Lack of planning to cost taxpayers €46 million in new leased power plant

Taxpayers will have to pay at least €46 million over the next two years to lease a small power plant to compensate for the lack of planning and oversight from the government and Energy Minister Miriam Dalli regarding power generation.

The amount results from the estimated value of the tender issued. Yet indications are the emergency measures may still be insufficient to avoid another crisis this summer as the island might not have enough power to feed its grid if the interconnector flips, as has happened in 2022.

In a rushed decision before this summer’s expected peak in demand, Enemalta has issued a tender to lease a temporary 60 MW (megawatt) diesel-powered power plant.

According to the still unassigned tender, the temporary power plant will be based in Delimara and available on standby for 27 months.

It will be used only in the case of an emergency until the second interconnector with Sicily, currently in the initial construction phase, is online by the end of 2026.

The leased power plant will be used only when all the other local generating capacity has been exhausted.

Despite years of the Labour Party criticising the Nationalist Party over using polluting fuel to fire power plants, the new leased plant to be procured by Enemalta will be fired exclusively by diesel, one of the most pollutant fossil fuels.

The €46 million payment will only cover the leasing of the plant. It does not include the cost of the diesel, as Enemalta will be supplying the fuel for free but at an extra cost to taxpayers.

Energy experts told The Shift that the type of power plant to be leased by Enemalta uses hundreds of tons of diesel each time it is fired up, making the cost of the power produced significantly higher.

Earlier this week, Enemalta’s new chairman, Ryan Fava, asked the Environment and Resources Authority (ERA) to waive the environmental permit needed for the plant, or else the state power distributor could not guarantee an adequate supply this summer.

Sources who spoke to The Shift said the commissioning of the plant was already late, expressing doubts about whether it would be ready by summer.

According to the tender documents, it will take at least 13 weeks to mount the new plant. This leaves little time to complete the tender process and set up the power plant before peak energy use in July and August.

After that phase, the 27-month lease period kicks in, with a possibility of another 12-month extension in case the interconnector is not ready, as planned, by the end of 2026.

In his letter to ERA, the new chairman, appointed by Prime Minister Robert Abela, overriding the energy minister’s choice following last summer’s grid failure.

While Dalli gave the impression that the power failure was the result of problems in the distribution network – again due to underinvestment – Fava told ERA that there was a power generation problem due to “unprecedented and sudden increases in demand”, which Enemalta and the government did not anticipate.

Malta’s power generation capacity currently stands at 550 MW, including the LNG plant owned by Electrogas, the former BWSC plant sold to the Chinese government, and a few old turbines owned by Enemalta.

At peak demand, Malta must rely solely on the 200 MW interconnector in place since 2012.

Malta’s peak demand reached 649 MW last July and is expected to increase further this summer due to increased tourism and a further surge in the population.

This means that if the interconnector fails, as happened in 2022, and is put out of service for months, Malta will not have enough energy to satisfy demand.