Financing Options for Rehabilitation of Thermal Power Plant ‘Kosovo B’

The plant's current operational reliability, efficiency, and output have been enhanced through investments of over €56m in the past few years. However, to continue operations until 2030 or 2040, major rehabilitation with significant new investment requirements is necessary, including bringing the plant up to current EU environmental standards. The 2013 Vattenfall study concluded that Kosovo B is the most important and cost-effective option for increasing security of supply in Kosovo in the near to mid-term. Although some assumptions made in the study have been overtaken by events, the overall conclusion remains valid. The electricity supply and demand balance have been analyzed over the period up to 2030 under various scenarios to identify the years of maximum exposure to supply insecurity. The analysis shows that Kosovo B's rehabilitation should remain a key element of the Government's short to medium term energy strategy. The main findings from the simple stress test indicate that Kosovo B's rehabilitation is necessary to ensure the plant's continued operation until 2030 or 2040. The scenarios analyzed include Kosovo A running until 2022, the New Kosovo Power Plant (NKPP) coming online in 2023 with a capacity of +500MW, and Kosovo B undergoing rehabilitation in 2018 or 2019. The rehabilitation of Kosovo B is critical to ensure the plant's continued operation and to meet the country's electricity demand. The plant's current age and condition make it possible that it will suffer a major failure in the short term, and European legislation will not allow Kosovo A to continue its present operating regime. The full scenarios are described and compared in Appendix 1 to this report. The main drivers for the Government of Kosovo to rehabilitate Kosovo B include the need to increase security of supply, meet EU environmental standards, and ensure the plant's continued operation until 2030 or 2040. The challenges facing the Government include the need to secure funding for the rehabilitation, ensure the plant's compliance with EU environmental standards, and manage the risks associated with the project. The financing options for the rehabilitation of Kosovo B include project financing, corporate financing, and a combination of both. The project financing option involves securing funding from a single lender or a group of lenders, while the corporate financing option involves securing funding from a company or a group of companies. The combination of both options involves securing funding from a combination of lenders and companies. The comparison of the financing options shows that project financing is the most suitable option for the rehabilitation of Kosovo B. This option involves securing funding from a single lender or a group of lenders, which can provide a stable and predictable source of funding. The corporate financing option involves securing funding from a company or a group of companies, which can provide a flexible and adaptable source of funding. The timelines for the rehabilitation of Kosovo B are critical to ensure the plant's continued operation and to meet the country's electricity demand. The main timelines include the completion of the feasibility study, the securing of funding, and the commencement of the rehabilitation works. The completion of the feasibility study is expected to take 6-9 months, while the securing of funding is expected to take 12-18 months. The commencement of the rehabilitation works is expected to take place in 2018 or 2019. The conclusions and recommendations of this report are that the rehabilitation of Kosovo B is necessary to ensure the plant's continued operation until 2030 or 2040. The main recommendations include securing funding for the rehabilitation, ensuring the plant's compliance with EU environmental standards, and managing the risks associated with the project. The report also recommends that the Government of Kosovo should consider the project financing option as the most suitable option for the rehabilitation of Kosovo B.