UPM's Kaukas Mill in Lappeenranta to Build New Joint Power Plant

Helsinki, Finland, 08 May 2007 -- UPM, Pohjolan Voima, and Lappeenrannan Energia owned by the town of Lappeenranta have agreed to build a joint power plant at UPM's Kaukas mill site in Lappeenranta, Finland. The total value of the investment is EUR 244 million. The plant will start-up in spring 2010.

The plant will generate process heat as well as electricity for UPM's Kaukas mills, and electricity and district heating for Lappeenrannan Energia Oy. Its heat power is equivalent of 385 MWTH. The plant's energy sources are bark and forest energy (i.e. logging residues, stumps, small wood from thinnings, and peat).

"The new power plant will improve the security of energy supply to our Kaukas mills. It is also the latest example of UPM's long term strategy to utilize biofuels in energy production. The new power plant is able to utilize efficiently all site derived biomass based side products," explains Anja Silvennoinen, UPM's senior vice president, Energy.

The project will be carried out by a separate company, Kaukaan Voima Oy, which is owned by Pohjolan Voima Oy (54%) and Lappeenrannan Energia Oy (46%). UPM has a 42% ownership in Pohjolan Voima.

"Pohjolan Voima has built several big bioenergy power plants, and we have recognised that acting together with Pohjolan Voima in joint power plant projects has been beneficial for all parties," says Silvennoinen. "The latest example is Rauman Voima power plant, which produces energy both for UPM's Rauma mills and the town of Rauma. The same model we have used also in Kuusankoski, Ristiina, Savonlinna, and Pietarsaari."

The new power plant will replace the 30-year-old steam power unit of Kaukas mills and majority of the energy generation capacity of Lappeenrannan Lämpövoima Oy's 30-year-old Mertaniemi power plant.

"The new joint power plant secures district heat supply for Lappeenranta citizens. The old Mertaniemi natural gas power plant will remain as a back-up capacity to balance load peaks," said Reijo Kolehmainen, managing director of Lappeenrannan Energia Oy on the importance of the new power plant.