meed-logo

line1 line2 line3
SIGN IN / REGISTER

Transmission and distribution sector heads for record year

3 October 2024

The GCC region’s power transmission and distribution (T&D) sector is set to experience its best year in terms of the value of awarded contracts.

Based on data from regional projects-tracking service MEED Projects, the total value of awarded contracts for substations, control centres, overhead lines and cables across the six GCC states reached an estimated $13.8bn between January and September 2024.

This figure already exceeds by 81% the total value of contracts awarded in the preceding full year.

It also exceeds by 31% the total value of awarded contracts in 2021, which registered a record-high of $10.5bn in the 10 years starting in 2014.

Project activity within the T&D sector is expected to remain buoyant over the next few years, with roughly $35.9bn-worth of planned and unawarded contracts.

Of these, some $8.5bn are in the bid evaluation stage as of early October, with a further $6.5bn under tendering.

Some $12bn of projects are in the front-end engineering and design (feed) phase.

Energy diversification 

Ambitious national energy diversification and net-zero targets across the region, which traditionally relied almost entirely on thermal power plants, will spur significant investments in T&D infrastructure in the future.

According to experts, the ongoing expansion of electricity generation capacity across the region, particularly from renewable energy sources, requires a more robust, integrated and stable electricity grid.

This is in addition to the projected increase in electricity demand as most states expand their downstream and petrochemical sectors, develop new communities and megaprojects in remote regions, and build more data centres to support smart cities, and internet-of-things (IoT) and artificial intelligence (AI) applications.

The region’s largest economy, Saudi Arabia, for instance, aims for renewable energy to account for 50% of its electricity generation capacity by 2030.

Operational renewable installed capacity in the kingdom jumped from roughly 300MW in 2020 to 3,500MW this year, with a further 16,000MW currently under construction or about to start construction, and gigawatts more under tender.

Crucially, the kingdom’s energy minister confirmed earlier this year that the kingdom has plans to procure up to 20,000MW of renewable capacity every year, subject to demand.

Saudi Arabia is also ramping up its procurement programme for new gas-fired power plants, in line with a plan to decommission fleets running on liquid fuel and at the same time secure baseload as more renewable energy enters the grid.

There is also a marked increase in terms of T&D packages or contracts interconnecting the kingdom’s various regions from central Riyadh to the eastern, northern and southern provinces.

It comes as no surprise that the kingdom accounted for 72% of the $13.8bn-worth of T&D contracts awarded in the GCC region in the first three quarters of 2024.

Oman, which awarded T&D contracts with the same value as the UAE between January and September this year, has also been working to integrate its smaller electricity grids with the sultanate’s main electricity grid to boost electricity supply in its smaller, remote regions.

Unlike the noticeable peaks and throughs in T&D capital expense in other GCC states, the UAE’s spending has remained pretty consistent since 2014, averaging roughly $1.4bn annually. The exemption was in 2021 when a team comprising South Korea’s Kepco, Japan’s Kyushu Electric Power Company (Kyuden) International and France’s EDF won the contract to develop Abu Dhabi’s first high-voltage, direct current (HVDC) subsea transmission system.

It is worth mentioning that the completion of the four units of Abu Dhabi’s 5,600MW Barakah nuclear power plant this year and the expected completion of Dubai’s first hydropower plant in Hatta mean the UAE will have the most diverse energy sources for electricity generation among its peers.   

Power links

The goal to expand electricity trade within the GCC member states and with other countries such as Egypt, Jordan and Iraq is another key driver for T&D investments.

Work is under way to increase the capacity of the GCC regional grid and enable its member-states to procure backup or emergency capacity when the need arises. Kuwait availed of this in May when it purchased 500MW from the GCC grid in anticipation of its inability to meet peak demand in the summer months.   

An HVDC network linking Saudi Arabia and Egypt is under construction, which will allow bidirectional electricity trade as well as access to the wider European and African markets.

A second GCC link with Oman and a first link with Jordan are also planned. Another HVDC transmission project linking Neom in the northern tip of the Red Sea to Yanbu, stretching 605 kilometres, is under way.

It turns out that the need to invest in T&D infrastructure to support electricity generation capacity buildout, following years of underinvestment, is a global phenomenon.

Juan Diego Zuluaga, Suncolombia CEO, told the ongoing World Green Energy Summit in Dubai that there is a major mismatch between the buildout of transmission lines and electricity generation capacity.

Experts like Zuluaga think that failing to invest in T&D can potentially lead to issues such as curtailment or wastage in renewable power, particularly in the absence of suitable energy storage systems or efficient interconnections or electricity links.

Utility companies are under pressure not only to expand their transmission capacities and coverage but to make these infrastructure and facilities more efficient, too.

New technologies, most of them driven by IoT or AI, for instance, can be used to improve demand and supply management and forecasting, leading to improved grid performance.

“In this region, in particular, consumers expect 24x7 electricity supply. In fact, it is a given,” notes a senior executive with a European technology company. “The hope is for that to continue in the future.”

 

 

https://image.digitalinsightresearch.in/uploads/NewsArticle/12646884/main.jpg
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Lowest bidder changes for Dubai Metro Blue Line

    22 November 2024

     

    Register for MEED's 14-day trial access 

    The team of Spain’s FCC, Beijing-based China State Construction Engineering Corporation (CSCEC) and France’s Alstom has emerged as the low bidder for the Blue Line extension to the Dubai Metro network after revised bids were submitted on 21 November.

    The team submitted an offer of AED19.8bn after the project client, Dubai’s Roads & Transport Authority (RTA), asked bidders to submit proposals with alternatives to reduce the price.

    The consortium’s price is nearly 18% lower than its original base offer of AED24.1bn submitted on 8 October.

    The second-lowest price on 21 November was the AED20.3bn bid submitted by a consortium of India’s Larsen & Toubro, China’s Powerchina, the local Wade Adams and Hitachi.

    The third-lowest bid was an offer of AED20.6bn submitted by a consortium of Turkiye’s Limak Holding, Mapa Group, also of Turkiye, and the Hong Kong office of China Railway Rolling Stock Corporation (CRRC).

    The RTA had received another round of updated offers a week earlier on 14 November. That time the Limak/Mapa/CRCC team submitted the lowest bid with a price of AED21.7bn.

    For the first round of revised offers on 7 November, the group of China Tiesiju Civil Engineering Group (CTCE), Egypt’s Arab Contractors, the local Binladin Contracting Group and Spain’s CAF submitted the lowest-priced revised base offer of AED22.2bn.

    The CTCE/Arab Contractors/Binladin/CAF group submitted the lowest base offer when the bids were first submitted on 6 October.  

    The design-and-build contractor for the Blue Line will be responsible for all civil works, electromechanical works, rolling stock and rail systems. After completing the project, the contractor will assist with maintenance and operations for an initial three-year period.

    The Blue Line will connect the existing Red and Green lines. It will have a total length of 30 kilometres (km), 15.5km underground and 14.5km above ground.

    The line will have 14 stations, seven of which will be elevated. There will be five underground stations, including one interchange station, and two elevated transfer stations connected to the existing Centrepoint and Creek stations.

    The scope of the contract also includes the supply of 28 driverless trains, the construction of a depot to accommodate up to 60 trains and the construction of all associated roads, facilities and utility diversion works.

    The detailed scope of work for the project includes:

    • Civil works, including detailed design and construction of architectural and structural components (including viaducts, tunnels and stations)
    • Design and execution of electromechanical works
    • Design, procurement and delivery of operation and control systems for rail, stations and facilities
    • Design, manufacturing and supply of rolling stock

    UAE Vice President, Prime Minister and Ruler of Dubai, Sheikh Mohammed Bin Rashid Al-Maktoum, approved the Blue Line extension project last year. In a post on social media network X, formerly Twitter, he said the project will cost AED18bn ($4.9bn) and will have a length of 30km, half of which will be underground.

    He added that the extensions will transport 320,000 passengers a day and serve a population of about 1 million people living in areas such as Festival City, International City, Rashidiya, Warqa, Mirdif, Silicon Oasis and Academic City.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12972366/main.jpg
    Colin Foreman
  • Silk Road Fund to co-invest $2.8bn in Masdar projects

    22 November 2024

    China’s Silk Road Fund (SRF) has agreed to invest up to RMB20bn ($2.8bn) in projects alongside Abu Dhabi Future Energy Company (Masdar) in renewable energy projects across developing Belt and Road Initiative (BRI) countries.

    Under the agreement, Masdar and Silk Road Fund will establish a strategic partnership to pursue co-investment opportunities in renewable energy projects developed, invested in or operated by Masdar.

    China's BRI envisages connecting Asia, Europe, Africa and other parts of the world through a network of infrastructure and trade projects.

    Masdar’s chief executive Mohammed Jameel Al-Ramahi and Silk Road Fund chairwoman Zhu Jun signed the memorandum of understanding (MoU) for the planned cooperation at the recent Cop29 climate summit held in Baku, Azerbaijan.

    Masdar has significant investments in the Middle East, Central Asia, Southeast Asia and Africa, many of which are participants in the Belt and Road Initiative.

    The company said it will continue to invest in these regions as part of its strategy to reach 100GW renewable energy capacity by 2030.

    SRF’s renewable power portfolio totals more than 7,000MW in Belt and Road regions, including the Middle East, Africa, Southeast Asia and Latin America.

    The UAE has been an active partner in the BRI since the initiative was launched and has already invested $10bn in a joint China-UAE investment fund to support BRI projects in East Africa.

    Photo credit: Pixabay (for illustrative purposes only) 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12972007/main.jpg
    Jennifer Aguinaldo
  • Kahramaa awards Facility E contract

    22 November 2024

     

    Qatar state utility General Electricity & Water Corporation (Kahramaa) has awarded a contract to develop and operate Qatar’s Facility E independent water and power producer (IWPP) project to the sole bidder led by Japan’s Sumitomo Corporation.

    According to a source close to the project, the project’s power and water-purchase agreement (PWPA) is due to be signed on 25 November.

    The Facility E IWPP scheme will have a power generation capacity of 2,300MW and a water desalination capacity of 100 million imperial gallons a day (MIGD).

    MEED reported in July that Sumitomo had submitted a proposal for the contract. It leads a consortium that comprises fellow Japanese utility developer Shikoku Electric, Seoul-headquartered Korea Overseas Infrastructure & Urban Development Corporation and Korea Southern Power Company.

    The developer consortium’s engineering, procurement and construction (EPC) partner is South Korea’s Samsung C&T.   

    The contract to develop the Facility E IWPP was first tendered in 2019. The three teams that submitted bids for the contract in August 2020 were:   

    • Engie (France) / Mitsui (Japan) / Yonden (Shikoku Electric, Japan)
    • Sumitomo / Kansai Electric (Japan)
    • Marubeni / Kyushu Electric (Japan)

    The original plan was for the Facility E IWPP to have a power generation capacity of about 2,300MW and a desalination component of 100MIGD once fully operational.

    Kahramaa revised the power plant’s design capacity to 2,600MW and sought alternative prices from bidders. 

    Kahramaa eventually cancelled and reissued the tender in September 2023. The current tender entails a power generation plant with the same capacity as initially tendered in 2019.

    MEED understands that the new target commercial operation date for the Facility E IWPP project has been moved to 2027. 

    The state utility’s transaction advisory team includes UK-headquartered PwC and Clyde & Co as financial and legal advisers, respectively, led by Belgrade-headquartered Energoprojekt as technical adviser.

    Facility E is Qatar’s fifth IWPP scheme. Completed and operational IWPPs include three projects in Ras Laffan – known as Facilities A, B and C – and Facility D in Umm Al-Houl.

    Awarded in 2015 and completed in 2018, Facility D was developed by a Japanese consortium of Mitsubishi Corporation and Tokyo Electric Power Company (Tepco). South Korea’s Samsung C&T was the EPC contractor.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12971834/main.jpg
    Jennifer Aguinaldo
  • Masdar and Hassan Allam sign Egypt solar and battery contracts

    22 November 2024

    Register for MEED’s 14-day trial access 

    Cairo-based Hassan Allam Utilities, Abu Dhabi Future Energy Company (Masdar) and Infinity Power have signed two power-purchase agreements (PPAs) with Egyptian Electricity Transmission Company (EETC) for the development of two solar projects with a combined capacity of 1,200MW.

    The first solar project in Wahat will have a capacity of 900MW. The second solar plant in Benban will have a capacity of 300MW and include a battery energy storage system (bess) plant capacity of 720 megawatt-hours (MWh).

    Egypt’s Prime Minister Mostafa Madbouly and the UAE’s Minister of Industry and Advanced Technology Sultan Al-Jaber witnessed the signing of the PPAs. 

    In a statement, Hassan Allam said the facilities “are expected to play a critical role in reducing carbon emissions, supporting Egypt’s sustainability ambitions, and increasing the supply of clean energy in Egypt”.

    It will also be the first development to come on stream in the broader strategic partnership between Hassan Allam Utilities, Masdar and Infinity Power. The partners are looking to develop close to 11,000MW of renewable power generation capacity in Egypt.

    In May, the team signed a land access agreement with the Egyptian government for a planned 10,000MW onshore wind farm project in Egypt.

    The agreement gives the consortium access to a 3,025-square-kilometre area in West Sohag and enables it to conduct the required development studies, which will help advance the project to the construction phase.

    The agreement followed an initial memorandum of understanding signed by the consortium and Egypt’s New & Renewable Energy Authority in November 2022, and a land agreement announced in June of last year.

    Photo credit: Hassan Allam

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12971765/main.jpg
    Jennifer Aguinaldo
  • Morocco awards $2bn of high-speed rail construction work

    22 November 2024

    Register for MEED's 14-day trial access 

    Contractors have now been selected for the eight main civil works packages on the Marrakesh to Kenitra high-speed rail line. The construction contracts total nearly $2bn.

    Each package covers the earthworks, structures, communications systems and fencing of different sections of the 245-kilometre line, with each lot covering between 36km and 64km.

    The contractors selected for each package are as follows:

    • Package 1: China Railway Number 4 Engineering Group (CREC 4) – MD3.4bn ($348.9m)
    • Package 2: Shandong Hi-Speed Group Company (China) – MD4.05bn
    • Package 3: Societe Les Grands Travaux Routier (GTR – the local subsidiary of France’s Colas) – MD2.15bn. The low bidder at bid opening was China Overseas Engineering Group with an offer of MD2.048bn, but the Moroccan contractor was selected after national preference criteria were applied.
    • Package 4: Travaux Generaux de Construction de Casablanca (TGCC – local) – MD2.8bn
    • Package 5: China Railway 20th Bureau Group (CRCC 20) – MD1.8bn
    • Package 6: Jet Contractors (local) – MD2.1bn
    • Package 7: Groupe Mojazine (local) – MD1.98bn. The low bidder was China Gezhouba Group at MD1.88bn, but the local contractor was selected after national preference criteria were applied.
    • Package 10: China Overseas Engineering Group – MD1.35bn

    The link will extend the Al-Boraq railway, a high-speed rail line between Tangier, Rabat and Casablanca. The line started operating in 2018 and was Africa’s first high-speed railway system.

    In August, MEED reported that the client, Office National des Chemins de Fer (ONCF), had appointed a team to provide project management services for a high-speed rail link. The contract was awarded to a team comprising French engineering firms Egis and Systra, in association with Moroccan firm Novec.

    In November, ONCF also announced it had awarded an $81m contract to German firm Vossloh to deliver components for the high-speed project.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12972029/main.jpg
    Edward James