Patnow II refinancing - Konin Biomass

Location:

Poland

Project number:

42240

Business sector:

Power and energy

Notice type:

Private

Environmental category:

B

Approval date:

15 Feb 2011

Status:

Complete

PSD disclosed:

13 Dec 2010

Project Description

The EBRD is considering providing an €80 million senior secured loan to Elektrownia Patnow II Sp. z o.o. (“EPII”), a subsidiary of Zespol Elektrowni Patnow Adamow Konin S.A. (“ZE PAK”), as part of a larger refinancing package. EPII owns and operates a 464MW lignite-fired power generation unit co-financed by EBRD in 2005, which started commercial operation in July 2008. The new transaction is part of a refinancing package to repay the existing project finance loan for the existing lignite-fired power unit and to finance the construction of a new 154MWt/50 MWe biomass boiler at the Konin power plant (the Project), which is being developed by the ZE PAK. The proceeds of EBRD financing will be utilised exclusively for the construction of the Project.

Transition Impact

The Project is part of a larger investment programme of ZE PAK to apply a renewable energy solution to an old polluting lignite-fired power plant. As such, the Project has the potential to lead to important demonstration of a successful conversion of an old lignite-fired power plant into a biomass fuelled power generation, with high replication potential in Poland and other countries the region. The Project will also increase the number of biomass projects operating in Poland, which is so far limited, and contribute to increase the share of the renewable energy in the Polish power generations sector.

The Client

EPII is a special purpose company incorporated for the purpose of the construction and operation of the new 464 MW power unit at the Patnow power plant in Poland, which started its commercial operation in July 2008.

The company is a wholly owned subsidiary of the ZE PAK group, the second largest lignite-fired electricity generator in Poland with 2,457 MW installed capacity, accounting for around 8 percent of the country’s total electricity supply. In addition to the EPII’s new unit, ZE PAK operates three lignite-fired power plants: Patnow I, Adamow and Konin.

EBRD Finance

Up to €80 million long-term debt financing package, alongside other commercial lenders.

Environmental Impact

The Project has been screened as category “B” under the Bank’s Environmental and Social Policy (2008), requiring an Environmental and Social Due Diligence (ESDD) of the environmental and social issues associated with the conversion of an existing lignite-fired boiler into a state-of-the-art fluidized bed biomass boiler.

The new facility will not add any additional capacity to the plant and therefore does not fall under Annex 1 of the Bank’s Environmental and Social Policy.

The ESDD has confirmed that the Company and Konin CHP plant have a good environmental and social management system and the capacity to fully implement the Bank’s Performance Requirements (PRs). The due diligence has confirmed that the biomass CHP plant will meet EU requirements and will allow the company to reduce carbon emissions.

The main environmental and social impact of the Project is associated with the fuel supply chain. This includes possible road traffic impacts and the need to ensure that transport of biomass does not have a significant impact on local communities, as well as ensuring that the biomass is obtained from sustainable sources. The Company is developing an internal biomass verification and monitoring system as part of its integrated environmental management system to address these issues and ensure that appropriate information is provided to the public on transport routes and any planned changes.

A non technical summary (NTS) of the Konin CHP Biomass project is available on the Company website.

The ESDD confirmed that other existing operations of ZE PAK, namely, Patnow 1, Konin CHP and Adamow, are in compliance with the IPPC permits. ZE PAK will need to undertake additional investments to meet future requirements of the Industrial Emission Directive, and an investment program has been developed to facilitate future compliance. The ESDD also confirmed that the existing Environmental Action Plan (EAP) for the original EP II transaction has been implemented and EPII is complaint with the Bank's PRs, EU and National requirements for new installations.

A comprehensive ESAP has been agreed with the Company, which covers all operations to enable compliance with the Bank's PRs, as well as the requirements of the Industrial Emissions Directive, notably in terms of NOx emissions post 2016. The ESAP includes a corporate Stakeholder Engagement Plan (SEP) to be implemented by the Company over the next few years to ensure that the Company fully complies with the PR.

Implementation requirements

  • The Company will implement the ESAP (as agreed with the Company) and an Environmental, Health and Safety Management System.
  • The Company will be required to provide the Bank with an annual environmental report, including updates on the ESAP (i.e. implementation status of the various projects), and notification on any material accidents or incidents.
  • The Company will be required to inform the public of any biomass transport route changes;
    The Bank will monitor the implementation of the project through regular visits, and an independent audit is to be undertaken of the project in 2013.

 

Technical Cooperation

None.

Company Contact

Elektrownia Patnow II sp. z.o.o
ul. Kazimierska 45
62-510 Konin
Poland

Attention: Anna Strizyk
Fax: +48 63 247 3031

 

Business opportunities

For business opportunities or procurement, contact the client company.

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Email: procurement@ebrd.com

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