AES Adds 16MW Capacity in Turkey - Analyst Blog

The AES Corporation (AES) began commercial operations at the 16 megawatt (MW) Damlapinar hydro power facility in Turkey. This facility, located on the Goksu River in Karaman, Turkey, is owned and operated by AES-IC Ictas Energy (AES-IC), a joint venture. AES Corp. has a 51% stake in the joint venture.

 

The 16 MW Damlapinar facility includes two 8.2 MW Francis Turbines from Harbin Power Engineering, a Chinese manufacturer. The engineering, procurement and construction work at the facility was performed by IC Ictas Construction. This project increases AES’s small hydro capacity in Turkey to 42 MW. AES expects the total cost of the project to be roughly $65 million, of which $36 million was financed by a non-recourse seven-year term loan.

 

Damlapinar is the first of the two AES-IC cascading run-of-river facilities and includes a small dam with a storage capacity that will allow production planning for peak generation during key periods.

 

Going forward, the company expects to focus on its development in Turkey, given the rate of growth in electricity demand and the upcoming privatization of state-owned generation facilities.

 

AES expects to start commercial operations at two more hydro power facilities by year-end 2010 – the downstream 28 MW Kepezkaya facility, and the 18 MW Kumkoy small hydro project, located in Samsun.

 

The electricity generated by these renewable power projects will be sold into the wholesale market through day-ahead spot sales or to eligible customers through short-term contracts.

 

AES Corp. reported adjusted EPS of 23 cents in the second quarter of 2010, beating the Zacks Consensus Estimate of 21 cents but falling short of the year-ago EPS of 28 cents. On a GAAP basis, the company’s EPS dipped 60% year over year to 18 cents.

 

In 2010, AES Corp. expects EPS to be in the 80–85 cents range. The Zacks Consensus Estimates for fiscal 2010 and fiscal 2011 are 95 cents and $1.12, respectively.

 

AES Corporation is a global power company spread over 30 countries in five continents. The company owns and operates two businesses, Generation and Utilities. The company employs about 27,000 people and owns and manages nearly $40 billion in total assets.

 

We have a Zacks #3 Rank for the stock, which translates into a short-term Hold rating. Our long-term recommendation on the stock is also Neutral.