The Malta Independent 15 July 2020, Wednesday

Indepth: Interconnector damage leading to higher energy production cost - Enemalta CEO Jason Vella

INDEPTH online Sunday, 12 January 2020, 09:24 Last update: about 7 months ago

Enemalta has been incurring higher energy production costs as a result of damage to the Malta-Sicily interconnector, but there has so far not been any discussion on the possibility that energy prices could increase, the utility company's CEO said on Indepth.

Engineer Jason Vella was interviewed by The Malta Independent's Deputy Editor-in-Chief Neil Camilleri. He said one first has to wait for the outcome of the insurance claim that will be filed in relation to the interconnector incident, with the company expecting to recoup the repair expenses.

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Enemalta made a public announcement that the interconnector had been damaged by the anchor of a ship. What happened exactly, and what are the next steps forward to restore normality?

The damage occurred on 23 December. We experienced a blackout in the early hours of the morning and immediately realised there was some sort of damage to the Malta-Sicily interconnector. We began analysing the situation and, once it was confirmed that the interconnector had been damaged, we contacted a company called Nexans and ensured that a survey of the damage would get underway as soon as possible, so that we could determine the extent of the damage.

The survey ship's work was concluded on Wednesday, and the results show very clearly that the cable was damaged by the anchor of a ship.

Where exactly did the accident take place? Was it closer to Malta or Italy?

The damaged part of the interconnector is in international waters, closer to Italian territorial waters. We ensured that this part of the interconnector is being monitored so that no further damage takes place.

People have been asking who is to blame. We understand that there is some form of insurance which covers this type of damage, just like car insurance, but obviously on a larger scale. The expenses are also far greater.

Responsibility lies with the party that caused the damage. In these circumstances, through the arrangements Enemalta has with its insurance companies, we can see who can assume responsibility for what happened.

Naturally, the time that it will take to repair the interconnector depends on a number of factors, such as bad weather. But can you give us an indication? Are we talking weeks or months?

Now that we have determined the extent of the damage, we are identifying the resources needed to carry out the repairs. Because of the depth and positioning of the cable, there are few ships that can fix this kind of damage. Currently, we are in contact with four or five of these ships to see the earliest they can begin working on the interconnector.

Once we can determine that date, we can estimate the amount of work necessary. We need to bring the cable to the water's surface and properly analyse the damage. It will also take some weeks to return the cable back to the seabed and for it to start working normally again.

 

Currently, the interconnector is out of action and energy is being produced by other plants. What should consumers expect until the interconnector is fixed?

Basically, Malta has four sources that produce energy that is distributed by Enemalta. These are the interconnector, the D2B plant, the D3 plant, which is run by Shanghai Electric, and D4, which is run by Electrogas. We also produce energy via solar panels. This is how Enemalta works during normal operations - balancing between the different sources to provide energy to the consumer. Enemalta also has standby-energy plants.

Now that the interconnector is not available, we are dependent on the other energy plants, and we are also using the emergency energy plants. We have experienced a number of power cuts previously, which we call shedding. This means that the turbines shut down for some time to recreate the balance until more power generators kick in. So that is what is causing the short power outages.

Did you receive any forms of complaints and reports from the public? People say that power cuts cause damage to electrical equipment. Does this really happen?

This is not something we are experiencing for the first time. We have received complaints and compensation claims even following bad weather. I cannot say there have been many, in this case, but there have been a few, as is always the case. We look at the merit of each claim within a legal framework.

Part of the old Marsa power station is back in use. Many people believed the Marsa plant had been decommissioned for good. Enemalta also closed down part of the Delimara power station, which was old, but not as old as Marsa. Could you explain that?

One needs to take things into perspective when describing something as 'old', especially when it comes to machines providing energy. Yes, the Marsa power station, which ran on heavy fuel oil, was closed down, but in this particular zone we kept a turbine available. It runs on gas oil. We believe it was a good idea to keep this turbine on stand-by.

Enemalta wants to reduce the frequency of power interruptions due to shedding and we are ensuring that we always have enough spinning reserve, just in case anything happens.

So does this mean Enemalta is incurring higher costs for energy production? And will this result in higher consumer prices?

Yes, the cost of energy production has increased substantially as a result of this situation. But our primary aim is to provide energy for the country. So, if the circumstances require that we pay more to ensure a stable supply, we will do that.

There has so far not been any discussion on higher energy prices. We first have to see how the damage compensation claim will pan out.

 

The country's economic growth is leading to a greater demand in energy production. Do we need a second power station, or at least more energy production plants?

Yes, energy consumption is increasing at a faster rate than we were projecting. Last year, we saw demand increase by 4.6% over the previous year, and the most interesting statistic was the increase in demand for new services. We saw an increase of 19% in new services in Malta, so yes, the demand is increasing and will continue to do so.

The government has also released a tender for an analysis of how the energy generation system is expected to develop by 2025. I have to clarify that Enemalta's role is not to generate energy, but to distribute it. The energy production sector has been liberalised.

Over the past several weeks, the price of natural gas has plummeted. Do long-term hedging agreements create stability or advantages and disadvantages for consumers?

As I have already said, the role of Enemalta is to provide electricity; there was a contract, which reflects stability in prices. One may argue that it benefits certain businesses but, as always in life, there are advantages and disadvantages. The agreement we have today keeps prices stable.

We have seen two arguments when it comes to the interconnector: those who believe that the island is fully dependent on the cable, and others who say we did not need it. In reality, how dependent are we on the interconnector?

I believe that this country has an advantage today as energy production has been diversified. In 2019, a quarter of energy consumed came from the interconnector; the rest from other plants. With a number of different sources, the country is able to grow more.

What would be the better to increase energy production: a second interconnector or a new energy plant?

One first needs to determine what the increase in demand would be. There needs to be a balanced decision, both technically and financially. Today, there are also other available options, such as energy storage.

What projects is Enemalta working on?

We are working on a project to automate our substations, which would ensure that power is restored more quickly in the case of interruption. We are also upgrading our distribution network and upgrading two major distribution centres in Marsascala and Paceville.

We will also soon announce the new tariff for the charging of electric vehicles, which was a budget measure.

 


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