Sostanj lignite thermal power plant unit 6, Slovenia
In 2016 a new 600 MW unit at the Šoštanj lignite power plant (TEŠ6) started commercial operations. It has turned out to be a financial disaster. Slovenia’s official coal exit date is 2033, but the plant will likely close much earlier.
Source: www.focus.si
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Key facts
Loans from the European Investment Bank (EUR 550 million) and the European Bank for Reconstruction and Development (EUR 100 million) added up to more than 50% of the overall costs of the investment.
In 2013, a senior EIB source described TEŠ6 as “one of those projects that tends to haunt you”.
Background
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.
High carbon lock-in
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.
Doubling of initial costs
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.
Corruption charges
In a report from February 2012, the Slovenian Commission for the Prevention of Corruption issued serious warnings that:
the project [TES 6] is designed and implemented in a non-transparent manner, lacks supervision and is burdened with political and lobbying influences, and as a result there has been [and still is] a high risk of corruption and conflict of interest.
After a lengthy investigation, in October 2014 ten people were charged with fraud in relation to the project.
Read more:
The dirty French-Slovenian connection
Press release | February 23, 2012
EBRD freezes loan disbursements in Alstom’s coal project over corruption allegations. NGOs call on the EIB to follow suit
Press release | April 18, 2012

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.
Unrealistic claims about employment
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.
Lessons to be learnt
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.
Latest news
Poročilo CE Delft znižuje notranjo stopnjo donosa Teš 6
Bankwatch in the media | 28 November, 2011Neutemeljene predpostavke omogočajo večanje tveganj in če se ta uresničijo, lahko stopnja pade celo na 5,12 odstotka, je danes ob predstavitvi metodoloških napak investicijskega programa Teša 6 dejal Geert Warringa iz CE Delft.
Read moreIndependent analysis questions economic viability of TES 6
Press release | 28 November, 2011Ljubljana – An independent analysis commissioned by Bankwatch and Focus published today reveals a number of unsubstantiated claims and methodological mistakes in the investment plan for the TEŠ 6 lignite plant in Slovenia. Correct calculations show that the internal rate of return is in reality lower than estimated by the project promoter, state-owned TEŠ. Had the rate of return been calculated properly, the project would not have qualified for the EIB loan of 440 million euros it is set to receive.
Read moreProtest proti Teš 6
Bankwatch in the media | 20 October, 2011http://tvslo.si/predvajaj/dnevnik/ava2.118804865/#ava2.118804218;;
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