Sostanj lignite thermal power plant unit 6, Slovenia

NGOs such as Focus raised numerous issues with the Slovene government and international financial institutions but they showed no sign of taking concerns into account until the project was considered a fait accompli.

The TEŠ power plant has made a loss every year since TEŠ6 started operating, except for 2021 when it received compensation from the corruption case related to the unit. In 2023, losses amounted to nearly EUR 46 million. In late 2024, the government stepped in to bail out the plant with EUR 405 million until 2027 so it can continue providing heating to the local community.

The project is a prime example of what happens when planning is based on vested interests instead of evidence and analysis.

Initial concerns around TEŠ6 by civil society groups like Focus centred around its climate impact, since it emits around 3.4 million tonnes of CO2 per year. Its promoters argued that the new unit would increase efficiency and reduce CO2 emissions, but failed to understand the speed of greenhouse gases reductions needed.

Between 2006, when the project was announced, and 2014, the the costs more than doubled (pdf) from around EUR 600 million to EUR 1.43 billion.

The reasons for this are numerous but include alleged fraud of EUR 284 million that benefitted lead equipment supplier Alstom.

Dubious economic assumptions

An analysis (pdf) carried out by consultants CE Delft in 2011 showed that the projected price of coal was unrealistic and that the project would be very sensitive to electricity prices.

Both of these issues have turned out to be serious problems.

One of the assumptions behind the project and conditions for the state guarantee for the first EIB loan was that the price of lignite from Velenje mine would not exceed 2.25 EUR/GJ in 2015 or 2.73 EUR/GJ in 2054. However, in 2015 the production price was already EUR 3.09 per GJ, while the sales price was lower and thus not sustainable. In 2022, the plant even supplemented domestic coal with lignite imported from Indonesia, due to difficulties in mining sufficient amounts.

One of the key arguments for construction of TEŠ6 was that it would enable long-term employment in the plant and nearby Velenje mine, and that the Šaleška Valley would otherwise face a social disaster.

However in October 2014, the management of TEŠ announced its plans to optimize the functioning of TEŠ: reorganization of the company led to half –  226 of the current 452 – employees being laid off.

The number of workers at the mine has also declined, from 2,465 in 2014 to 1,941 in 2023. 

TEŠ6 is a good example of what can happen when a project is pushed forward to satisfy narrow interests without adequate transparency, public participation or an examination of alternatives. Had the project been opened up to scrutiny at an earlier stage, the mistaken assumptions behind the project could have been discussed and serious mistakes avoided.

It also vividly illustrates the fact that lignite can no longer be considered cheap and shows that ignoring economic warning signs early on will most likely backfire later on.