RWE and Turcas Award $667 Million EPC Contract to Metka

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Researched by Industrial Info Resources (Sugar Land, Texas)--Power and energy company RWE AG (OTC:RWEOY) (Essen, Germany) and Turkish joint venture partner Turcas Guney Elektrim Uretim (Istanbul), a subsidiary company of Turcas Petrol AS (IST:TRCAS) (Istanbul), have signed an agreement under which the 70:30 partnership will construct a 775-megawatt (MW) combined-cycle gas turbine (CCGT) plant at Denizli in western Turkey. The partnership has awarded construction and power plant building company Metka SA (ATH:METKK) (Neo Iraklio, Greece) the $667 million turnkey engineering, procurement and construction (EPC) contract to develop the facility. Siemens AG (NYSE:SI) (Munich, Germany) will supply the project with some of the major units such as gas and steam turbines. The project will be based on Siemens' SGT5-4000F gas-turbine technology.

According to plans, construction will commence in 2010, and the plant will be commissioned in late 2012. The contract covers all the necessary details regarding construction, and RWE is expected to make a decision about the final investment in early 2010, when the building permit is granted. The project will be implemented in two phases. Phase I will focus on engineering and other activities related to obtaining the permit for construction, while Phase II will focus on the actual construction.

The new Denizli CCGT plant is expected to be more than 55% efficient and contribute significantly to Turkey's power security. According to Leonhard Birnbaum, chief strategic officer of RWE, the company hopes to participate in Turkey's growing power market and be a part of the nation's future power plans. RWE has had a presence in Turkey since 2008.

Turkey's power generation sector is largely constituted by thermal and hydropower sources with solar, wind, geothermal, and landfill sources accounting for about 1% of the country's installed capacity. The economic slowdown of 2008 reduced Turkey's demand for power, but this is not expected to last long. In a trend similar to that of most countries, Turkey is trying hard to meet the growing energy demands of its consumers, and to do so, the country must expand power generation capacity and modernize existing facilities. Rapid urbanization and a young and growing population is driving the demand for power.

According to Turkey's Ministry of Energy and Natural Resources, Turkey must increase the existing power generation capacity of 40,000 MW to 80,000 MW by 2020 in order to meet the expected growth in demand.

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