The Qatari economy has flourished over the last ten years, riding on the high price of oil and gas, resulting in an annual population growth of 9 per cent. This is putting undue pressure on its electricity sector. The Qatari government has recognized this in recent years and is in the middle of an ambitious generation capacity and T&D expansion programme.
Paul Breeze, UK
The oil and gas-rich Middle East state of Qatar occupies a small desert peninsula that juts north from the Saudi Arabian coast into the Persian Gulf. Although tiny, the country controls the third largest gas reserves in the world and has major oil reserves too. These underpin an economy which has shown strong growth during the past decade, in spite of the global recession, and which is expected to post extremely high GDP growth in 2010. This performance has resulted in Qatar having the second highest per capita income in the world.
Modern Qatar evolved from a British Protectorate, which was established in 1868. Until the middle of the 20th century the main source of income was fishing and pearls. Its fortunes were transformed by the discovery of oil in 1939, and the subsequent exploitation of both this and, more recently, its natural gas reserves have led to its present economic situation.
The country is officially a monarchy and executive power resides with the Emir, Hamad bin Khalifa Al Thani, who also holds the post of Prime Minister.
The country’s high per capita income has led to high levels of energy consumption and per capita emissions of carbon dioxide were 70.6 tonnes in 2007, not far short of four times the US emission level of 20 tonnes per person in 2008. Electricity consumption is correspondingly high and even though generating capacity is expanding rapidly, the government fears shortages in the near term without further massive expansion.
Economic growth & energy demand
The Qatari economy has flourished over the last ten years, riding on the high price of oil and gas. The country’s gas reserves, of25.9 trillion m3 at the beginning of 2009, are the third largest after Russia and Iran and account for 15 per cent of global reserves. Oil reserves are relatively smaller but Qatar was the 11th largest oil producer in OPEC in 2008, its output falling between those of Algeria and Ecuador.
While energy is the mainstay of the economy, the government has been trying to encourage investment in non-energy sectors. Even so, oil and gas still account for over 50 per cent of Qatar’s GDP, 85 per cent of export earnings and 70 per cent of government revenue, according to US government figures.
GDP growth has been phenomenal in recent years. The country posted 9.2 per cent growth in 2005, over 15 per cent in 2006 and 2008, and 9 per cent in 2009 in the midst of the global economic recession. Growth has rebounded strongly since then and the latest predictions from the International Monetary Fund suggest it could reach 18.5 per cent in 2010, with a danger of overheating, the organization has warned.
Economic growth has led to rapid population growth, fuelled mostly by expatriates settling in the Kingdom. The most recent census has shown a population of 1.69 million, compared to 774 000 in 2004, half today’s figure. Of that number, the native population accounts for only 200 000.
Annual population growth is around 9 per cent and, according to the Qatar General Electricity and Water Corporation (Kahramaa), the population is expected to increase by a further 85 per cent between 2008 and 2017 to reach nearly 2.7 million. This population growth, coupled with the high levels of energy consumption, is at the root of the country’s soaring demand for electricity.
Water and electricity
As with the other Gulf States, Qatar has extremely limited supplies of fresh water. It ranks among the countries in the world with the most restricted fresh water resources and yet, ironically, its per capita water consumption is among the highest in the world.
In order to meet water demand, the country relies on desalination plants and this has led to strong links between electricity and water production, with all many modern power plants producing water too. As a consequence the management of both falls to the same companies. These all involve an element of government ownership.
The main generator in country is the Qatar Electricity and Water Company (QEWC), in which the government holds a 52 per cent share.
The company had generating capacity of 2113 MW together with potable water capacity of 105 MIGD at the end of 2007, but this will have risen to 5200 MW and 325 MIGD by 2011, when projects under construction are completed.
QEWC owns exclusively a number of power and water desalination plants including Ras Abu Fontas, Al Saliyah, Doha South, Al Wajba and Dukhan. In addition, it has shares in a variety of independent power producer (IPP) projects including Mesaieed and Ras Laffan A, B and C.
Keen to expand its own holdings where possible, the organization has recently agreed to purchase AES’s interest in the Ras Laffan Power Company, which owns the Ras Laffan A plant, consolidating its position by raising its stake in that company up to 80 per cent.
|Installed generating capacity (MW) Source: EIA, Qatarabia, Kahramaa|
In addition to its domestic interests, QEWC is planning to expand internationally and recently submitted bids to build power projects in Oman in conjunction with consortium partners, according to Fahad Hamad Al Mohannadi, QEWC’s general manager.
It will also build two power plants in Syria in a joint venture with Syrian-Qatari Holding. The latter signed a $1 billion memorandum with the government and construction of the plants is due to start in April 2011, with completion in 2013.
When the capacity owned by QEWC and that of the independent power projects in which the company holds stakes are taken into account, the total generating capacity in Qatar in 2010 is around 7589 MW, up from an estimated 5315 MW in 2009, a 42 per cent increase.
T&D expansion accelerates
The second important state-owned company in the sector is Kahramaa. This company holds the monopoly for transmission and distribution (T&D) of both electricity and water within the Kingdom. QEWC has long-term supply contracts with Kahramaa for the supply of both power and water.
The Ras Laffan Industrial City, Qatar Source: ABB
Since its establishment in 2000, Kahramaa has overseen a massive expansion of the electricity T&D system. Between 2000 and 2008 the number of high-voltage primary substations in the country has increased from 87 to 139. By 2011 the total number is expected to reach 239.
This has been accompanied by extensive addition to line lengths at 11 kV, 66 kV, 132 kV and 220 kV. Between 2000 and 2008 the cumulative investment in T&D was $9.64 billion according to the company. Additional investment since then will see the system expand further to meet the ever-increasing level of demand.
Expansion has been managed through a series of phased projects, the last of which was Phase VIII, contracts for which were signed in June 2008. These were estimated to be worth $3.5 billion. In total, Phase VIII involved 19 contracts for 37 new 66, 132 & 220 kV substations and three 400 kV substations, as well as 835 km of new T&D power lines.
The new 400 kV substations are intended to handle power from the Ras Girtas power and desalination plant, which started generating power this year. Phase VIII followed rapidly on the heels of Phase VII, formalized in January 2008 during a visit of France’s President Sarkozy to the Kingdom when the contract was signed between Kahramaa and French company Areva. The total investment in Phase VII was $2 billion. In 2010, contracts for the next phase, Phase IX were signed.
This will include 22 more substations, the upgrading of eight existing substations and the construction of 437 km of 400 kV, 220 kV, 132 kV and 66 kV lines. This phase has been divided into a number of subprojects.
Six packages for substations were awarded to a Siemens consortium and to South Korea’s Hyosung Corporation. New cabling, involving five packages, were awarded to Mitsubishi and Siemens, while a further overhead line project was awarded to Saudi Arabian company NCC.
A telecommunications package was awarded to Areva. The estimated value of Phase IX is $1 billion and completion is expected in the first quarter of 2012.
As part of Phase IX one 400 kV substation will be constructed, which will be connected to the Gulf Cooperation Council power grid. This network currently interconnects Kuwait, Bahrain, Saudi Arabia and Qatar. Qatar hopes to export power to Kuwait during the summer of 2010 when it expected to have a short-lived surplus of up to 1100 MW as new projects come on-line.
Alongside the expansion of the T&D network there has been a major expansion in generating capacity. Between 1994 and 2002, generating capacity grew from 1100 MW only up to 1900 MW, and in 2007 national capacity stood at 3300 MW. Since then capacity addition has begun to accelerate with the total expected to reach 7589 MW in 2010. This will need to continue, however, if generation is to keep pace with demand.
A recent report by Business Monitor International predicts that GDP growth will average 8.2 per cent between 2010 and 2014, that GDP per capita will rise by 21 per cent during this period and the per capita electricity consumption will increase by 28 per cent. On this basis, electricity demand is expected to rise from an estimated 20 TWh in 2010 to 33 TWh in 2014, a rise of 65 per cent in just five years.
In order to meet this demand, generating capacity is expected to increase by 49 per cent between 2010 and 2014. Over the longer term a further rise in generating capacity of 52 per cent is predicted to come between 2014 and 2019, equating to a ten-year increase of 127 per cent. Most of this extra capacity is expected to be provided by thermal power plants.
This hectic rate of growth means that new capacity will have to be added continually. Projects that are already under construction include Ras Girtas, a $3.9 billion power and water project at Ras Laffan (also known as Ras Laffan C). Eight turbines at the plant began operating in June 2010 producing 1833 MW and the first phase of the water plant is due to be completed later in the year. When full power is reached in 2011, the plant will generate 2730 MW.
The eight 235 MW gas turbines for Ras Girtas were supplied by Mitsubishi Heavy Industries, which will also supply the four 240 MW steam turbines. French company Sidem is supplying the desalination units.
Another power plant, the 2000 MW Mesaieed power station at the industrial city south of the capital Doha, also began generating electricity in 2010. The plant is owned as a joint venture by a consortium of Qatar Petroleum, QEWC and Marubeni Corporation. The consortium will operate the plant for 25 years under a BOOT contract. The power plant comprises six gas turbines and three steam turbines, and was built by a consortium led by Iberdrola of Spain.
Power Capacity Pipeline
In addition to the capacity under construction, new plants are planned. QEWC is already predicting a short-fall of generating capacity of 300-350 MW in late 2012 without additional capacity.
Peak demand in 2010 is expected to hit 6572 MW, but by 2013 this is anticipated to rise to 9400 MW.
A new 2000 MW power plant with a cost of $2.5–$3 billion is being planned and a contract is expected to be signed during 2010 but no further details are available.
This plant would be due to enter service in 2012–2013. Potential sites include Ras Rakan, Al Jemail, Mesaieed and Umm Bab. Like most future projects, this is likely to be an IWPP with long-term power purchase agreements with Kahramaa.
Qatar has no renewable generating capacity currently but boasts excellent solar resources, and in the past two years there have been hints the country might invest $5 billion in its solar capability. The most recent report suggests that a $1 billion solar plant might be built, although details have yet to be made available. However, Kahramaa has indicated an interest in solar power, and Qatar recently signed up as a member the International Renewable Energy Agency (IRENA).
Potentially allied to this, the Qatar Foundation recently announced that it would form a joint venture with German company SolarWorld to establish a solar cell plant in the Kingdom. The facility, in northern Qatar, is expected to cost $500 million and produce 3500 tonnes of polysilicon each year.
The other source of power that Qatar is exploring is nuclear. The country has been flirting with the idea of a nuclear project since around 2006, and in 2009 a member of the Ministry of the Environment suggested the country might seek to purchase a research reactor. The technology would be attractive as a source of both power and water, but any water and power nuclear generation project is likely to be a long way off.