Valued at US$81M, the electro-mechanical contract calls for the supply of a Francis turbine with a rated capacity of 248MW and associated electrical equipment, including a 273MVA generator.

The Picote II plant adds to the existing Picote facility on the Douro river in the north of the country and will have an underground powerhouse. Construction work started in March and the new plant is to be commissioned late 2011. The 100m high Picote dam was built in 1958.

The contract was awarded by project developer Energias de Portugal (EDP), and is the first hydropower plant to be built as part of the country’s new national energy plan aimed at boosting its renewables assets.

The plan calls for the addition of 2GW of wind power by 2020 but at least matching additional capacity from hydro to assist with electricity grid stability, and the project are to be a mix of new plants plus rehabilitation and expansion of existing facilities.

The Picote I and II facilities as well as pumped storage plants are key components of the hydro asset build-up under the new plan. Another key project is the Bemposta II plant. The Bemposta dam was built in 1964.

In a separate development, EDP recently took on a 35-year contract to manage two hydro plants – 240MW Alqueva and 10MW Pedrogao. The strategic move will see EDP double the capacity of Alqueva by pumping, and also do nearly so at Pedrogao, contributing to its need for renewables investment and helping to offset carbon emissions from thermal parts of its asset base.

Under the terms of the deal, EDP will pay the owner of the dams, Empresa de Desenvolvimento e Infra-estruturas do Alqueva (EDIA), US$283M upfront with annual payments of more than US$18M. The deal also sees EDP invest US$226M on uprating the facilities.