GCC in $217bn power capacity expansion drive
Aug 31, 2008 - Karen Remo-Listana - Emirates
GCC countries are in a serious drive to
expand their power capacity and have already earmarked
$217 billion (Dh797bn) on power projects to date.
Majority of the new projects are in Saudi
Arabia, where power-starved mega projects are expected
to go on stream from this year up to 2012, according to
data from projects information specialist ProLeads.
Saudi Arabia, the world's largest producer
and exporter of oil, is shelling out $111bn on new power
generation and transmission projects to stem the growing
demand for electricity. Second to the pack is the UAE
with 58 projects valued at $55bn followed by Qatar, the
world's LNG capital with 12 projects valued at $21bn.
Kuwait's planned and ongoing projects stands at $14bn
while Oman and Bahrain's power projects are put at $10bn
and $5bn respectively.
The UAE power demand is among the largest
in the region due to financial and tourist projects as
well as a growing population. According to Global Insight,
UAE has added 24 per cent electricity-generating capacity
at an annual rate over the last 30 years.
Current total capacity for electricity production
is around 16.7 gigawatts (GW), but will need to increase
further considering the 10 per cent per year demand rise
expected through 2010.
Abu Dhabi's demand for electricity alone
will leapfrog from 5286 megawatts (MW) in 2007 to 12,817MW
in 2013; 17,469 in 2020 and 23,554 in 2030, Abu Dhabi
Water and Electricity Company (Adwec) – the single buyer
and seller of electricity and water in the UAE's capital
Its forecasts are based on a 6.7 per cent
per annum average growth for 2007 to 2030, which is lower
than the historic rate of 7.6 per cent in the period of
Adwea projects Abu Dhabi residents will
increase from 930,000 in 2007 to 1.3 million in 2013.
The agency further slates population to grow to 2m in
2020 and 3m in 2030.
And according to Keith Miller, Adwec's director
of planning and studies, Abu Dhabi will either have to
build a new plant or extend the lifespan of current ones.
He said Abu Dhabi can expect to suffer
a 774MW shortfall in power capacity by 2012. And without
any new plants being developed, the shortfall is expected
to reach 2,000MW just one year later.
Dubai's electricity demand, on the other
hand, is set to reach 5,400MW this year and will further
jump to 8,513MW and 16,000MW in 2011 and 2015, respectively.
Commercial entities consume about 43 per cent of Dubai's
power, residential uses 31 per cent, while industrial
and power stations consume 10 per cent each.
In Saudi Arabia, the combination of Saudi
Arabia's rapidly expanding population and industrial base
representing 60 per cent of demand, paired with artificially
low power tariffs, has increased the demand on electric
utilities, which is averaging five to seven per cent annual
At times, the increased load has lead to
shortages, blackouts and power rations in various parts
of the country, a recent report by US Department's Energy
Information Agency said. Saudi Arabia's Water and Electricity
Ministry estimates that the country will require at least
35GW of additional power generating capacity by 2023 to
2025 – more than double the 2005 estimate of installed
capacity of 30.5 GW – at a cost of an estimated $120bn.
In addition, Saudi Arabia's state-owned
Saline Water Conversion Corp has estimated that through
2020, the country will need to spend at least $50bn on
water projects, many integrated with new power generation
capacity, in order to meet the kingdom's equally rapidly
growing water demand. Most of this money is slated to
come from the private sector, including foreign investors.
According to the 2007 SEC annual report,
Saudi Arabia has added more than 2.3GW last year, including
expansions at the Shuaibah Power Plant and nearly 900
MW of gas fired turbines in Riyadh, Tehama and Jizan.
Some of the newest and largest facilities
include the $1.7bn, 2400-MW Ghazlan II plant north of
Dammam, the first power project to be debt-financed; its
sister plant, the1600-MW Ghazlan I; and the 2500-MW Qurayya
I and II.
Saudi Arabia's power sector – including
generation, transmission and distribution – has traditionally
been dominated by the partly state-owned Saudi Electricity
Company. However, in July 2002, the Supreme Economic Council
(SEC) passed a resolution setting out a framework for
private sector involvement in developing mega-scale integrated
Independent Water and Power Projects (IWPPs), and since
that time the sector has become increasingly liberalised.
In March 2004, Saudi Arabia announced their
plan to launch 10 IWPPs by 2016, at a total cost of around
$16bn although this is said to be increasing.
The SEC has already approved six such mega-projects.
The majority of the facilities will be in the Western
parts of the country, drawing from the Red Sea.
The combined production capacity of the
original four projects, which are under construction or
in the bidding phase, will produce more than 7000MW of
power and 600 million gallons of water daily. They will
boost the total desalination capacity of the kingdom by
80 per cent when the come online between 2009 and 2010.
Also proposed is a 60-MW Shuqaiq-3 extension.
Throughout the Kingdom, independent power
projects (IPPs), which are not integrated with desalinisation
facilities, are also being tendered by the SEC, primarily
to local contractors.
According to the SEC, about 8000MW of new
capacity is currently under construction, 5200 MW of which
are IPPs. The SEC is calling for 10 per cent of power
generation to come from IPPs in the next decade. Three
SEC-led IPPs are currently being planned include Rabigh
(1200MW, online 2012 or 2013), Riyadh-P11 (2000MW, 2013
or 2014) and Al-Qurayyah (2000MW, 2014 or 2015). The facilities
will be built on a Build-Own-Operate basis, and the SEC
will be a partner.
In addition, several large- scale electricity
IPPs are still in the planning phases, including 1,725-MW
expansions at Muzahimiyah, Shubuk and Riyadh.
Separately, Saudi Aramco is building a series
of co-generation plants at oil and gas installations throughout
the country in order to reduce drain of the energy sector
on the national grid. For example, as part of the Khursaniya
and Shaybah mega-projects, two cogeneration units with
a combined capacity of 300 MW were installed. Also, a
380-MW plant is being constructed at Rabigh that will
power the adjacent Sumitomo/Aramco petrochemical complex.
Besides generation, Saudi Arabia also requires
additional investment in power transmission. At present
around 10 per cent of the kingdom's population lacks access
to the national power grid. Aramco estimates that creating
a unified national grid may require laying more than 20,000
miles of additional power transmission and distribution
lines on top of the existing 150,000 miles of lines.
Similarly, Qatar is restructuring its power
sector and encouraging foreign investment to expand electricity
generating capacity. Electricity generation shortfalls
led the Qatari government to encourage greater foreign
investment through IPPs and to begin restructuring of
the country's power sector.
The government has considered plans to privatise
transmission and distribution functions, but Qatari nationals
currently receive free electricity and water supplies,
which poses a significant barrier to complete privatisation.
Kuwait on the other hand has already suffered
from a lack of power plant capacity, resulting in power
cuts during summer months last year. It was further pressured
by its creaking political system as the energy minister
bore the brunt of disgruntled voters' anger when summer
temperatures hit as high as 55 degrees and air-conditioning
16.7GW: Current total capacity for electricity
production needs to increase further considering the 10
per cent per year demand rise expected through 2010
23,554 MW: Abu Dhabi's demand for electricity,
which was 5,286MW in 2007, will leapfrog by 2030