Belchatow II

Location:

Poland

Project number:

25438

Business sector:

Power and energy

Notice type:

Public

Environmental category:

A

Approval date:

29 Nov 2005

Status:

Complete

PSD disclosed:

24 Aug 2005

Project Description

The proposed project consists of construction of a new 833 MW lignite fired unit at an existing 4,440 MW lignite power plant operated by BOT Elektrownia Belchatow SA (“EBSA” or the Company”) accompanied by the associated investments i.e. modernisation of existing power units, additional flue gas desulphurisation (FGD) installations, new waste disposal system, a cooling tower for the new unit, etc.

It is envisaged that the new 833 MW unit will not add substantial additional new capacity. It will allow for the reconstruction and modernisation of 10 existing blocks and afterwards for the shut down of 2 blocks (planned in the year 2016). The 833 MW power unit will be constructed on the basis of an EPC “turn-key” contract.

The project represents a major step in upgrading existing generating assets in Poland to ensure that they meet EU environmental legislation post 2008, notably requirements of the EU Large Combustion Plant and IPPC directives. The project is also an integral part of Polish governmental energy security program.

 

Transition Impact

By supporting the project the Bank would address one of the key transition challenges in the Polish power sector, helping the Government to success in its goal to reform the industry and to create a competitive and liberalised energy market in the country. By supporting EBSA, the Bank would be instrumental in supporting BOT in bringing the tools it requires to reduce costs and create efficiencies throughout its subsidiary companies’ operations.

The Bank will also help the company to install a professional system of internal controls and risk management for its trading operations, identify existing and future human resources required to compete and training for staff to operate in a fully competitive environment. Since BOT’s plants are strongly dependent on the prevailing and uncertain long term PPA’s environment, the Project provides another opportunity for the Bank to influence the direction of and subsequent implementation of both appropriate stranded asset legislation and any capacity payment system to transition Poland to a competitive market with modernised generating assets that meet environmental standards.

EBSA and its parent company, BOT, will remain one of the largest players on the Polish electricity market, and indeed one of the larger utilities in Europe. As a source of low cost supply to the both: the Polish and European markets, EBSA’s ability to bring its operations and management up to best practices standards in terms of competitive profile and risk management will be important..

The project brings technology that will lead to compliance with the EU environmental standards, and shall provide a positive demonstration effect in Poland, where environmental performance is still an issue.

This financing will have also a positive demonstration effect in the local and international financial markets.

 

The Client

BOT Elektrownia Bełchatów S.A., the largest lignite-fired power plant in Poland and in Europe. It is located in the Łódz region, central Poland. Currently, EBSA’s aggregate installed capacity is 4,440 MW, which accounts for approximately 12.7% of the total installed capacity of all Poland’s power plants. EBSA is a joint stock company majority owned by BOT Gornictwo I Gazownictwo S.A. (a state owned energy holding).

EBRD Finance

The EBRD expects to provide EUR 100 million long term senior debt to co-finance EBSA Investment Program alongside the group of commercial banks, European Investment Bank and Export Credit Agencies from France and Germany and NIB.

Project Cost

Approximately EUR 1.6 billion.

Environmental Impact

Environmental classification and rationale
BOT Elektrownia Belchatow is one of the largest conventional power plants in Europe, with the installed capacity of 4440 MWe in 12 units. This lignite fired plant was designed in the 1970’s and was gradually commissioned throughout the 1980’s.

The project was screened A/1, requiring an environmental impact assessment (EIA) and environmental audit in line with the Bank’s Environmental Policy and Public Information Policy. The project is also subject to Polish EIA and IPPC requirements. An IPPC permit application will be undertaken prior to commissioning the plant.

Information reviewed during the environmental appraisal
An Environmental Audit and Analysis is being undertaken as part of the Banks due diligence.

Information received includes the following;

  • Environmental Impact Statement for new 833 MWe power unit, Executive Summary, July 2005 (in Polish and English)
     
  • Environmental Impact Statement for new 833 MWe power unit, Main Report, Planning permit application, dated July 2005 (in Polish)
     
  • Assessment of the environmental impact of El. Bełchatów II, prepared by “Energoprojekt-Warszawa” S.A., dated 1998 (in Polish)
     
  • Integrated Permit for BOT Elektorwnia Belchatow, dated March 31th, 2003 (in Polish)

Members of the Bank’s Environment Department visited the site in 2000; additional meetings were held in 2004/5. EBRD staff attended public consultations in July 2005.

Key environmental issues and mitigation
The key environmental issues are air emissions and waste disposal. Belchatow is a lignite fired power station providing almost 19% of the Polish electricity supply. It is also a significant point source emitter of SO2 and CO2 in Poland. To reduce environmental impacts, a gradual modernization programme has been implemented since the 1990’s, mainly aimed at improving efficiency and reducing emissions. The plant has installed flue gas desulphurization (FGD) on 8 units, modernised burners, optimized boiler combustion process and modernised electrostatic precipitators (ESPs) on existing units, which has resulted in a drastic reduction of emissions over the past decade.

The new unit and the overall modernization of the Belchatow Power Plant is part of the long term modernization of the plant. The new 833 MWe unit will eventually replace the oldest units at Belchatow (number 1 and 2 by 2015). The project will enable the plant to slightly increase its generating capacity and at the same time reduce emissions, notably SO2 and NOx

The new unit will be using state-of-the-art pollution control technology inclusive of flue gas desulphurisation (FGD). The plant will meet the relevant EU and Polish emission standards for particulates, SO2 and NOx, notably as specified by the EU Large Combustion Plant Directive (2001/80/EC). The project will make use of Best Available Techniques (BAT) as required under the IPPC Directive and will help to reduce the overall environmental impacts associated with generation of electricity in Poland.

The main impact from the plant will be sulphur dioxide emissions and their impact on local air quality. An assessment was made of the impact on the local air quality, and the modelling did not identify any exeedance of national or EU ambient air quality standards as a result of operating the existing and new unit.

BOT Belchatow Power Plant will operate the plant in compliance with Polish laws and regulations as well as in accordance with EU environmental standards. An environmental management system and continuous monitoring is incorporated into day-to-day operations of the plant and will be upgraded during the implementation of the modernization programme.

Given the nature of fuel used (lignite), substantial carbon emissions will be associated with the project. This will be partially mitigated by high efficiency of the new 833 MWe power unit and efficiency improvement of existing units (less lignite used).

Water consumption and wastewater discharges will be minimised by a water circulation system, flue gas emission will be emitted via the cooling tower for the new unit, and from the existing multi-flue stack for the remaining units.

Solid waste consisting largely of fly ash and furnace bottom ash, will be transported as slurry to a newly constructed landfill associated with the neighbouring lignite mine. This new landfill has been constructed in accordance with EU and Polish environmental standards and regulations. Waste gypsum from the wet limestone FGD scrubbing system will be used commercially. Existing buffer storage capacity is included in the project design.

The plant will utilize an existing site and existing connections for lignite, and auxiliary operations; this limits the new footprint of the plant. Fuel will be supplied from the nearby operational mines. In the future an additional 40 km high power voltage line will be constructed to serve the new unit. Appropriate permits will be obtained in due course for this separate development. Initial information received indicated that the environmental impact associated with this investment is not major.

The Company has implemented an ISO 14001 Environmental Management System for its operations.

These measures are aimed to ensure that the environmental issues will be sufficiently managed to prevent or minimise impacts on staff and local population as well as on the environment.

Environmental opportunities
The proposed project is expected to bring significant environmental benefits as the new plant will be using state-of-the-art technology and replace older polluting generating units in Poland leading to reduced pro rata emissions. The project will also help to satisfy future demand for electricity in Poland as old inefficient coal/lignite fired plants are decommissioned. Moreover, the project is an essential element in the Polish strategy to reduce sulphur dioxide emissions from large combustion plants.

Summary of Environmental Action Plan
An Environmental Action Plan (EAP) will be developed following the completion of the due diligence. It is likely that the EAP will address inter alia air emission control, house keeping and the overall management of the environment, health and safety issues at the power plant and associated auxiliary operations such as the landfill and the transmission line.

Disclosure of information and consultation
BOT Belchatow Power plant has started a public consultation and disclosure programme, in compliance with national and EBRD requirements, commencing in July 2005.

Disclosed materials

1. 2005 Environmental Impact Statement, Executive Summary in English and Polish

2. 2005 Environmental Impact Statement, Main Report in Polish

3. 2003 IPPC Permit for the BOT Elektorwnia Belchatow power plant (in Polish)

The materials are available in hard copy at the following locations in Poland:

  • The Office of the Gmina in Kleszczów; 97-410 Kleszczów, ul. Główna 47; Tel. + 48 (44) 731-31-10; e-mail: kleszczow@kleszczow.pl
     
  • The Poviat Starost's Office in Bełchatów; 97-400 Bełchatów, ul. Pabianicka 17/19; Tel: +48 (44) 635 86 00; e-mail: powiat@powiat-belchatowski.pl
     
  • ELBIS Sp. z o.o., Rogowiec, Belchatow. Tel. +48(44) 735 33 40; Contact: Mr Marek Wdowiak, Technical Director.
     
  • BOT-Elektrownia Belchatow S.A.; Rogowiec, 97-406 Bełchatów 5, Tel: +48 (44) 632-51-32; contact: Mr Miroslaw Niewiadomski, Environment Director
     
  • EBRD Regional Office Warsaw, ul. Emillii Platter 52; Contact Lucyna Stanczak

An announcement about the public consultation period was made on from 30 June to 6 July 2005 in the “Gazeta Belchatowska”, “Fakty”, “Informator Kleszczowski” newspapers and in local radio and TV.

Additionally, the materials are available on the BOT website and ELBIS website.

Monitoring and reporting
The Company will monitor the environmental impact of its operations in accordance with national law and regulations. The Bank will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing annual environmental reports prepared for the project covering:

(i) ongoing performance of project-specific environmental, health and safety activities as reflected in the results of periodic and quantitative sampling and measuring programmes, and

(ii) the status of implementation of environmental mitigation and improvement measures. The Bank’s representatives will also conduct periodic site supervision visits when deemed appropriate.

If required, the Bank will carry out monitoring visits to the plant.

There is an Environmental and Social Impact Assessment available for this project.

Technical Cooperation

EUR 253,000 TC to assist and ensure that BOT and EBSA are prepared to operate competitively in a liberalised market by enhancing or adding to the skill sets of BOT management, identifying potential necessary investment (e.g. in additional technology), and identifying other needs to secure BOT’s and EBSA’s strong competitive position prior to full liberalisation of the Polish electricity market.

 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

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