Israel Electric Corporation (IEC) (TASE: ELEC.B22) has shut down its Haifa power plant, after investing NIS 140 million to convert it to natural gas two years ago. If the plant does not operate using gas in the future, the investment will be written off.
The Haifa C Power Plant, built in 1967, is one of the country's oldest power plants. It has two 141-megawatt units, which used crude oil. IEC decided to convert the power station to cleaner and cheaper natural gas, similar to the upgrade carried out at the Reading Power Plant in Tel Aviv. The conversion, at a cost of €25 million (NIS 140 million) was completed two years ago, ongoing delays in building the national natural gas power line to the Haifa Bay area has meant that the power plant cannot operate.
IEC has therefore decided to take the Haifa C Power Plant off line, and keep it as an emergency reserve to handle periods of peak demand.
The power plant's employees oppose the measure. Last month, they broke into the office of IEC deputy CEO in effort to block the shutdown. A compromise was reached, under which the employees will be transferred to other power plants, leaving only a skeleton staff at the Haifa power plant.
Meanwhile, IEC has built two large gas-powered turbines adjacent to the Haifa C Power Plant as part of the company's emergency plan. These turbines are slated to gradually come online between March and May 2011.
Sources at IEC said that when these turbines come online, there will be no need for the obsolete Haifa C Power Plant when the Haifa Bay area is finally linked to the natural gas pipeline, and the power plant will be closed down completely.
IEC said in response, "As part of IEC's environmental quality and fuel mix policies, all crude oil power plants have been converted to natural gas. The same is true for the Haifa power plant."
Published by Globes [online], Israel business news - www.globes-online.com - on January 11, 2010
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