The GCC Interconnection Authority has awarded contracts for Phase I of the GCC grid interconnection project and both local and foreign firms are already starting work on this key regional project.
Nigel Blackaby, Features Editor
The long-awaited project to connect the power networks of the countries around the Arabian Gulf, the Gulf Co-operation Council (GCC) Interconnection Project, has finally commenced. The idea for the three-stage project emerged from a study carried out in 1990 and for a long time did not get much further than the drawing board. With the signing of construction contracts in November 2005, there is now confidence that the Phase I of the project will be commissioned in 2008.
The Gulf Cooperation Council (GCC) was established in 1981 by member states Kingdom of Saudi Arabia, United Arab Emirates, Kuwait, Bahrain, Qatar and Oman. The Council establishes areas of cooperation and integration between the member states across a wide range of social and economic interests. In July 2001 the six countries established the GCC Interconnection Authority (GCCIA), with an authorized share capital of $1.1 billion. The objective of the Authority was to link up the power grids of all six GCC countries, operate and maintain the interconnected grid and become a major player in a regional electricity trading market. Each participating country has two seats on the GCCIA board, which operates under a rotating chairmanship.
Each state currently operates its own isolated electricity supply industry and even within the United Arab Emirates there is currently no link between the largest and neighbouring Emirates of Dubai and Abu Dhabi.
One common feature among the Gulf states is the rapidly rising demand for power, currently running at around six per cent annually compared to a world average of about three per cent. Demand for water is also skyrocketing and with much of the region’s potable water derived from desalination plants, this only adds to the need for electricity. In response, Gulf states have embarked on an impressive programme of new and expanded power plant projects, coupled in some cases with privatization strategies that have resulted in foreign capital and expertise being attracted to the region.
Figure 1. The interconnection size was dimensioned so that each system can import up to 50 per cent of the capacity of its largest plant.
The option that has not been available has been to import power when needed or indeed to sell surplus electricity in low demand periods. The construction of an interconnection between the various power networks in the region therefore offers the prospect of more efficient operation through the sharing of a spinning reserve. The four-hour time zone difference from the eastern to the western Arab world means that peak load periods will vary and power exchange becomes possible. If peak loads can be partially met through power imports, countries will be able to reduce capital expenditure on new power plants, ensure greater reliability as well as reducing fuel bills and operation and maintenance costs. The improved efficiency would result in energy conservation and a lower environmental impact.
The Dammam-based GCCIA has estimated that the planned interconnection would allow a reduction in capacity reserve of up to 50 per cent that of the isolated grid. By 2028 it forecasts that an interconnected system would result in a need for 5 GW less installed capacity across the GCC states. Figures produced by Saudi Aramco point to a 12 per cent reserve saving across the region and a consequential saving of $11 billion.
The GCCIA also foresees an opportunity for utilities to build larger and more efficient generation units if they are able to share the extra power generated and the prospect of industrial consumers and utilities being able to shop around for more attractive suppliers of power.
The GCC grid interconnection will be developed in three phases the first of which involves the interconnection of Kuwait, Saudi Arabia, Bahrain and Qatar. This system is the GCC North Grid. Phase II will see the interconnection of the independent systems in the UAE as well as Oman to form the GCC South Grid. This aspect of the overall project will not be the responsibility of the GCCIA. Phase III will be the interconnection of the GCC South Grid with the GCC North Grid and will result in the interconnection of all six Gulf states.
The first phase of the interconnection consists of ten individual projects involving 14 separate contracts. These are the construction of a 400 kV GIS substation in Al-Zour, Kuwait, a 400 kV switching station in Al-Fadhili, KSA and a HVDC back-to back converter station. The converter station connects the 50 Hz Gulf countries to Saudi Arabia, which operates a 60 Hz system and prevents disturbances from one system being transferred to the other. It will include controls that can be adjusted to provide support between the 60 Hz and 50 Hz systems and can decouple the systems if necessary.
Two further 400 kV switching stations will be built in Saudi Arabia, one at Ghunan and the other at Salwa. A 400 kV GIS substation is to be built in Al-Jasra, Bahrain with a similar facility in Doha, Qatar. The stations will be connected with a 400 kV double circuit overhead line with a 400 kV submarine cable being laid between Ghunan and Al-Jasra, Bahrain. A control centre will be situated in Ghunan in Saudi Arabia.
The estimated capital cost of Phase I is $1.2 billion against which the GCCIA estimate capital cost savings of $2.8 billion and operating cost savings of $519 million. It has calculated that Phase I total costs will be recovered within four years of completion.
A competitive tendering process for the $1.1 billion worth of Phase I contracts was launched in February 2005. The tender submission was based on a two envelope system namely, technical and commercial. Tender submission and opening of technical envelopes was conducted in June 2005 and commercial envelopes for the technically viable offers were opened in August 2005. The lowest three tenders were then taken for evaluation and pre-award meetings held with the short-listed companies.
Six companies were eventually awarded the 13 EPC contracts with one company winning the Consultancy and Supervision contract. Contracts were signed during an award ceremony that took place in Al-Khobar on 17 November 2005.
The six contracts for the substation work were awarded to Zurich based ABB. Its bid was the lowest in respect of all the substation lots and included work to be done by ABB Contracting Company of Saudi Arabia. The total value of ABB contracts was $222 million making it one of the largest substation orders ever won by the company. ABB will be responsible for design and manufacturing of the equipment, system engineering, installation, commissioning and civil works. Work has already begun under its contracts and ABB says it will be completed by January 2009.
An Italian and French grouping of Prysmian Cables & Systems and Nexans won the largest of the contracts worth $343 million to install the underwater cable that will link Bahrain to Saudi Arabia. One circuit of the cable is scheduled to be completed within 37 months with the second circuit completed by month 50. Nexans will supply one extra-high-voltage cable circuit comprising a total of 120 km of 400 kV single core SCFF (Self Contained Fluid Filled) submarine cables, 24 km of 400 kV single core SCFF underground cables and 47 km of fibre optic cable (48 fibres) as well as connection accessories (joints and terminations, oil pressurizing system and temperature monitoring systems). These links will run from Al Jasra in Bahrain to Ras Al Qurrayah in Saudi Arabia via Umm An Na’san Island. The submarine sections will be 40 km long and the underground sections 7 km long. The overall weight of the cables to be delivered for this project will be over 12 000 tonnes.
Figure 2. Block Diagram of GCC Interconnection project
France’s Areva T&D and Cogelex were awarded two contracts by the GGCIA worth in total $234 million. Under the first contract, Areva will deliver the region’s first back-to-back 1800 MW HVDC converter station. The station will consist of three 600 MW converters including thyristor valves, 375 MVA converter transformers as well as 380 kV and 400 kV circuit breakers.
Under the second contract, Areva will design and build the GCC grid’s entire automation solution. It will construct a new control center equipped with a SCADA and Energy Management System based on Areva’s e-terraplatform software. The centre is designed to guarantee the efficiency and safety of the power grid and to enable the recording and billing of energy transactions between the different countries. Areva will also develop a telecommunications infrastructure spread across approximately 800 km that will relay key substation information to the control center via a fibre optic high-speed network and backup digital power line carriers.
Saudi Arabia’s National Contracting Company (NCC) and Middle East Engineering & Development Company (Meedco), the Saudi affiliate of South Korea’s Hyundai Engineering & Construction Company, both won two of the four lots on the overhead line package, totalling around $280 million.
The large Canadian engineering and construction firm SNC Lavalin won the final contract covering the supervision work and is also acting as the project consultant. SNC Lavalin has been involved with the GCC Grid project since it was first conceived, including preliminary studies and detailed engineering. This latest $16 million contract involves supervision of the final designs and suppliers, as well as of the construction of the project itself.
The prospect of creating an interconnection across such a large territory in the Gulf has highlighted possible additional commercial uses for the infrastructure, which the GCCIA is keen to exploit. By increasing the capacity of the current fibre optic cable network the GCC Grid could realistically provide opportunities for the telecommunications industry to take advantage by connecting to the interconnection transmission line.
The prospect of an interconnecting grid system in the energy rich Middle East is of long-term interest to the power sector further afield as it raises the possibility of the transfer of surplus power north, first through the Medring and then on to southern Europe. The GCCIA has embarked on a project that will undoubtedly enhance the power systems and economies of the GCC countries and serve as an important step towards liberalization of the region’s power market. It has the potential to form part of a future pan-Arab Grid and therefore, in time, the impact of this Gulf project could be felt far beyond the immediate region.