Powering the pearl Kingdom

Bahrain is experiencing solid growth in power demand. At the same time the Kingdom is looking to embark on its first private power project. MEE examines Bahrain’s electricity industry and its plans for the future.

Bahrain has seen a dramatic transformation in its fortunes in the last 50 years. From a nation in decline following the sudden and unexpected decline of its pearling industry, it has been transformed into a vibrant modern state, as a result of the discovery of oil. Where once there were tracks in the sand and simple houses built of palm fronds and coral blocks, there are now six-lane highways along with glass and steel skyscrapers.

Bahrain’s Pearl Monument
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Bahrain now consists of a cosmopolitan mix of nationalities totalling 617 000, linked by a causeway to Saudi Arabia. It is the smallest and most densely populated Arab State.

Demand growth

Along with the growth in population and rapid urbanisation has come a vastly increasing demand for electricity. The requirements of industry and the necessity for domestic air conditioning combined, have led to an average annual growth of 6.5 per cent in peak power demand over the last five years. This growth is set to continue, with Bahrain’s Ministry for Electricity and Water (MEW) forecasting peak demand rising from 1535 MW in 2003 to 2468 MW by 2010 and 4312 MW by 2019. The government estimates that the country will require a new power plant every two to three years.

Despite the fact that the supply of electricity is barely able to cope with current demand, domestic power prices remain at the low level set by government in 1992, in an attempt to help low-income groups.

Electricity generation, transmission and distribution across the 33 islands that make up Bahrain is the responsibility of the MEW. It has been charged by the government to play a major role in providing the required power and water infrastructure to allow for inward investment into the country and to improve the quality of life for the people of Bahrain.

Bahrain MEW currently operates power plants with a total installed capacity of 1879 MW. This capacity derives from four main facilities, Hidd (35.7 per cent), Rifa’a (35.4 per cent), Sitra (11.9 per cent) and Manama & Muharraq (2.2 per cent). Beginning this year, the Manama power station will be undergoing a gradual retirement. To this capacity can be added up to 275 MW supplied to MEW under an agreement with Aluminium Bahrain (Alba) during the summer peak period. In 2003 this accounted for 14.7 per cent of Bahrain’s electricity supply. This supply agreement is set to expire in 2004, although it is likely that the link will be kept open for emergency use.

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Alba is one of the largest smelters in the world, producing in excess of half-a-million tonnes of primary aluminium each year. Smelting is a very energy intensive process and Alba operates four power station units with a total installed capacity of 1504 MW in order to generate the electricity needed, including state-of-the-art combined cycle technology. Power export to Bahrain’s national grid is through 60 MVA/33 kV and 315 MVA 220/132 kV links.

Hidd power & water

Bahrain has two combined power and water plants ” Hidd and Sitra. In recent years, the focus has been on the modern Hidd complex, Phase 1 of which was completed in 1999, adding 280 MW. Phase 2 was mooted as being Bahrain’s first IWPP but went ahead as a government financed project with the MEW unable to the reach an agreement with Bahrain’s pro-privatization Ministry of Finance and Economy. The Phase 2 combined cycle expansion, being led by Alstom with consultancy from Ireland’s ESB International, began at the end of 2001. The project will be completed this year and will add just under 700 MW. The plant comprises three gas turbine generators, each of 140 MW and three heat recovery steam generators (HRSGs) feeding one 280 MW steam turbine. In addition, 370 kg/s of steam at 2.7 bar is produced, which will be used for a Phase 3 desalination project.

A 12-year maintenance and serving contract for Hidd phases 1 and 2 worth BD 100 million ($263 million) is currently the subject of a competitive bidding process, with six companies pre-qualifying. The Phase 3 desalination extension, calling for the addition of 60 million gallons a day of desalination capacity, is also currently out to tender.

Independent power project

By the end of this decade Bahrain’s requirement for power capacity is expected to have increased from 1647 MW to 2469 MW. In order to achieve this, Bahrain’s first independent power project (IPP) is planned. The 1000 MW Al-Ezzel IPP will be a new facility, located to the south of the existing Hidd power and water station. It is scheduled for completion by April 2007. Al-Ezzel will be a combined cycle plant comprising four gas turbines generators, four HRSGs and two steam turbine generators.

Following a competitive bidding process, which attracted five bidders, a consortium of Belgium-based Tractebel EGI and Kuwait-based Gulf Investment Corporation signed agreements with Bahrain’s Ministry of Finance and National Economy to build the $500m plant, through a special purpose company ” the Al Ezzel Power Company. The consortium’s bid of BD 8.09/MWh ($ 21.5/MWh) was 16 per cent below the next lowest bid and regarded as very competitive.

Source: Bahrain Ministry of Electricity & Water.
Peak power demand is forecasted to continue to grow at about 6.5 per cent a year
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The first phase of the project is set to deliver 470 MW by April 2006 with the plant slated to achieve full capacity by May 2007. Germany’s Siemens Power Generation is Tractebel’s nominated engineering, procurement and construction (EPC) contractor and lead financiers are HSBC and Société Générale. BNP Paribas, Mott MacDonald and Freshfields Bruckhaus Derringer are financial, technical and legal advisers. The consortium has entered into a 20-year power purchase agreement with the MEW, who will continue to control tariffs. No desalination capacity is planned for the plant.

Back in 2001, the government awarded a contract to Siemens Power Generation to extend the life of the Rifa’a power plant. The scope of this project includes both rehabilitation works and the implementation of NOx reduction technology, in order to reduce emissions to internationally acceptable levels. The rehabilitation work is designed to extend the life of the existing six 75 MW simple cycle Brown Boveri Company gas turbine units, commissioned in 1983 and 1984.

Looking beyond this, the MEW has projected that a new power and water plant will be needed which will eventually consist of units with a total installed capacity of 3000 MW. Current plans are for the first stage of this plant to be commissioned in 2011 with additional units coming on line every two years after that until 2020.

Grid system

Bahrain’s power transmission system predominantly consists of an underground 220 kV and 66 kV system with isolated portions on the islands of Manama and Muharraq operating a 33 kV system. The system runs through 71 transmission substations, nine of which are 220 KV type, 54 are 66 kV and 8 are 33 kV. There is 113 km of 220 KV underground cabling and 423 km of underground 66 kV cabling, plus 22 km of overhead lines. The 33 kV portion of the transmission network has 33 km underground and 13 km of overhead lines.

As well as expanding electricity generation, Bahrain is improving its transmission and distribution infrastructure. In December 2002, Bahrain awarded a contract to Saudi Cable Co. for the supply and installation of power lines, optic cables and other accessories. An original plan to develop the 220 kV network was planned to be completed by the end of 2004, but extra work has been added extending the project to 2006. The work consists of upgrades and expansions to substations plus cabling to link to developed substations.

Between 2005 and 2009 the MEW plans to develop the grid to accommodate the transfer of electricity from the new Al-Ezzel power plant. Part of this work will include the addition of five new bulk supply points at Al-Ezzel, Manama power station, Bahrain Financial Harbor, Bu Quwwah and Sitra. The 66 kV network will also be upgraded and extended.

Sector privatization

Bahrain is moving cautiously in the direction of private participation in its power sector. In establishing the Al-Ezzel IPP it became the fifth GCC country to approve private power production. While not moving as fast countries such as the UAE and Oman, it is making slow progress and is thought to be considering the privatization of the country’s entire electricity sector.

Despite the earlier false start with the Hidd development, the launch of its first IPP project appears to have been smooth and efficient. The willingness of the government to enter into long-term power purchase agreements, its good sovereign credit rating and well established legal framework, makes Bahrain an attractive proposition for private investors in the power sector.

Reference: “Development of Bahrain’s power sector.” Presented by Miriam Ahmed Jumaan, Ministry of Electricity & Water at Power-Gen Middle East, Bahrain, September 13-15, 2004

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