State to help TPP Sostanj

The financial situation of thermal power plant Sostanj has worsened to the point where it faces bankruptcy in 2025 unless the state intervenes. The relevant Ministry aims to address the situation through an emergency law that would secure public service for heat energy supply. State action is necessary because its operator HSE can no longer finance the plant due to EU regulations.

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According to unofficial information, the thermal division of HSE, which includes TPP Sostanj and the Velenje coalmine, is expected to operate at a loss of between 150 and 200 million euros next year. Overall, the division is projected to have a negative EBITDA of 125 million euros and a negative cash flow of 195 million euros. Since TPP Sostanj is the sole provider of heating energy in the Saleska Valley, its bankruptcy would pose an unacceptable risk to over 35,000 residents, as well as the economy.

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The temporary solution proposed by the Ministry of Energy involves limiting the operations of the plant to heating only. This would establish a public service for thermal energy supply that must be directly connected to HSE’s thermal division. The solution must also comply with EU state aid rules.

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Under this scenario, TPP Sostanj and the Velenje coalmine would be separated from HSE and directly managed by the Slovenian State Holding (SDH). The estimated annual cost to the state for maintaining the plant and the coalmine is around 150 million euros.

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According to unofficial sources, the revised operating regime would not end market activities but would significantly limit them. The Ministry intends to find the maximum or optimal balance for the new operating regime.

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The measure would remain in place until an alternative heating system is established, and all principles of a just transition must be respected. To prevent the burden from falling on the valley's residents or taxpayers, Minister Kumer pledged to do everything possible to ensure that the profits of energy companies are primarily used for this purpose.

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Kumer met today with the mayors of ?o?tanj and Velenje, as well as other stakeholders, including HSE management, SDH representatives, and trade unions. He expects to finalize solutions with their cooperation in a few weeks, and the public will be informed of any progress.

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Without state intervention, about 2,500 workers would be left jobless overnight, and the state would still owe 286 million euros to the European Investment Bank. The emergency law will buy time until two laws determining the future of the region are passed, namely the regional restructuring law and the law on the gradual closure of the Velenje coalmine.

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HSE has also warned that state action is essential because, due to EU state aid regulations, TPP Sostanj will no longer be able to receive financial support after 2025. Without an adequate solution, TPP Sostanj will become insolvent in 2025, and consequently, the Velenje coalmine as well, since the plant is its sole customer.

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Starting in 2025, HSE will have limited authority and options for financing the continued operation of TPP Sostanj and the Velenje coalmine. After that date, conditions for the previous financing methods, such as paying the market price for electricity combined with periodic recapitalizations or covering the cost-plus price of electricity, will no longer be met. From that point on, HSE will have to pay TPP Sostanj the market price for electricity only, and any other form of financing for the thermal division could violate EU state aid rules.

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