New Spanish combined cycle leverages pay-offs in capacity market

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Iren S.p.A., through its subsidiary Iren Energia S.p.A., has signed a contract with Ansaldo Energia for a new combined cycle. With an investment of €180 million, the combined cycle will boost installed capacity at the Turbigo site, from 850 MW to around 1,280 MW. The expansion of the capacity for 430 MW has paid off in the capacity market, according to Ansaldo. These comes from a total of approximately 105 million euros, distributed over 15 years starting from 2022 (around 7 million euros / year), for the new gas turbine section, as "new authorized capacity". A total of approximately 12 million euros, about 6 million euros per year for the years 2022 and 2023, relating to the existing steamturbine as an "existing capacity", but not used today, which will be reactivated thanks to repowering. These pay-offs for participation in the capacity market are in addition to the margins associated with the sale of electricity (MGP) and ancillary services (MSD).

The new combined cycle, with a 57% yield, will achieve the first parallel by 31/03/2022, whereas the test exercises and inspection will be completed by 30/06/2022. Based on an EPC contract, Ansaldo Energia will manage the executive design phase, the supply of the gas turbine, generators and set-up transformers, heat recovery vapour generator, the implementation of the civil works, the assembly and supply of ancillary electrical and mechanical installations.

Iren will integrate the project with the existing plant to obtain maximum overall production flexibility, the upgrading of certain components on the current production plant, operational since 2008, so as to further improve performance and the renewal of the concessions with the national electricity network.

“The repowering of the Turbigo station - said Massimiliano Bianco, Chief Executive Officer of Iren - represents a significant upside in relation to the assumptions in the most recent business plan, which we decided to implement after the pricing signals from the first Capacity Market auctions. Prices were positioned at highs both in terms of existing capacity and the new capacity, highlighting the important role of gas power stations with high levels of flexibility, which operating on a supplementary basis to renewable sources, are essential to supporting system adequacy. With this project, Iren and Ansaldo Energia are consolidating their collaboration in the energy sector, and more specifically, in managing the turbogas fleet.”

“By signing this contract, Ansaldo Energia further consolidates its leading role in Italy’s energy transition and confirms our sound decision to increasingly centralise the production plant in Genoa – commented Giuseppe Marino, Chief Executive Officer of Ansaldo Energia –since November last year, the order backlog has increased by over 600 million euro, confirming technological leadership of Ansaldo Energia and its service capacity for the maintenance and assistance to its customers”.