Key machinery required to run electricity through a second undersea interconnector is to be supplied and installed by a local firm, after its €20.3 million tender bid proved to be the cheapest.
AG Installations has been recommended as the supplier to install a shunt reactor on each side of the interconnector – in Magħtab and Ragusa, Sicily – as well as a 220kV/132kV transformer in Maghtab.
Shunt reactors will reduce the reactive power generated by the interconnector cable, improving its energy transmission efficiency. The transformer will step down the interconnector’s 220kV voltage to 132kV.
AG Installations is part of the AG Group, a local company that provides mechanical, electrical and plumbing services and which is run by founder Andrei Grech.
Its €20.3 million bid was one of two offers received for the tender. The other bid, made by Shining Star Infrastructure and Construction Ltd, came in at €24 million.
Tender evaluators were instructed to assess bids on the basis of cost/price effectiveness.
Interconnect Malta, the state-run entity that is overseeing the second interconnector project, has advised the Department of Contracts to award the contract to AG Installations. That is expected to be a formality, given that the deadline for other bidders to file objections to that recommendation ended on August 5.
The tender is the first of four related to the interconnector project to be adjudicated. The largest – to manufacture and install the submarine cable itself – has an estimated value of €185 million and is still open for bids. Another tender, valued at €12 million, is for the supply and installation of 220kV Switchgear, Fire Suppression System and Construction of Fire Walls at Ragusa and the Upgrade of Control System.
Further tenders related to the project will be published later this year, according to ICM’s website.
In a statement on Saturday announcing the tender award recommendation, ICM said that the Sicilian Regional Administration for the Environment had this week positively reviewed the project’s screening submission. That review will play a part in the Italian environment ministry’s authorisation of the project.
Plans to develop a second undersea interconnector linking Malta to the European energy grid were first unveiled in June 2021.
At the time, Energy Minister Miriam Dalli had said the project would cost €170 million and be completed by 2025.
That deadline now appears exceedingly unlikely to be met, given that tenders have are still being evaluated and Italian regulators have yet to greenlight the project. It is now projected to cost €300m, though €165m of that amount will be covered by EU ERDF Funding.
Analysis Malta’s energy needs indicates authorities must hurry to complete it, as the country’s energy supply will be stretched to breaking point by 2030 and overwhelmed by demand by 2035.
Minister Dalli said IC2 – as the project as been dubbed – “is central to the government’s energy vision”.
“The project will not only strengthen one of the sources in its energy mix but will also enable the country to improve its indigenous renewable energy supply. The project will allow Malta to move towards larger scale offshore RES as the interconnector can provide a buffer to counterbalance the intermittency of renewables,” she aid.
ICM divisional manager and engineer Joseph Vassallo said the company was pleased that reputable firms had bid for the tender.
Manufacturing shunt reactors and the transformer came with “long lead times”, he warned.
“The project is a complex one which involves a lot of planning and coordination between different providers given that at one time, there will be cable laying works ongoing both onshore in Malta and Italy, offshore works with detailed surveys and the laying of the subsea cable, works involving the overall control system and the installation of the transformer and reactors,” Vassallo said.