Until 2018, gas power plants were seen as a replacement for thermal capacities that should be gradually withdrawn.
They produce 50 to 60 percent less carbon dioxide.
However, just two years later, it was announced that gas-fired power plants in the EU that did not meet emission limits would not be treated as investments in sustainable development. The goal of these rules is to increase investment in low-carbon projects, but also to stop “greenwashing”.
Brussels wants to introduce investments in low-carbon projects by achieving new rules in order to achieve the EU’s climate goals. The European Commission proposed in September 2020 that the EU’s goal be to reduce greenhouse gas emissions by 55% by 2030 compared to 1990. The EU also wants to be climate neutral by 2050. The aim of the rules is to limit “greenwashing”, which means that investments that are not are also marked as green.
Thus, gas power plants will not be allowed to emit more than 100 grams of CO2 per kWh in order to be labeled as a green investment in order to be classified as investments in sustainable development, ie investments that have a significant contribution to the fight against climate change. However, even the most efficient European gas-fired power plants have emissions that are three times higher than this limit.
Gas power plants in Serbia
In terms of energy consumption, in Serbia, coal is still in first place with a share of about 49 percent, crude oil with 25 percent is second, while natural gas is third with 12 percent. The reason for that is the small domestic production of oil and gas, which is why those energy products are mostly imported from abroad, more precisely from Russia. In Serbia, it was previously planned that by 2030, gas would take the second position in consumption. The precondition for that is the construction of five new gas power plants in Belgrade, Nis, Kragujevac, Novi Sad and Subotica, which would be located on the route of the then current South Stream gas pipeline, which has been canceled in the meantime. In any case, Serbia will have to introduce replacement capacities for about 4,000 MW of obsolete coal capacities in the medium term, and the value of investments is estimated at over 10 billion dollars.
The question here is whether the solution is the construction of gas power plants or investment in new renewable sources. Looking at the wider European context, gas-fired power plants are seen as a transitional solution, which should give way to solar and wind power plants by 2030. However, Serbia has not made progress in building new gas power plants, nor in implementing renewable energy projects to the extent necessary to meet the 27% renewable energy target.
Elektroprivreda Srbije is the owner of the Pannonian thermal power plants, which run on natural gas or fuel oil, with a capacity of 403 MW for the production of electricity and 505 MW (t) for the production of thermal energy.
Works on the construction of a new combined gas power plant in Serbia, with an installed electric power of 200 MW and a thermal power of 121 Gcal, began in March 2019. The plant, located near the NIS refinery in Pancevo, is being built by Gazprom’s subsidiary. The value of the investment is 180 million euros, of which Gazprombank provided 140 million euros in loans.
A Russian investor, GazpromEnergoholding, has entrusted the construction to a Chinese partner, ShanghaiElectricGroup, on a turnkey basis. The contract for the delivery of gas turbines and generators, worth 40 million euros, was awarded to the Italian company AnsaldoEnergia.
The construction of the power plant was supposed to be completed in the fourth quarter of 2020, but it came to a standstill due to the restrictions caused by the coronary virus pandemic in Serbia and China. As announced by the General Director of GazpromEnergoholding, Denis Fyodorov, in mid-February, the company is doing everything to keep TE-TO Pancevo online until the middle of 2021.
Steam-gas power plants of this power consume approximately 300 million cubic meters of natural gas per year. In TE-TO Pancevo, the specific consumption of conditional fuel for the production of one kilowatt-hour will be around 213-234 grams. CO2 emissions from this plant, according to the Environmental Impact Assessment, will range from 263,146 to 334,795 tons per year, depending on the operating regime. The final price of electricity that TE-TO Pancevo will deliver to the market will depend on the purchase price of gas.
If we look at the prices of electricity produced in gas power plants in the region, the combined power plant Brazi in Romania, owned by OMV Petrom, with a capacity of 860 MW, charged 54.8 euros per MWh for the supply of households on the regulated market in 2019. This price takes into account production costs, plus a margin of 5%. When looking at the price for futures contracts, the Brazi power plant sold electricity for delivery in 2021 at prices ranging from 48.6 to 54.8 euros per MWh for the same type of contract. However, the reason for such fluctuations should be sought in the sharp decline in industrial consumption, as a consequence of the corona virus pandemic.
It is planned that the annual production of electricity in TE-TO Pancevo amounted to about 1,400 GWh, which is about 4% of the total production of electricity in Serbia in 2019. The power plant is not part of the support scheme and no subsidies are planned for its operation, but electricity will be produced on the domestic and regional open market. This means that domestic consumers will not pay for any difference in the price of electricity produced in TE-TO Pancevo and power plants owned by EPS.
According to the Environmental Impact Assessment of TE-TO Pancevo, the maximum load of the refinery is 28 MW. Of that, 18 MW is paid from EPS, ie from Petrohemija, and 10 MW from its own power plant.
Given that the new combined power plant will be used to supply NIS’s refinery in Pancevo, while the rest will be sold on the free market, this means that over 1,200 GWh per year will be available on the market. These quantities could be sold directly to customers or suppliers, and part of the electricity placed a day in advance on the SEEPEX energy exchange market.
On the other hand, the average annual production of EPS in the period from 2010 to 2020 was 34,896 GWh. This means that EPS will maintain its dominant position on the market in the next decade as well – its share is currently around 97%. However, thanks to great flexibility, the gas power plant could play a larger role in the balancing market, which could gain in importance with the expected increase in the contribution of variable renewables.
The situation on the domestic market could change even more significantly if GazpromEnergoholding decides to realize three more gas power plants with a capacity of 200 MW each, however, that idea is only under consideration for now, B92 reports.
