal deposit Geological Minable Production Ratio 2002 Minable/product ion (years) Lignite (open pit) Kosovo 12,870 9,000 6.00 1,500 Kolubara 3,020 1,885 25.73 73 Metohija 2,730 1,800 No pits - Kostolac 910 448 5.52 81 Kovin 230 180 0.25 720 Pljevlja 250 130 1.5 87 Brown Coal (under ground) 440 220 0.56 392

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 27 Tables 8 and 9 show existing and future open pit mines in Kolubara and existing open pit mines in Kostolac, respectively, as the most important mines in Serbia and Montenegro at the moment. As it is well known, resources in Kosovo and Metohija are not available for Serbia and Montenegro, because UNMIK is entitled to rule with this Serbian province according to UN Resoulution 1244.

Table 8: Existing and future open pit mines in Kolubara

Mine Minable Overburde O/C- NCV Coal reserves n (Mm3) Ratio 3 (MJ/kg) <5 MJ/kg (Mt) (m /t) (Mt) Field B 36.47 37.00 1.01 8.30 2.01 Field D 169.00 386.00 2.28 8.15 0.81 Tamnava East 35.30 58.24 1.65 7.08 3.00 Tamnava West 463.00 1,041.00 2.25 6.56 110.72 Total existing 877.96 mines Field E 321.55 1,029.00 3.20 7.83 5.75 Field South (G/F) 333.61 962.50 2.88 7.41 81.91 V. Crljeni 21.80 13.30 0.61 7.79 0.32 Field Radljevo 280.00 980.00 3.50 6.82 60.00 Total future 1,006.80 fields

Note: NCV = Net calorific value, O/C-Ratio = overburden/coal ratio

Table 9: Existing open pit mines in Kostolac

Open pit Mine Minable Reserves O/C-Ratio (m3/t) NCV (MJ/kg) (Mt) Cirikovac 6.0 5.0 9.92 Klenovnik 2.0 6.5 8.75 Drmno 440.0 3.0 7.70 Total existing 448.0 mines

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 28

Table 10 shows coal production in Serbia and Montenegro in 1990 and from 1996 to 2002. Data for Kosovo are not included.

Table 10: Coal production in Serbia and Montenegro 1990 and 1996-2002

Coal basin 1990 1996 1997 1998 1999 2000 2001 2002 Kolubara 29.1 24.1 26.8 27.2 22.7 26.6 25.3 25.7 Kostolac 5.00 5.00 5.70 6.70 5.70 5.40 5.20 5.52 Kovin 0.09 0.09 0.14 0.25 0.25 Underground 0.90 0.70 0.70 0.60 0.60 0.60 0.55 0.54 mines Total (Mt/y) 35.0 29.8 33.2 34.5 29.0 32.7 31.3 32.0

6 Problems encounter in Power Plants and projects for rehabilitation of the thermal plants

All Serbia and Montenegro′s lignite-fired power units use conventional technology of pulverised coal combustion. The majority of units operate at a low overall efficiency. The reasons are numerous. First of all, because of very bad maintenance and overhaul during the more than 10 years of sanctions imposed to Serbia and Montenegro (Federal Republic of Yugoslavia), because of NATO bombing and large damages made to power facilities and finally due to the age of units.

In order to increase the efficiency of the lignite-fired power units a lot of studies are under preparation. Future revitalization of TPPs will be used to improve not only efficiency and to extend its life, but also its environmental performance.

The lignite-fired units that are under consideration to be constructed will apply the same technology with the existing power units in Serbia and Montenegro. However, a better environmental performance is expected due to the implementation of primary measures for the reduction of NOx and mainly SO2 emissions.

Rehabilitation study for TPP Nikola Tesla A units A1 and A2, in order to reduce SO2 emissions, includes analyses of desulphurization system and pressurized fluidized bad combustion. In order to reduce CO2 emissions from lignite-fired power plants, pressurized fluidized bed combustion technology is also very important.

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 29 TPP Kolubara B that is under construction will include desulphurization system. Total installed capacity of CHP LFTPP Kolubara B is 2X350 MWe and 2X380 MWth. The total investment cost is about 940 million USD (so far spent some 380million USD). TPP "Kolubara B" is located about 40 km south-west from Belgrade. It was designed as a plant for a combined production of electric and heat energy, with the idea of supplying Belgrade with heat. The construction started in 1988. A part of the equipment has been contracted and partially delivered (95% of the imported boiler, steel supporting frame, generator transformers and generators). Civil and design works are also partially contacted and implemented. In 1991, disintegration of the former SFRY stopped the implementation of the loan having already been approved by the World Bank for the power plant and lignite mine. From then, the construction of the power plant has practically been stopped.

The plant is constructed in the close vicinity of the open-pit-mine Tamnava-West Field where from it will be supplied with coal.

About 40% of the estimated value of the power plant has been implemented. Until now, the construction of the power plant has been financed by EPS's own funds and commercial credits.

"Kolubara B" is a key source for energy production, which will have to meet energy demands and consumption increase in Serbia in the next decade.

The Electric Power Industry of Serbia is looking for a partner or partners for a joint completion of the construction of this power plant and for a joint exploitation of the same. Changes in the legislation in Serbia provide opportunities to find new solutions for the completion of this project.

Large rehabilitation projects are already done in LFTPPs , first of all, owing to the support of international community (donations) and in the last time owing to soft loans provided from the international financial institutions. The most important support is EAR support within the CARDS program. In future, above mentioned support will be more and more oriented to improvement of environmental performance. That is why, replacement and better maintenance of electrostatic precipitators is also under consideration.

The most important rehabilitation works in the field of LFTPPs that should be performed are:

- rehabilitation of TPP Nikola Tesla A unit A5 (provided by EAR (CARDS)) - rehabilitation of TPP Kostolac A unit A1 - rehabilitation of TPP Nikola Tesla A units A1 and A2

Table 11 shows the major overhauls in existing thermal power plants in Serbia and Montenegro 2002 – 2010.

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 30 Table 11: Major overhauls in existing thermal power plants in Serbia and Montenegro 2002-2010

Plant (MW) 2002 2003 2004 2005 2006 2007 2008 2009 2010 TPP N.Tesla A A3 A5 A4 A6 A1 A2 (280) (280) (280) (280) (200) (200) TPP Kolubara A5 A3 A4 A2 A1 (100) (58) (29) (29) (29) Closure Closure Closure TPP Kostolac B1 B2 A1 (320) (320) (90)

Certain documentation is prepared and possibilities of construction of new facilities are considered: new thermal power plants lignite fired, new lignite mines and natural gas power plants with combined gas-steam cycles. If construction of power plants in Kosovo would not be possible, an accelerated construction of the above additional plants would cover the future consumption, which could be higher than estimated. These capacities are also considered as an alternative to the thermal power plant "Kolubara B". Two most important alternatives to TPP Kolubara B are construction of third unit B3 in TPP Nikola Tesla B and construction of gas-fired plant (CCGT). Because of the fact that Serbia and Montenegro at present can not plan with Kosovo power facilities it is very hard to consider Kosovo, but obviously, rehabilitation of Kosovo′s existing TPPs or construction of new TPP in Kosovo with the capacity of 2X300 MW would be very feasible and important for Serbia and Montenegro. The use of natural gas and reconstruction of turbines in the Heat supply plant "Beograd" (Total 84 MW) are also considered as well as justification of installation of gas turbines in the current natural gas plants (e.g. in the thermal power-heat supply plant "Novi Sad"). Upgrade of TPP Pljevlja in Montenegro and its conversion to CHP plant is also under consideration.

Changes in legislation framework and increase of prices will enable construction of smaller plants, primarily small hydro power plants and facilities for a combined production of electric and thermal energy.

REPLACEMENT OF COAL MINES WHERE COAL RESERVES ARE SUBJECT TO EXHAUSTING

In the Kolubara basin, today, the following coal mines are active: "Field D", "Field B", "Tamnava - East Field", while "Tamnava - West Field" has not yet been completed although coal has already been produced there.

Exploitation life of the "Field B" and "Tamnava - East Field" is in the phase of closure. To provide a continuous coal supply to the plants, these open-pit-mines shall be replaced. In the Kolubara basin, until 2005, a new "Field C" shall be opened with the annual coal production plan of 3 million of tons, which will replace "Field B". The open-pit-mine

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 31 "Tamnava - East Field", with capacity of 12 million of tons, will be for a short time replaced with the Field "Veliki Crljeni" and partially with "Tamnava - West Field" (the total planned coal production will be 12 million of tons - 7 million of tons for the TPP "Kolubara B"); after that it will be replaced with "Tamnava - South Field".

In the Kostolac open-pit-mines, now, three open-pit-mines are operating: "Drmno", "Cirikovac" and "Klenovnik". Considering the exploitation life, natural and equipment conditions, "Klenovnik" and "Cirikovac" will be replaced by increasing the planned coal production of "Drmno" to 9 million of tons per a year, for the thermal power plants "Kostolac A and B".

TAMNAVA - WEST FIELD

The open-pit-mine "Tamnava - West Field" is intended to supply coal to the thermal power plant "Kolubara B". Although not yet completed, coal has been exploited in the "Tamnava - West Field" for several years, using a temporary technology which has been changed with relation to the design.

COAL SUPPLY FOR CONSUMERS

Following the preparations for coal mines restructuring, a much more work will be devoted to geological research and preparation/update of documentation for the mines, which are estimated to be efficiently and profitably exploited. To meet the expected increase in demand of coal for heating purposes, the research will be continued to find out whether opening of new coal mines, is justified. For the same purpose, construction of a new lignite drying chamber (annual capacity: 1 million tons) will be verified and it is expected to be put into operation in 2005 or 2006.

7 Future trends in the Power Sector

The reform process of the Serbia and Montenegro energy sector is focused on policy development, legislative and institutional framework development and energy sub-sectors restructuring and decentralization. In order to overcome the institutional, technical, structural and economic difficulties in the Serbia and Montenegro Energy System and to implement an efficient and sustainable reform, the following objectives and priorities have to be addressed in the short term and the responsibilities of the relevant state bodies need to be clarified: a rehabilitation, modernisation and up-grading programme begun in 2001/2002 for the existing energy sub-sector infrastructure (power, district heat, oil and gas) needs to be continued and extended in the future in order to adjust supply to a well-managed energy demand.

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 32 Energy sub-sector reforms must be continued through restructuring and unbundling the state-owned, vertically integrated companies in order to establish financially sustainable energy service companies through radical improvements of accountability and financial performance. Programmes for substituting energy carriers must be financially supported and reinforced by municipalities (by attracting new consumers to district heating and natural gas for space heating purposes in the residential and public/commercial service sectors). The Energy Efficiency Action Plan addressing all final energy consumers, as well as a general culture of rational use of energy must be implemented quickly; Direct subsidies must be eliminated while protecting, by newly established instruments and financial sources, vulnerable groups of the society from the negative impacts of economic energy pricing; Energy and sectoral policies must be adapted in order to favour the integration of Serbia and Montenegro into the European Union in a reasonable time frame of about a decade through the following steps:

- Liberalization of the energy markets (especially electricity, natural gas, oil / oil products and district heat) and opening them to the national, regional and international competition;

- Corporatization and commercialisation of the state and municipal-owned energy supply enterprises by opening them to private sector participation;

- Energy market regulation in compliance with EU policies for all sub-sectors that are characterized as natural monopolies; the anti-trust regulation will deal with other types of monopolies; and

- Technical regulation (for safety and operation) and environmental regulation in compliance with EU standards and rules.

Legislative and institutional reform of the Serbia and Montenegro energy sector started in 2001 with the preparation of Energy Laws for the Republic of Serbia and the Republic of Montenegro.

The Energy Law of the Republic of Montenegro has been recently adopted, while the Energy Law of the Republic of Serbia should be very soon adopted by National Parliament of the Republic of Serbia. These Energy Laws are written according to the concept of similar laws in Central and Eastern European Countries in order create the necessary legal environment for improving the operation of the energy sub-sectors, and to support public and private energy companies, including energy service companies, for the operation in regulated/liberalized market conditions.

The Energy Laws lay down the principles of the energy policy and the energy sub-sectors development strategy. At the same time they define the Government/Ministry's mission and roles in establishing the ambient for secure, reliable, efficient energy production and supply, as well as for rationale energy use. The Laws prescribe, the principles of

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 33 organization and functioning of energy markets, including technical requirements for operation, maintenance, and the protection of energy infra-structures and the environment. These Laws establish independent regulators to oversee market opening and to set electricity rates.

Urgent and efficient measures should be undertaken in all sub-sectors of EPS and EPCG (or future companies arising from EPS and EPCG) in order to increase the production and, particularly, to reduce the consumption of electricity. A list of necessary actions aimed at this goal is given below for each sub-sector.

In distribution, urgent organizational and technical measures should be undertaken to: suppress theft (non-commercial losses) regulate debts analyse in-depth technical losses to identify sources and measures for reduction of losses elaborate regulations for connecting the independent electricity producers with distribution systems

In transmission, the measures to be undertaken are: rehabilitate and reconstruct the damaged and technically inadequate transmission system facilities to meet the requirements of a secure operation nationally and of the Regional Electricity Market (REM) prepare the necessary data, rules and tariffs required by transmission services which should be provided to REM upgrade the information system supporting the operation of Power System.

In generation, the measures are: intensify the efforts on rehabilitation and overhaul of TPP and HPP units to achieve higher efficiency and/or additional capacity check and upgrade governor and excitation control systems for a better power frequency and voltage control.

In power system management, the appropriate measures could be: investigate the possibilities to reduce load peak demands by modifying the load diagrams of large consumers (shifting working hours); this can be specified in advance by adequate contracts initiate expert inspections of large electrical energy consumers concerning the efficiency of energy managing intensify efforts on restructuring EPS and EPCG..

Serbia and Montenegro's annual electricity demand is forecast to grow about 3.2 % through the next decade. The growing electricity demand will result in deficiency of some 4700 GWh in the year 2010. Because of that construction of a large TPP is

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 34 necessary. To that end, there are a few considerations: to complete TPP Kolubara B or to construct TPP Nikola Tesla B3 or to construct TPP on natural gas. New investments in Kosovo (rehabilitation of existing TPPs or construction of a new one) would be a good opportunity,but there are a lot of uncertainities about the final status of Kosovo. Investments in rehabilitation and modernization of existing HPPs as well as in new HPPs are under consideration (Djerdap I refurbishment, construction of new units in HPP Bajina Basta and HPP Zvornik, invetments in new HPP and rehabilitation of existing small HPP). Electricity balance of country could also be improved by reconstruction and upgrade of CHP Novi Sad and by upgrading of industrial CHP units. Increase of use renewables for electricity production is also under consideration.

The most important new transmission network facilities (a part of the equipment already procured) are:

-substations: TS 400/110 kV "Beograd 20", TS 400/110 kV "Jagodina", TS 400/110 kV "Sombor 3"; in phase I, one transformer for each substation and enlargement of two existing TS 400/220/110 kV "Pancevo" and 220/110 kV "Sremska Mitrovica" -Transmission overhead lines 400 kV: Sombor - , introduction of power lines into TS "Jagodina 4" and TS "Beograd 20" and, possibly, Sremska Mitrovica – Ugljevik (Bosnia), Sombor – Pacs (Hungary), Nis – Skopje (FYR Macedonia), Podgorica – Elbasan (Albania).

Planned works and activities: -rehabilitation or replacement of the existing old and exhausted equipment in the transmission and distribution network -to verify justification, preparation and design of corridors for a stronger connection to the neighbouring electric energy systems (e.g. in Hungary and Macedonia) -completion of already commenced construction and also construction of three new transmission substations in 15 distribution substations, with voltage 110/35 kV and 110/x kV, as well as reconstruction/enlargement of two existing transmission substations and distribution substations, -construction of power lines 110 kV, 200 km long, in transmission network and 40 km long in the distribution network, -construction of low voltage levels network, in conformity with the local increase of electric energy consumption, development of transmission facilities and increase of quality of energy supply, -improvement of measuring devices with the consumers

During the next five-year period it is planned to complete the previously commenced energy management system. It is aimed at a complete implementation of the dispatcher management system and telecommunication system. The telecommunication system is one of the most attractive fields for new investments because the energy system of EPS already has a considerable infrastructure within its transmission system.

CFF OPET Project – WP 3 / Serbia and Montenegro Developed by the BLACK SEA REGIONAL ENERGY CENTRE 35

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