Ignitis Group, an energy company based in Lithuania, has announced its final investment decision to expand the Kruonis Pumped Storage Hydroelectric Power Plant (PSHP). The company plans to invest around €150m to install a fifth unit with a 110MW capacity, thereby expanding the facility that currently has four units with 225MW each. German hydropower specialist Voigt Group has been awarded the contract for deploying the fifth unit, and the project is expected to be completed by the end of 2026.
According to Ignitis, the new unit will have a wider range in generation mode, starting from 0MW instead of 44MW, and in pump mode, it will be able to draw as low as 59MW, while the previously planned unit had a minimum threshold of 77MW. The wider operational range of the new unit is particularly relevant in the context of the rapid development of renewable energy sources as the demand for balancing services is growing. The Kruonis PSHP's fifth unit will significantly contribute to the energy independence of the region, help ensure the development of renewable energy sources, and the reliability of the energy system.
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The Kruonis PSHP currently has four units with a combined capacity of 900MW, and the new 110MW unit will increase the facility's total capacity to 1,010MW. Ignitis will receive returns on the new fifth unit at Kruonis PSHP in a range of high single-digit to low double-digit on a levered equity basis.
In addition, Ignitis has approved a contract with German energy and infrastructure engineering company Fichtner for FIDIC engineering and maintenance services. The Commission for Coordination of Protection of Objects of Importance to Ensuring National Security has screened and concluded that the companies that won the contracts and the planned transactions are in the best interests of national security.
Earlier this month, Ignitis signed an agreement to procure a €100m credit facility from Citibank London Branch to manage its working capital needs. The expansion of the Kruonis PSHP is an important milestone for Ignitis in achieving its renewable energy goals and strengthening the energy independence of the region.
