OREANDA-NEWS . September 4, 2012. The Board of Lietuvos Energija approached the shareholders of the Company for decisions on three strategic projects which would expand the range of the services provided by the Company and strengthen its position. The shareholders will decide on the development of Kruonis HPSP, biofuel-fired boiler houses, and dismantling of two units of the Lithuanian Power Plant.

Development of the Kruonis Hydro Pumped Storage Plant

It is proposed that the shareholders should give approval to the decision to announce a tendering procedure for the construction of Unit 5 of the Kruonis Hydro Pumped Storage Plant (Kruonis HPSP). It is intended that the new unit will be commissioned prior to the start of operation of the NordBalt and LitPol Link power links.

The development of the Kruonis HPSP is being planned in accordance with the approved national Energy Strategy aimed at developing the electricity market and expanding the range of services provided by the Company.

“As volumes of power generation from renewable energy resources are increasing, we need a unit which could operate flexibly by both absorbing any unplanned amounts of electricity and generating electricity when the winds are not blowing“, Dalius Misiunas, General Manager of Lietuvos Energija, lists the factors underlying the development of the Kruonis HPSP. “Furthermore, on completion of the links with Sweden and Poland, as the market is enlarged, it will be possible to buy cheaper electricity in the night time and to sell more of it in the day time when both the demand and the price are higher“.

According to Dalius Misiunas, the Kruonis HPSP‘s development will ensure the demand for the power reserve of the Visaginas Nuclear Power Plant and will contribute to the attainment of one of the strategic objectives of the Lithuanian energy sector: synchronisation with the European power system.

An analysis of the development alternatives for the Kruonis HPSP has shown that a 225 MW asynchronous unit would be optimal for the meeting of the estimated demand for the power system regulation and new power generation capacities. Other alternatives had been considered but later abandoned; according to experts, it would be more complicated technically to adapt the present infrastructure to units of different capacity and the efficiency would be lower.

The estimated investments in Unit 5 of the Kruonis HPSP can be LTL 400 million. The exact value of the project will be determined during the tendering procedure. Several financing sources are being considered. It is estimated that the length of the project will be from three to four years. The putting of the unit into operation should coincide with the start of operation of the NordBalt and LitPol Link power links.

Upgrading of Heat Generation Technologies

The agenda of an extraordinary meeting of shareholders of Lietuvos Energija includes an investment project on the construction of heat energy generation capacities at the Lithuanian Power Plant (LEL). The purpose of the project is to provide efficient heat generation capacities that are independent from the power generation. Such capacities would secure supply of heat to residents and businesses of the Elektrenai municipality, with the present units of LEL performing the standby function only.

It is being planned that operation of the new heat generation capacities will start in 2013, whereas the whole project on upgrading of the heat generation technologies will be completed in 2014.

The shareholders will decide on the pledging of the assets to be developed under the project in order to secure the requisite project financing.

Decommissioning and Dismantling of Units 3 and 4 of the Lithuanian Power Plant

The shareholders of Lietuvos Energija will also decide on the decommissioning and dismantling of LEL Units 3 and 4. Such decommissioning and dismantling have been provided for in the loan agreement concluded by and between the Company and the European Bank for Reconstruction and Development (EBRD) of 18 February 2010.

Units 3 and 4 are no longer used for core operations of the Company, and no public-interest service funds have been allotted to them since 2011.