VA Tech Hydro's $70 Million Turbine Order Sees All Systems Go for Alcoa's Iceland Smelter - At Last

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Landsvirkjun, Iceland's national utility company, has awarded the $70 million supply contract for turbines, generators, and electrical equipment for the Karahnjukar power plant in Iceland to VA Tech Hydro (Vienna, Austria). The plant is designed to supply power to the Alcoa (NYSE:AA) (Pittsburgh, Pennsylvania) aluminum smelter (PEC 80200019) to be built at Fjardaal in east Iceland.

The $1.1 billion smelter is scheduled for operation in 2007 represents the largest single investment ever made in Iceland. After a long running battle with environmentalists (See related archived IIR Industry Alert: Iceland Attracts Aluminum/Power Interests and Looks Beyond Clean Thermal/Hydro Power To The Hydrogen Economy, during which Norsk Hydro (NYSE:NHY) (Oslo, Norway), withdrew from the project, Alcoa finally won government approval for the project plans in March 2003. The company claims that the plant will be the most environmentally friendly aluminum smelter ever built. It will include online disposal of spent pot linings, possible zero water discharge, and carbon anodes will not be manufactured on site reducing emissions of SO2, NOx, and hydrocarbons. It will comply with all environmental quality standards for implementation 2005 to 2010.

In September this year, Bechtel Group (San Francisco, California) signed an agreement to construct the 320,000 tons per year aluminum smelter with a planned completion date in 2007. Construction is scheduled to begin in 2005. The new plant will generate 750 jobs, of which 450 will be plant dependent.

VA Tech Hydro will supply six 130 MW high-head Francis turbines and six synchronous generators. The plant will have an installed capacity of 780 MW and a harnessed flow rate of 160 cubic meters per second. Annual electricity generation is rated at 4,450 GWh, enough to provide energy for one million households (or one aluminum smelter). The contract is for design, manufacturing, testing, delivery, erection, and commissioning of the six generating units and all accessories. Site installation will start at the beginning of 2005 and the first unit will start operation in April 2007.

The development of the power station entails the harnessing of two glacial rivers. Tunnels from two reservoirs combine the rivers in a single tunnel to the Teigsjbjarg escarpment where the water drops down steep penstocks to an underground powerhouse and through the generators, into a tailrace and along a canal back into a glacial river.

VA Tech Hydro is a world player in the hydropower market and also supplies turnkey combined cycle (40 to 800 MW) turbo generators and automation, control and protection. In the combined cycle market, the company offers power/heat coupled generation facilities with system solutions specifically tailored to operator requirements. They offer a high fuel utilization factor of more than 80 percent, about twice the efficiency of electricity only generation plants.