Bahrain: Fighting fit

Bahrain knows it needs to ‘punch above its weight’ if it is to remain a hub for business in an increasingly competitive Gulf region, and that its power and water supply will have to be up to the task.

The small Kingdom of Bahrain in the Arabian Gulf has been a pioneering nation in its history, first with its pearl fishing industry, followed by its early development of oil resources and then its diversification into financial services.

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However, as a regional force it now faces challenges greater than ever from the likes of Dubai, Abu Dhabi, Qatar and near neighbour Saudi Arabia. Bahrain has therefore embarked upon its own ambitious programme of development ” a programme that will, as a consequence, draw ever more power from the electricity grid and potable water from the water network. Meeting this demand is the task of Bahrain’s Electricity and Water Authority ” an organization still not yet 12 months old but keen to meet the challenge.

In January 2008 a handover of responsibility took place which saw the newly created Electricity and Water Authority (EWA) assume much of the role previously undertaken by the Ministry of Electricity and Water. The more streamlined organization operates on more corporate lines, with a CEO responsible for the operations, instead of the undersecretary in the ministry. Ultimately, the Bahrain’s EWA is the responsibility of the Minister of Works, HE Fahmi bin Ali Al-Jowder, a young and able cabinet member who has shown himself well up to the task. The EWA is responsible for planning and programmes of works and for managing the annual budget and financial affairs.

Despite being the region’s smallest oil producer by volume, Bahrain has still benefited from recent high oil prices, helping it build a major new financial harbour development and several major land reclamation projects ” in the last 26 years the Kingdom’s surface area has grown by more than 11 per cent. The Khalifa bin Salman Port, already the second-largest deepwater port in the Gulf, will be developed in conjunction with the Bahrain Logistics Zone to become one of the region’s largest shipping and transport hubs.

Phenomenal demand

All these commercial developments and the associated residential housing growth has meant expansion and strengthening to the power grid network and the scheduling of new installed capacity and desalination capabilities. Consumption of electricity is already three times more than the international average as a result of the climate and the billions of dollars worth of development in the country. Speaking at a recent GCC power industry conference, minister Al-Jowder said, “The demand for electricity is growing at a phenomenal rate that will soon exceed the international average growth, which will make Bahrain one of the strongest energy generating markets in the world.” He forecast that the Gulf’s demand for energy would be in the region of 7 to 10 per cent per annum for the next ten years, while international demand is expected to grow by three per cent.

A major strategy of the Bahrain government is to encourage investment in the Kingdom and the EWA is well aware of its important role in ensuring timely supplies of electricity and water. The EWA has to provide these services at the lowest possible cost while adhering to agreed standards and specifications. In order to achieve this, Bahrain has embraced privatization in its power and water sector, offering developers the opportunity to build independent power plants (IPPs) or independent power and water plants (IWPPs), which contract with the EWA for fuel gas and power supplies.

This strategy has led to the successful development of the Al Hidd and Al Ezzel plants, which between them account for 60 per cent of Bahrain’s power supply in the peak summer months.

Bahrain’s foray into private investment in the energy and water sectors began in 2004, since when it has successfully created an environment to attract the private sector to invest and operate in the sector. The first IPP license was granted in July 2004 to construct the Al Ezzel power plant.

The Kingdom’s electricity requirements are currently met by five power plants in total, with a combined installed capacity of 2767 MW (see Table 1). Peak demand in 2007 rose to around 2180 MW ” a 12.5 per cent increase on the preceding year. Over the last ten years Bahrain has had to cope with a doubling of the level of peak demand for electricity and an annual average growth of 11.5 per cent in total energy demand over the past five years. The EWA’s forecast for future demand growth to 2020 see peak demand rising to 4803 MW, which means planning for a further doubling of the power supply system.

Existing facilities

Al Ezzel is Bahrain’s first independent power station, which began commercial operation in April 2006. The plant is owned and operated by the Al Ezzel Power Company, a joint venture by Suez Energy International, Gulf Investment Corporation and the Pension Fund Commission of the Kingdom of Bahrain. The plant consists of two 475 MW combined-cycle units, two heat recovery steam generators with supplementary firing and one condensing steam turbine with seawater cooling.

The Al Hidd power and water plant was Bahrain’s second IWPP and was sold to a Suez Energy, International Power and Sumitomo consortium in January 2006. It is located alongside Al Ezzel and has a capacity of 675 MW and 409 million litres water/day. It consists of two gas fired combined cycle units plus a desalination plant. The most recent development phase involved the addition of the large MED desalination plant, which went into operation during 2008 and is now capable of supplying 75 per cent of Bahrain’s daily water consumption.

The smaller Rifa’a power station is undergoing a rehabilitation programme due to be complete by next year. It is designed to extend the life of the six existing simple-cycle 75 MW BBC gas turbine units, which were commissioned in 1983 and 1984. Alstom is the main OEM contractor and the work will include reducing NOx levels to the internationally agreed levels.

Largest IWPP planned

In order to deal with this rise in demand Bahrain has embarked on its largest power and water project to date. This is the new Aldur IWPP project, which in time is projected to have an installed capacity of 3500 MW and a potable water output of 432 million litres/day (98 MIGD). Aldur is to be built in the southeastern part of Bahrain. By 2020, the EWE foresees Aldur accounting for over half of Bahrain’s peak power needs with Al Ezzel and Al Hidd providing the remainder. Aldur is to be constructed in stages, with the first phase to be commissioned in 2010. The first stage requires the development of a plant capable of producing 1200 MW and 218 million litres/day with the first 600 MW coming on line in 2010 with the other 600 MW a year later. The project will consist of a combined cycle gas fired turbine power plant and a reverse osmosis desalination plant.

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The EWA will be the sole offtaker of the plant’s produced electricity and water, under a 20-year Power and Water Purchase Agreement (PWPA). The plant is planned to have three similar capacity expansions over the next 20 years in order to supply the increasing local power and water demand.

The Ministry of Finance contract for stage 1 of Aldur was awarded back in August to a consortium of Belgium’s Suez Energy International and Kuwait’s Gulf Investment Corporation on a build own operate (BOO) basis. The project has attracted 13 prequalified bidders. A $2.5 billion financing package is being worked on with underwriting commitments so far obtained from Standard Chartered Bank, Mashreq Bank and Calyon (The corporate and investment banking arm of the Crédit Agricole group). The EPC contract was awarded to Hyundai Heavy Industries of South Korea. GE Energy will supply the power plant turbines and Degremont will supply and install the RO desalination facility. Mott MacDonald is the project’s technical consultant.

Grid strengthening

Power transmission in Bahrain predominantly consists of an underground 220 kV and 66 kV system with isolated portions of 33 kV transmission system on the islands of Manama and Muharraq. Some 94 transmission substations are connected by 213 km of underground 220 kV cables with the 666 kV network stretching for 483 km, most of which is underground. The system includes 5000 distribution stations and an overall underground cable system of 8000 km and 450 km of HV overhead lines.

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The system has had to keep pace with the rapid commercial and residential developments and assimilate the addition of the planned Aldur IPP. A five-year plan to achieve this is underway and this will effectively double the size of the existing system. It involves the reinforcement of the 220 kV network by establishing new Bulk Supply Points substations and the extension of existing ones. Similarly, new and expanded substations will be added to the 66 kV network and new underground cables will connect all the new substations to the existing transmission network. The EWA has appointed Dutch technical consultants KEMA to optimize maintenance and related operating processes across its T & D network.

Looking ahead

The imminent completion of the GCC power grid will provide some welcome reserve capacity to Bahrain and promote more co-operation between Gulf States in the field of electricity exchange.

Not content with planning power production out to 2030, the EWA is already looking ahead to its next major generation project and has selected a site for this. The project will be built in Sitra in the northeast of the island on the site of an existing power and water plant, due to be decommissioned by 2020. MEE

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