GE Power Systems has been awarded the largest ever contract for geothermal power generation equipment by Erga, the renewable energy company established in 1999 by Italy’s Enel group. The contract, which was announced yesterday, is valued at approximately $85 million. This represents about 30 per cent of Erga’s total investment in the eight-plant expansion project in Tuscany, Italy.

The equipment to be provided includes rotating machinery, steam turbines and centrifugal compressors. It will be supplied by Nuovo Pignone, the Florence-based energy supply company which GE Power Systems acquired in 1994.

Paolo Pietrogrande, Chief Executive Officer of Erga, said, “Our agreement with GE Power Systems is just the beginning of Erga’s $800 million investment plan, which aims to increase our renewable generating capacity in Italy by 40 per cent in the next five years. The growing demand for energy coupled with supply constraints and environmental concerns have contributed to the increasing global interest in green energy.”

Claudi Santiago, President and Chief Executive Officer of GE Power Systems Oil & Gas, said, “GE Power Systems has again set a new benchmark for our industry. This agreement with Erga underscores the strength of our technology and breadth of our portfolio of products and services for the energy industry. We are committed to working closely with Erga to ensure the timely completion of this project.”

The extension to the Tuscany geothermal plant is due for completion in 2002 and will provide approximately 220 MW of generating capacity.

Geothermal plants produce environmentally-friendly electricity by converting the water that is heated by magma in the earth’s crust into steam. The pressure of the steam powers the turbine that generates electricity. The plants then return the slightly cooled water to a subterranean reservoir for re-heating as a renewable resource.

Italy has limited domestic energy resources and is dependent on energy imports mostly from its neighbours, France and Switzerland. Domestic generation is mostly from thermal sources although the mix of thermal power is shifting away from oil and toward gas, and to a lesser extent toward coal. Non-hydro renewable electricity generation almost doubled in the 1990s with solar and geothermal projects, such as the Erga plant in Tuscany, accounting for most of the production. Italy has no operating nuclear power plants.

Erga is a fully owned subsidiary of Enel. It was established to manage the group’s renewable energy operations both in Italy and abroad. The company designs, constructs, operates and maintains power plants in the fields of geothermal, small-hydro, wind and photovoltaic electricity production.

GE Power Systems is one of the world’s largest suppliers of power generation technology, energy services and management systems with revenues of $15bn. The business has the largest installed base of power generation equipment in the global energy industry. GE Power Systems provides turnkey equipment, service and management solutions across the power generation, oil and gas, distributed power and energy rental industries.