OREANDA-NEWS. June 11, 2010. At a meeting of Liepajas energija shareholders, a proposal to reconstruct the Liepaja thermoelectric plant (TEC) at Kaiju iela 33 was approved. With the possibility of attracting financial support from European Structural Funds, it is envisaged that the reconstruction project will provide new woodchip-burning power blocks. Thus, the share of renewable energy sources used at Latvenergo Group companies will increase still further.

Overall, the reconstruction plan entails the construction of new water boilers during the next two years, with a total capacity of 20 to 30 MW (megawatts) on the territory of the TEC, along with an electricity cogeneration facility with an installed electricity capacity of around 2 MWel (megawatts of electric power) and a heat capacity of 10 MWth (megawatts of thermal power). The only energy resource used to operate both these facilities will be woodchips. Thus, once the planned construction works are completed, around 60% of all heat produced in Liepaja will be coming from renewable energy sources, and the rest from natural gas.

In the long term, this investment in the city’s energy supply infrastructure will allow inhabitants to reduce their payments for heat. We should keep in mind that, by implementing green energy projects which are basically advantageous for inhabitants if European Structural Funds are received, their buyback period and profitability will be subject to a long-term forecast. Overall, 34% of the total cogeneration block construction expenses will be co-funded.

This decision on reconstruction will not only promote diversification of the city’s heat energy portfolio, but also increase flexibility in response to fluctuations in energy resource prices. Moreover, the use of green energy will reduce the amount of CO2 emissions into the atmosphere.

Support from the Cohesion Fund is a crucial factor in providing support for the project, because the creation of such a small-scale woodchip-operated plant will only be profitable for inhabitants if co-funding from these funds is received and the plant is operated according to the state-approved long-term programme for supporting renewable energy sources and cogeneration. The reconstruction of the TEC should also provide indirect support for the drive to boost local employment by considerably increasing sales for wood producers.

Reconstruction of the thermoelectric power plant is being carried out in accordance with the Liepajas energija business plan for 2009-2016, which was developed upon the conclusion of the initial three-year plan to overhaul the city’s heat supply infrastructure (2006-2009).

In line with this business plan, the commissioning of a 4MW electricity and heat gas-operated cogeneration facility (Tukuma iela 2a boiler house) is due to given the go ahead in July 2010. In addition, a programme is being developed to replace heat mains in the city of Liepaja, once again with support from European Structural Funds. The heat mains investment programme should be concluded in 2012-2013.

The equipment procurement procedure for the cogeneration project is expected to start in 2010, followed by an equivalent procedure for water boilers in 2011. During the first stage of works, the site will be prepared for construction work by demolishing unnecessary buildings. Thus, the shareholders of Liepajas energija are striving not only to attract state support for infrastructure projects to improve the standard of living of the city's residents, but are also focussing their attention on improving the environment in Liepaja.

Considering that Latvenergo AS is a 51% shareholder in Liepajas energija SIA, such reconstruction should contribute to the use of environmentally friendly energy resources by the Group’s companies to produce electricity and heat. Latvenergo AS already generates more than two-thirds of its electricity from the three Daugava cascade HESs, which ensures that the Latvian company sits at the top of the list of Europe’s greenest power companies.

Liepajas Energija and its shareholders will have invested about 17 million lats in the programme to overhaul the heat supply network in Liepaja by the end of 2010.