GDF Suez Signs with South Africa for Two Peaker Power Plants Worth $1.02 Billion

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--GDF Suez (Paris, France) confirmed that it has signed 15-year power purchase agreements (PPAs) with South Africa's state-owned power utility Eskom (Johannesburg) for two open-cycle gas turbine (OCGT) peaker power plants with a combined output capacity of 1,005 megawatts (MW). The plants have a combined investment value of $1.02 billion.

The contract package awarded by the Department of Energy (DoE) covers the 335-MW Dedisa plant in the Eastern Cape Province and the 670-MW Avon plant in KwaZulu-Natal. Financial closure is imminent, and commercial operations are expected to begin in 2015 at Dedisa and 2016 at Avon.

An operations and maintenance company will be established by GDF Suez for the two plants. The turnkey engineering, procurement and construction (EPC) contractors on the project will be Italian firms Ansaldo Energia (Genoa) and Fata (Turin). The peak power projects have suffered delays in their final commitments.

The DoE terminated talks with the initial preferred bidder, a corporation led by AES Corporation (NYSE:AES) (Arlington, Virginia), in April 2008. The consortium led by GDF Suez was the only other respondent to the DoE's request for proposals.

The successful consortium comprises GDF Suez (38%), South Africa's Legend Power Solutions (27%); Mitsui (Tokyo, Japan) (25%), and the Peaker Trust (10%), which represents local economic empowerment and community interests. The consortium members have attracted funding from a number of local banks.

GDF Suez chairman and CEO Gerard Mestrallet said that the two plants demonstrated the company's ambitions in fast-growing markets. He noted that the group also was developing projects in South Africa and had recently signed a PPA agreement for West Coast One, a 94-MW wind project in the Western Cape. He also said that the group was moving ahead with plans for a 600-MW captive coal-fired plant in the Limpopo province.

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