UK-based independent generating company International Power plc, announced today a second agreement with Italian power producer, Ansaldo Energia, to co-develop up to 4000 MW of new combined cycle gas turbine (CCGT) power plants in southern Italy.
Under the agreement, International Power and Ansaldo Energia will together develop five greenfield sites of 800 MW each. Three are located near Naples and two in Calabria.
This agreement complements an agreement signed by the two companies last month to co-develop greenfield CCGT sites in northern Italy with a total potential of 3,200 MW.
Under both agreements, the proposed project locations have several inherent advantages, according to the press release issued by International Power. These advantages include substantial support from the local communities, good access to gas supply facilities and relatively easy access to Italy’s electric grid. In addition, the proposed sites are in areas with strong electric demand growth and increasingly constrained installed generating capacity.
“As we look at Italy’s ageing fleet of oil-fired power plants and relatively high electric demand growth and wholesale prices, we expect our new CCGTs to create significant economic benefits throughout the country,” said Peter Giller, International Power’s Chief Executive Officer. “We look forward to helping Italy meet its future electricity needs,” he added.
EU directives have required Italy to open up its electricity market. The state-owned utility ENEL was floated in 1999 and spun off into three separate generating companies, totalling 15000 MW of generation capacity. Eurogen, the largest company is based in Rome and Milan with the second largest, Elettrogen being based in Rome and Piacenza. The third and smallest company, Interpower, is based in Rome and Naples.
As a result of this deregulation and the introduction of competition, there has been considerable worldwide interest in participating in the Italian electricity market. Involvement by international energy companies has been either by way of participation in new plant development such as that announced by International Power today or, by seeking to enter the Italian market through acquisitions.
In mid-March of this year, US energy company AES Corporation announced its first entry into the Italian market. This was the purchase of an oil-fired cogeneration facility in Sardinia. The acquisition marked the beginning of a strategy by AES to participate in the deregulating Italian market and to build a larger presence in the country.
The three Italian generating companies are in the process of being sold. The sale of the first of these, Elettrogen, had attracted bids from seven companies by the February 9 2001 deadline. Spanish, German and US companies submitted bids and the outcome of the bidding process is awaited. The bidders are: Endesa of Spain; the Energia Italiana consortium, comprising Mirant and Verbund; the Merloni consortium, comprising Foster Wheeler, EnBW and a number of Italian municipal utilities; Edison and Sondel; Italpower � a group led by AEM and Atel; a consortium of Italian refiner ERG and Edison Mission Energy; and a joint venture of Electrabel and ENI.
The remaining two generating companies are expected to be sold later this year.