Power Engineering - Caterpillar subsidiary makes first investment in Polish power sector

7 October 2003 - Caterpillar Inc. recently announced that its subsidiary, the global power plant developer Caterpillar Power Ventures, broke ground on a new environmentally friendly cogeneration power plant in the city of Starachowice, Poland. The plant will create a low emission alternative to Poland's traditional energy sector.

The new 37 MW facility will provide the Starachowice Special Economic Zone with both heat and electricity from Caterpillar natural gas-fired turbines manufactured by Caterpillar subsidiary Solar Turbines Inc. in San Diego, Calif. Engineering and construction of the site will be completed by Turbomach Industrial Energy Systems, based in Switzerland.

The plant will reduce emissions, stabilize district heating prices and provide lower electrical costs for industries located in the Special Economic Zone. The privately funded project represents a total investment of about $42m and follows the Polish Energy Law allowing private power projects to sell directly to a local distribution company. Financial details of the Caterpillar sale were not disclosed.

"We believe the Polish Energy Law provides a unique opportunity for Caterpillar's highly efficient power plants in the below 100 MW size range," said Terry Sears, Vice President of Caterpillar Power Ventures.

Unlike all earlier investments in the Polish power sector, which were based on long-term power purchase contracts with Polskie Sieci Elektroenergetyczne S.A., the Starachowice project will be the first commercial investment relying on a long-term power purchase agreement with the local electrical distribution company - Zaklad Energetyczny Okregu Radomsko Kieleckiego S.A. (ZEORK). Surplus electricity will be sold to ZEORK after meeting requirements of the Special Economic Zone. Starachowice, Poland has a population of nearly 56,000 and is located about 150 km from the Polish capital of Warsaw.

Caterpillar Power Venture's initial investment in the Polish power market comes as Poland seeks to meet the stricter emissions standards of the European Union. By using natural gas fuel, combined with Caterpillar's advanced technology, the new plant will operate at an efficiency rate of greater than 70-percent, which is better than required by both the European Union and Polish regulations for cogeneration plants.

"Caterpillar's initial investment in Poland's energy sector won't be its last," according to Sears. "Caterpillar Power Ventures is actively developing other major projects in Poland."
Construction of the new cogeneration plant commenced with groundbreaking ceremonies in late August 2003. It is scheduled to become operational in the fourth quarter of 2004.

Caterpillar Power Ventures is a subsidiary of Caterpillar Inc. and is part of the Caterpillar Financial Products Division. Caterpillar Power Ventures develops, owns and operates electrical power plants powered by Caterpillar engines and Solar gas turbines in locations around the world, typically ranging in size from 15 megawatts to 100 megawatts. Other recent projects include delivery of a 100 megawatt power plant in the Dominican Republic and a soon-to-be-completed 35 megawatt facility in Tunisia.

For more than 75 years, Caterpillar Inc. has been building the world's infrastructure and, in partnership with its worldwide dealer network, is driving positive and sustainable change in every continent. With 2002 sales and revenues of $20.15 billion, Caterpillar is a technology leader and the world's leading manufacturer of construction and mining equipment, clean diesel and natural gas engines and industrial gas turbines.

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