On 27 February, the HSE Group followed the confirmation of the National Energy and Climate Plan (NECP) by the Government. The document remains inappropriate in key segments, and the adoption of the document with such content would represent a great challenge for the HSE Group in the efficient realisation of our development goals in the field of renewable energy sources (RES), in the construction of new combined cycle gas turbine plants to compensate for electricity from coal-powered generators, and in the plan to discontinue the use of domestic coal for electricity production.
Despite its latest version envisaging continuation of the initiated pre-investment activities in the exploration of the possibilities to exploit RES, the NECP still does not contain a clear indication of concrete/necessary hydro power plant projects on the middle Sava River until 2030. At the same time:
- it does not envisage the signing of a concession contract for the construction of hydro power plants on the middle Sava in 2020;
- it does not envisage the siting in 2020 of the hydro power plants for which activities related to the adoption of the national spatial plan have already been initiated (HPP Suhadol, HPP Trbovlje and HPP Renke);
- it does not envisage the provision of financing and simultaneous construction of non-energy infrastructure of other users of water/space (state, local communities, …).
This will negatively affect the level of self-sufficiency regarding electricity in the country and the attainment of the target share of RES in final consumption. There will also be a negative effect on the competitive ability of companies which possess concessions for the energy utilisation of water resources, while the NECP, by failing to mention concrete projects for reaching the set objectives, also does not enable the public benefit, as it would be understood from the importance attributed to the projects specified in the NECP by the Energy Act, to prevail. At the same time, it is also necessary to indicate concrete and clearly defined projects location- and size-wise in order to secure more favourable financial resources, both public and private.
Based on our extensive experience, we find that in the field of new facilities for the production of electricity from RES, the adopted NECP has a safeguard installed against facilitation of the construction of new hydro power plants until 2024, as it requires new studies to be made, and that it has shortcomings when it comes to continuing with the siting procedures that have already been initiated, while the Environmental Report has not been properly amended despite many remarks.
Based on the trends in the field of solar and wind power that we have detected, we also think that the set objectives regarding the construction of new solar and wind power plants are unrealistic and, given the “known output” of the Slovenian power system, even hazardous, both from the aspect of reliability of supply and that of the national economy.
Despite the proposals from the HSE Group, which emphasises the key role of natural gas as a transitional source of energy in abandoning coal and making the transition to a low-carbon economy, the NECP does not envisage power plants using natural gas as a key transitional source of energy, which would compensate for electricity from coal-powered generators and, consequently, secure the reliability of the electricity supply even before 2030. In this sense the NECP will prevent further utilisation of the existing energy locations, which could site the necessary replacement production facilities even before 2030, which are fully equipped in terms of infrastructure and whose closure or neglect would not be sensible either from the aspect of the economy or that of the environment.
When it comes to the early closure of the Velenje Coal Mine and abandoning of the use of coal in the Šoštanj Thermal Power Plant (TEŠ), the NECP envisages the measure of the adoption of a precise timeline, based on the adopted strategy for abandoning of the use of coal and restructuring of coal regions in line with the principle of just transition, by 2021 and the drafting of an act on the closure of the Velenje Coal Mine and an act on the restructuring of the region in 2021. But what the NECP is missing is a regional just transition plan, which will be a condition for the drawing of funds from the emerging European Just Transition Fund, which will be a key in implementing the necessary restructuring projects in the region. The NECP should in Chapter 5 clearly define sources of public funding of the just transition, closure of the Velenje Coal Mine and restructuring of the region in the period until 2030. Drawing on the funds from the Just Transition Fund, as part of which EUR 92 million will be earmarked for Slovenia for the restructuring of its coal regions, will be possible only under the condition that for each euro from the Fund, the state secures at least an additional EUR 1.5 from the cohesion funds and co-financing funds from the budget. These funds need to be secured for the period from 2021 onwards, when the Fund will be established, which is why they must also be defined and envisaged in the NECP.
During the period of facilitated decarbonisation, the HSE Group will need to fully invest the free cash flow from operations in new projects aimed at raising the competitive capacity and development. What remains open is the issue of financing of the closure works in the Velenje Coal Mine, remedying of the consequences of 200 years of coal mining, when electricity was a social good and not a market category, which is why we ask what amount of funds will be available from sources which will not burden the production price of electricity from HSE.
The HSE Group thus finds that the NECP is still a too general document which does not envisage concrete projects for the realisation of energy and climate objectives until 2030, and that at the same time it is overly ambitious in certain places – for example, when it comes to further utilisation of solar energy or objectives in the field of efficient energy use. The ambition is also not followed in Chapter 5, because apart from a general breakdown of necessary investments, there is no detailed breakdown of the sources of these investments, in particular those which should be provided from the national budget, while on the other hand a disproportionately high share of the burden of the required investments is transferred to households. We wonder if the amount of public funds in the known public finance frameworks in 2020-2022 will be sufficient to implement the NECP at all.
Despite our calls following the publication of the first NECP draft that measures and projects should be more clearly defined in several places, the HSE Group finds that the NECP confirmed by the Government has shortcomings in respect of clearly defining a vision of further development of the energy and climate policy in Slovenia, which would enable an economically sustainable transition to a low-carbon economy, and when it comes to providing the key stakeholders in the energy transition with a clear and predictable framework for the implementation of all planned projects, which could significantly contribute to attaining the national energy and climate objectives.
In conclusion, the HSE Group would like to say that as a company, a strategic asset of the state, the largest Slovenian producer of electricity both from RES and domestic coal, and the holder of a concession for the utilisation of the water power potential on the middle Sava River and on the Mura it will, responsibly and using all its capital potential and expert know-how, start reducing the damage done to the company and the owner and increasing the competitive edge on the market despite all the obstacles the adopted NECP has put in front of energy companies.