Saudi Arabia’s growing demand for electricity and water requires investment in plant and infrastructure. The Kingdom is keen to attract investment, but the financial downturn has been affecting the availability of private investors, notably for IWPPs.

Exploiting its vast hydrocarbon resources has made the desert Kingdom of Saudi Arabia the world’s largest oil producer and one of the wealthiest countries in the Middle East.

The Saudi Aramco R&D centre in Dhahran, Saudi Arabia Saudi Aramco

The inhospitable climate (midday inland temperatures can be as high as 50 °C while humidity on the coast can rise to 100 per cent), coupled with the Kingdom’s rapid population growth, increasing standard of living and growing industrial and agricultural developments mean inexorably increasing demands for electricity and water.

Saudi Arabia is the third largest consumer of water per capita in the world, yet with no permanent rivers or lakes in the country, fresh water supply is problematic. Groundwater used to supply most of the Kingdom’s supply (84 per cent in 1985), but much of this water came from non-renewable aquifers, now exhausted, which means that alternative sources are required.

Some surface water is found in the west and south-west of the country and in 1985 this provided ten per cent of the Kingdom’s supply, but as demand has increased this resource is of diminishing significance.

The Shoaiba power plant, Saudi Arabia, run by Alstom Marc Roussel/Alstom

Desalination of sea water underpins the government’s water supply strategy and today 70 per cent of the country’s potable water is supplied from this source.

With its 2640 km of Red Sea and Persian Gulf coastline, Saudi Arabia is a world leader in desalination, producing around a fifth of the world’s desalinated water. Around thirty desalination plants and more than 2500 miles of water pipe supply fresh water to Saudi cities but these have been barely able to keep pace with rising demand and more capacity is required.

Desalination plants also produced 29 million MW of electricity in 2008, 6.2 per cent of the total generation capacity during peak electricity load time. Demand for fresh water is forecast to increase to ten million cubic metres/day by 2040.

The 2002 government plan committed government to spending $6bn a year on the water sector over two decades. At the same time a framework was established for private sector involvement. The main vehicles for investment is intended to be independent power and water projects (IWPPs), in which the private sector takes stakes of up to sixty per cent.

Over $15bn has been committed since the IWPP programme started in 2004. The projects are projected to add over 1bn cubic metres/day to the country’s water supply plus nearly 10 GW of electric power capacity. The Saline Water Conversion Corporation (SWCC) is the government corporation responsible for desalinating sea water to supply the Kingdom. SWCC is also the second largest electric power producer in the Kingdom.

Following a decision of the Supreme Economic Council in July 2008, SWCC is being restructured into a state-owned joint-stock holding company with subsidiary production companies. This will potentially open the way for private sector participation in both the holding company and its subsidiaries.

 

World’s largest desalination plant

 

The world’s largest desalination plant was completed in the new Jubail Industrial Zone on the shores of the Persian Gulf in the Kingdom’s Eastern Province in spring 2009. The plant comprises the largest single seawater cooling system in the world, multi-stage flash evaporator and reverse osmosis desalination plants producing potable water for household use and process water for industrial use, and a sanitary and industrial wastewater treatment plant.

The EPC contract for the desalination plant was won by a consortium of General Electric, Hyundai Heavy Industries and Société Internationale de Déssalement.

It is the first stage of an ambitious 16 billion Saudi Ryals ($3.8 billion) Marafic IWP project due to comprise a 23 year BOOT (build, own, operate, transfer), contract for a 2750 MW combined-cycle power station and a water desalination facility A consortium of Suez Energy International, Gulf Investment Corporation and ACWA Power Projects owns 60 per cent of the Marafiq IWPP. The consortium owns project, with the remaining 40 per cent held by Marafiq, the Saudi Electricity Company (SEC) and the Public Investment Fund. The power and water output from the facility will be sold under a single off-take contract to a wholly-owned subsidiary of Marafiq.

Marafic’s core business is the operation, maintenance, management, expansion and construction of power and water systems to provide essential utility services to customers in the industrial cities of Jubail and Yanbu. It was established by government in October 2000 as a joint-stock company to provide integrated utility services to the two modern industrial cities of Jubail and Yanbu.

 

Financial downturn affects investors interest in IWPPs

 

The first Saudi IWPP to be completed, the $2.45bn Shuaibah facility, sought funding six years ago. Despite initial uncertainty among foreign investors, it gained finance from a Saudi-Malaysian consortium. This paved the way for other IWPPs, and subsequently over $15bn has been committed to IWPPs, adding more than 1bn cubic metres/day to the country’s water supply along with around 10GW of power capacity. In 2008, the Kingdom planned for three core water and power plants at Shuaiba, Jubail and Ras Al Zour, to be developed on a build, own and operate principle by IWPPS.

However, the global financial downturn and reduced demand growth forecasts have affected availability of investment and the Saudi government consequently reappraised proposals for the three IWPPs. The Ras Al Zour scheme was set to be let on a privately financed basis, but in mid 2009, the government withdrew it from the tender process due to uncertainties regarding the cost and availability of debt. The project is instead now being run by the Water & Electricity Company (WEC), a limited liability company owned on a 50:50 basis by the Saline Water Conversion Corporation (SWCC) and SEC.

WEC is now procuring contractors for the Ras Al Zour water and power plant. The scope of work include oil-fired turbines; steam turbines; heat recovery steam generator (HRSG); desalination plant; balance of plant (BOP) and offsite & utilities. The original plans for the project were to utilise gas as the feedstock and produce 3000 MW of power and 140 000 cubic metres/day of desalinated water.

However, WEC has subsequently reduced the plant’s configuration following a royal decree in early 2006 stipulating that all future coastal power plants must use crude feedstock in order to conserve natural gas resources. The Ras Al Zour IWPP will now be fuelled by Arabian heavy crude oil and produce only 850-1100 MW of power.

 

Shoaiba Plant Project

 

On the coast of the Red Sea, Saudi Arabia’s mammoth Shoaiba complex houses 4400 MW of generation plant, the largest conventional oil fired station in the Middle East. The station, which comprises eleven 400 MW units, is equipped with turbines, heat recovery steam generators and ancillary power generation equipment, has been constructed adjacent to the desalination plant which was the largest in the world until the Jubail plant opened last year.

The plant is part of an integrated operation, providing the 150 million m³/year desalination facility with steam to heat its seawater distillers, while reducing its own demands for cooling.

The power plant was completed in 2008, five years after the $1.06 billion desalination facility. The project also involved the provision of storage tanks, a pumping station and pipelines to transport the product water. As part of the project a port and tanker terminal to supply the complex were also constructed.

 

Solar desalination plant

 

In Saudi Arabia the sun emits about 7000 watts of energy per square metre over an average of 12 hours every day, making it a prime location for harnessing solar energy, yet Saudi Arabia’s per capita carbon emissions are exceeded only by the US, Australia and Canada.

In February 2010, Saudi Arabia started building its first solar-powered water desalination plant. The plant will have a reverse osmosis plant and a generating capacity of 10 MW.

The programme was launched by the King Abdulaziz City for Science and Technology (KACST), the Saudi Arabian national research and development organisation. At the same time KACST has established a Nanotechnology Centre of Excellence in association with IBM Research.

The water treatment research will focus on the use of new nano-membrane materials for reverse osmosis seawater desalination. SWCC, a major participant in the solar energy initiative says that a total of nine desalination projects are planned in at a cost of billions of riyals within the next few years.

 

Electricity capacity

 

The Saudi Electricity Company (SEC) was formed in 1998 when the Kingdom’s electricity industry was reorganised to pave the way for privatisation. SEC is owned 74 per cent by the government, 7 per cent by Saudi Aramco and 19 per cent by others.

The Kingdom’s total available generation capacity of 39 242 MW in 2008 grew by 6.2 per cent from 36 949 MW in 2007. SEC predicts an approximate ten per cent annual growth in national demand for electricity. It plans to add 32 000 MW in the next ten years, and establish a national network connecting all parts of the country.

Current electricity generation is 54 per cent from gas; 37 per cent from steam; 6.9 per cent from combined cycle and 1.1 per cent from diesel.

SEC’s plan for generation is to use steam power plant for coastal areas and combined-cycle or gas power plants (dependent on availability of natural gas) for inland generation.

SEC projects that eight main new power plants are required in Qurayyah, Ras Al-Zor, South Uqair in the Eastern Region, Power Plant 11 in Riyadh, Rabigh and South Jeddah Power Plants in the Western Region, Shuqaiq Power Plant in the Southern Region and Dhabaa Power Plant in the North Western Region. It plans to develop six new Independent Power Plants (IPPs) with private sector participation on a Build, Own and Operate (BOO) basis.

The IPP projects that are scheduled for completion between 2012 and 2021 include the 1000 MW plant at Dheba, the 2000 MW Qurayyah plant, the 1200 MW Rabigh plant, the 2520 MW plant at Ras Azzour, the 2000 MW plant at Riyadh, as well as the 800 MW plant at Shuqaiq.

Contracts for all the projects are expected to be awarded by 2017.

 

Financial climate affects IPPs less than IWPPs?

 

The plans for IPPs seem to be faring better than those for IWPPs. The competition for the $2.5bn 1200 MW fuel-oil fired Rabigh IPP was awarded to a consortium of ACWA Power (40 per cent); Korea Electric (40 per cent) and SEC (20 per cent) in 2009.

In March 2010 SEC appointed GDF Suez & Al Jomaih Group as preferred bidder for the 2000MW Riyadh IPP Project. The successful consortium beat bids from International Power & Saudi Oger & KEPCO; Marubeni & KANSAI & Saudi Masader; Mitsubishi Corp & TEPCO & ACWA Power and. Sumitomo & TNB & Saudi Bin Laden Group.

A team of Arabian Bemco and Doosan Heavy Industries & Construction was awarded the $1.04 billion contract to construct a 1330 MW (5 x 266 MW) Qurayyah combined-cycle thermal power plant, close to the city of Ad Dammam. Construction works begun on 20 October 2009, and expected to be completed in February 2013.

The scope of work includes converting the Al-Qurayyah simple-cycle power plant into a combined-cycle plant by adding five steam turbines to the facility, with a total capacity of 1000 MW a year. The conversion will bring the total capacity of the plant to nearly 3000 MW a year.

The Qurayyah power plant will be part of the largest single-location power plant complex in Saudi Arabia, with a total generation capacity of 3190 MW.

Saudi Arabia is the third largest consumer of water per capita in the world. For Saudi Arabia to continue its current rate of economic and demographic development, investment in water supply and electricity generation and infrastructure is needed, but it could prove difficult to launch new IWPPs while international investors are affected by the global financial downturn. MEE

 

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