The electricity price will rise fourfold, i.e. 376 percent by 2040, so as the construction of Unit II of the thermal power plant could be profitable, says the Feasibility Study on the basis of which the government proposed the project implementation, and to which MANS Investigation Center has had access.
A consulting firm Delloite from Belgrade designed a feasibility study on the construction of Unit II for the Montenegrin Electric Enterprise (Elektroprivreda Crne Gore – EPCG). The study is an integral part of the government’s Information on the construction the thermal power plant Pljevlja’s Unit II, which was adopted two weeks ago.
Deloitte refers to forecasts for wholesale electricity prices in Montenegro until 2040, which another consulting firm – Poyry, prepared for EPCG. Out of the three scenarios developed by Poyry – high, medium and low electricity prices, Deloitte chose the middle scenario, according to which the wholesale electricity price starts from €38 per megawatt in 2016 to reach the price of €97 per megawatt by 2040. The growth in electricity prices is explained by the growth in gas prices after 2025 and the coal costs.
As stated in the study, all forecasts for wholesale electricity prices in Montenegro prepared and provided by Poyry exclude inflation, so Deloitte adjusted the prices for a long-term projection of inflation of two percent, and thus calculated the price of electricity of €143 per megawatt in 2040.
The change in the wholesale prices would affect the electricity prices for households, which currently pay around €37.5 per megawatt, according to current tariffs of the Energy Regulatory Agency. The price of electricity has significantly dropped this year on the European markets, whereas in February it was €30 per megawatt.
The government sees the project of constructing the new thermal power plant in Pljevlja as one of the priorities and claims that the new unit should be built to solve the problem of electricity deficit that will occur in seven years, i.e. in 2023, when the current unit is closed.
According to the estimates on the basis of which the government decided to propose the Unit II construction, the sustainability of the project will be ensured at citizens’ expense, as they will pay electricity almost four times more than earlier.
The government has recently taken a number of steps to “push” the project of constructing the new thermal power plant in the Montenegrin Parliament, despite the fact that the Czech company Skoda Praha, the bid of which was selected as the most favorable in April last year, has not yet agreed on all the aspects of investment financing, including the basic – construction costs of the Unit II.
Thus, the government submitted a Draft Law on Ratification of the Protocol with the Czech Republic to the Parliament, for which it stated that it represented the institutional basis for implementation of the project of the Unit II construction, while at the same time it submitted a new contract with the Italian company A2A to MPs to discuss. Although the public attention is focused on the provisions concerning A2A leaving EPCG, the new contract views the relationship between the two companies predominantly through the investment project of the Unit II, and it precisely defines steps to be taken by the government if the Italian partner hinders the adoption of decisions concerning the project.
The government insists on the construction of the new unit, although a number of local and international NGOs and professional public question the economic justification of the investment and indicate the enormous impact that it will have on human health and environment. The Italian company A2A does not agree with the government on constructing a new thermal power plant in Pljevlja, which has been a key conflict in their relationship in the last months.
Author
MANS Investigation Centre
Importing electricity was more cost-effective than producing
It is known that the electricity generated in thermal power plants is considerably more expensive than the electricity from hydro-power plants, and EPCG has failed to announce the selling price of the electricity generated in the current Unit in Pljevlja. February this year, EPCG stopped the thermal power plant’s operations, since it was more cost-effective to import electricity than to produce it.
The projections of the electricity price in thermal power plants have been significantly affected by fees producers will pay for emission of gases into the atmosphere, especially carbon dioxide. Namely, the European Union established the EU Emissions Trading System, according to which the thermal power plants are obliged to pay fees, in order to stop building new thermal power plants and emission of carbon dioxide.
Deloitte’s Feasibility Study says that the fee is included in the overall price of electricity, which would be produced in the future unit of the thermal power plant from 2026, although it is expected that Montenegro join the EU earlier.
The study emphasizes that “on the basis of the official letter from the Ministry of Sustainable Development and Tourism, it is that the carbon tax will become applicable from 2026 with 13 percent output, while the full output will be achieved in 2031”, and it is projected that the fee in the first year amounts to €34.7 per ton of carbon.
Electricity prices higher than in Germany or Britain
Projections of wholesale electricity prices in Montenegro until 2040 show that the electricity will be more expensive in Montenegro than, for example, in Germany or Britain.
Thus a study on wholesale prices of electricity made for the government of Germany shows that in 2040 they could reach the sum of €83 per megawatt, while forecasts for the UK market predict the wholesale price at €73 per megawatt in 2035.
