RWE to Build Gas-Fired Power Plant in Turkey

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--German energy giant RWE AG (OTC:RWEOY) (Essen, Germany) has been given the green light to build a 775-megawatt (MW) gas-fired power station in the Denizli province of western Turkey.

The project, which is expected to cost 500 million euros ($653 million), is being built with 30% joint venture partner Turcas Elektrim (Istanbul, Turkey), a subsidiary of Turcas Petrol AS (IST:TRCAS) (Istanbul). RWE has confirmed the intent to forge ahead with the project as planned. Construction on the new combined-cycle gas turbine plant (CCGT) plant is scheduled to start this year. The plant will be commissioned by the end of 2012.

Last November, the partners awarded construction and power-plant building company Metka SA (ATH:METKK) (Neo Iraklio, Greece) the turnkey engineering, procurement and construction (EPC) contract to build the plant. Siemens AG (NYSE:SI) (Munich, Germany) has been chosen to supply most of the major units, and the plant will be based on Siemens' SGT5-4000F gas-turbine technology. For additional information, see November 3, 2010, article - RWE and Turcas Award $667 Million EPC Contract to Metka.

"Our state-of-the-art CCGT power station will have an efficiency rate of more than 55%," said RWE's Chief Strategy Officer, Dr. Leonhard Birnbaum, "and we will be thus making a vital contribution to sustainable and secure power supply in Turkey. The Turkish market is an attractive growth area of major strategic significance to our group. We intend to expand our business activities in Turkey on a step-by-step basis and will also engage in further energy projects to participate in the growth opportunities of this market."

RWE bought its share of the Turkish gas-fired project from rival German power company E.ON AG (OTC:EONGY) (Dusseldorf, Germany), which decided to cut its investment in the Turkish power market last year after to the economic downturn began. RWE holds a 70% of the Turcas Elektrim venture. RWE has also agreed to take a 70% stake in a Turkish coal-fired plant that is in the preliminary planning stages.

RWE has other interests in Turkey, particularly its role as a key partner in the Nabucco gas pipeline project, which is a 3,300-kilometre pipeline designed to transport gas from the Caspian Sea and the Middle East to European countries, while reducing the region's reliance on Russian gas exports.

Although power demand in Turkey fell slightly in recent years because of the downturn, demand is expected to grow steadily in the coming years. According to the country's Ministry of Energy and Natural Resources, Turkey will have to boost its current power generation capacity of 40,000 MW to 80,000 MW by 2020 in order to meet increased demand.

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