meed-logo

line1 line2 line3
SIGN IN / REGISTER

Acwa Power widens equity gap in power developer league

2 October 2023

 

The equity gap between Saudi utility developer Acwa Power and the other private utility developers in the GCC region has continued to widen, according to MEED’s annual GCC power developer ranking.

Acwa Power’s net capacity reached 13,340MW. This has doubled its lead to 67 per cent over France’s Engie, whose net capacity of 7,987MW has remained unchanged.

Over the past 12 months, power-purchase agreements were signed for six solar independent power producer (IPP) projects, as well as for a multi-utility public-private partnership contract and a cogeneration plant.

The seven contracts have a total combined power generation capacity of more than 8,000MW.

Acwa Power gained more than 2,900MW in net capacity over this period. This was due in large part to a 35 per cent equity share in the 2,060MW Shuaibah 2 solar power project and a 50 per cent shareholding in each of the Saad 2, Ar-Rass 2 and Kahfah solar photovoltaic (PV) projects. 

These contracts were procured by the kingdom's Public Investment Fund (PIF) through the Saudi renewable energy price discovery scheme.

Notably, the 600MW Shuaibah 1 solar IPP scheme, which was publicly tendered and awarded to an Acwa Power-led consortium under the second round of the National Renewable Energy Programme (NREP) in 2021, has been combined with the PIF’s Shuaibah 2.

Under the final scheme, which reached financial close this year, Acwa Power’s shares in Shuaibah 1 decreased from 50 per cent to 35 per cent. The shares of its partners Gulf Investment Corporation and Al-Babtain, which originally maintained 30 per cent and 20 per cent, respectively, have been bought by PIF subsidiary the Water & Electricity Holding Company (Badeel) and Saudi Aramco Power Company (Sapco).

As with Engie, the net and gross capacities of Japanese firms Marubeni, Mitsui, Sumitomo and Jera also remained unchanged, with no new contract wins in the period.

Ranked 10th in the previous year’s listing, France’s EDF rose three spots this year to claim seventh place, which was previously held by Korea Electric Power Corporation (Kepco).

EDF’s rise came as a result of winning contracts for two major schemes. It was selected together with South Korea’s Korea Western Power Company (Kowepo) to develop Oman’s 500MW Manah 1 solar IPP project, and was also awarded a multi-utility contract with the UAE’s Abu Dhabi Future Energy Company (Masdar) for the Amaala development in Saudi Arabia, which includes a 250MW solar power farm.

EDF overtook Kepco despite the South Korean firm’s successful bid for the Jafurah cogeneration plant, where it maintains a 60 per cent equity. The scheme’s power generation plant has a capacity of 320MW.

Singapore’s Sembcorp and China’s Jinko Power, which comprise the team that won the Manah 2 solar IPP contract in Oman, occupy the ninth and 10th spots, respectively.

Saudi utility developer Aljomaih Energy & Water Company relinquished its 10th spot last year.

Power tariffs have scope to improve

A different view

Saudi Arabia’s renewable energy price discovery tool is becoming a potential game-changer for the competitive landscape of GCC power developers.

It allows Acwa Power to submit a proposal to match the most recent prices obtained through each round of the NREP public tendering process, which is overseen by the state-backed principal buyer, Saudi Power Procurement Company (SPPC).

Under the price discovery scheme, the PIF will only invite other developers to bid for a contract if Acwa Power fails to match prices achieved through the public tenders.

Acwa Power has so far won all five of these contracts, which have a total combined capacity of 8,110MW.

Since the PIF is tasked with procuring 70 per cent of Saudi Arabia’s 58,700MW renewable energy capacity target by 2030, the Saudi sovereign wealth vehicle is expected to procure a further 32,000MW of renewable capacity over the coming years using the price discovery scheme.

Given the scale of the PIF’s programme, and the extent to which it has expanded Acwa Power’s renewables portfolio this year, a separate league table that includes only IPPs and independent water and power producer (IWPP) projects that have been publicly tendered, or simultaneously tendered to a pool of qualified private utility developers, offers interesting insights.

Excluding the PIF contracts reveals that the ranking of the private utility developers based on their net capacity – or the capacity commensurate to a developer’s equity shareholding in each power generation asset – is unchanged. Acwa Power remains at the top, with a total equity capacity of more than 9,800MW, compared to Engie’s nearly 8,000MW.

However, their gross capacity rankings reverse when the PIF contracts are excluded. Engie leads by 4 per cent in terms of gross capacity, or the total capacity of power plants that they are developing alone or with consortium partners.

Gas revival

No new gas-fired IPP or IWPP projects have been let in the GCC since 2021, when most principal buyers and utilities began to focus on increasing their renewable energy capacity in line with their countries’ decarbonisation agendas.

With the exception of the UAE's Fujairah F3 and Saudi Aramco’s Tanajib and Jafurah cogeneration plants, solar and wind power plants have accounted for the majority of private power generation capacity that has been procured since 2020.

This is set to change in the next 12-24 months as renewed demand for combined-cycle gas turbine (CCGT) plants is driven by the need to decommission old fleets that burn liquid fuel, or to replace expiring baseload capacity.

As of September this year, gas-fired power plants account for approximately 60 per cent of the GCC region's planned power generation plants that are likely to be awarded in the next 24 months, according to MEED research. 

The bid evaluation process is under way for four gas-fired IPPs in Saudi Arabia with a total combined capacity of 7,200MW. These are the first gas-fired IPP schemes to be procured by the kingdom since 2016.

A further three IWPP schemes – Kuwait's Al-Zour North 2 & 3 and Al-Khiran 1 and Qatar’s Facility E – are in the procurement stage. These schemes have a total combined power generation capacity of 6,800MW.

Next year, SPPC is expected to begin the procurement process for two gas-fired IPPs: the PP15 in Riyadh and another in Al-Khafji. Each is expected to have power generation capacity of 3,600MW.

Abu Dhabi’s Emirates Water & Electricity Company (Ewec) is also expected to initiate the procurement process for two CCGT plants with a total combined capacity of 2,500MW before the end of 2023.

Renewable arena

The revival of gas-fired schemes will not necessarily come at the expense of renewables, however.

The region’s largest market has ramped up its issuance of solar and wind tenders over the past 12 months and is expected to sustain or even accelerate the pace of its renewables procurement.

Saudi Arabia needs to procure at least 43,000MW of renewable energy capacity through public tenders and direct negotiations over the next six years to meet its 2030 target. This equates to about 7,200MW a year – twice its current average.

Overall, the future strength of the market for private utility developers is ensured by a growing clientele in Saudi Arabia that includes Neom and its subsidiary Enowa, in addition to the utilities in the other five GCC states, and the large conglomerates and organisations that aim to build captive power plants.

A case in point is the 35,000MW of solar and wind energy projects are in the pre-development stage for Neom, which aims to be powered 100 per cent by renewable energy by 2030.

Abu Dhabi also plans to procure at least 1,500MW of solar PV capacity annually over the next 10 years, in line with its goals for decarbonising its electricity system.

Developers’ dilemma

A Dubai-based executive with one of the international developers active in the region says: “It has been a very busy year for us. If all of these plans come through in the next 12-24 months, it will be even busier.”

The executive is unsure whether all the planned gas-fired projects will materialise, however. “We have been here before, and some of these projects have experienced major delays in the past for reasons that are not even related to decarbonisation or net-zero targets.”

Given the GCC states' carbon emissions reduction targets and the recent easing of supply chain constraints, solar and wind IPPs appear to offer greater certainty for utility developers, many of which are also beholden to internal decarbonisation targets that include a reduction of their existing thermal fleets.

The contracts for five solar and three wind IPPs in the region are expected to be awarded soon.

Masdar has outpriced Acwa Power for the 1,800MW sixth phase of Dubai’s Mohammed bin Rashid al-Maktoum Solar Park project. A team of EDF and Kowepo has also submitted the lowest bid for the 1,500MW Al-Ajban solar PV IPP in Abu Dhabi.

In addition, SPPC has shortlisted bidders for two solar PV IPPs with a total combined capacity of 1,500MW under the NREP fourth round. It also expects to receive bids soon for three wind IPPs with a total combined capacity of 1,800MW.

Tenders for the NREP’s fifth round and Abu Dhabi’s fourth utility-scale solar PV farm are also expected imminently.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11143965/main.gif
Jennifer Aguinaldo

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

Click here to register
Exclusive from Meed
Related Articles
  • Chinese and Saudi partners set up Hithium Manat

    17 October 2024

    Register for MEED's 14-day trial access 

    Chinese energy storage solutions firm Hithium Energy Storage Technology Company (Hithium) and the local Nabilah AlTunisi have formed a joint venture that will manufacture battery energy storage systems (bess) in Saudi Arabia.

    The joint venture is called Hithium Manat. The planned manufacturing facility has an annual production capacity target of 5 gigawatt-hours (GWh), according to an official statement.

    Hithium launched energy storage solutions designed for the region's harsh environment during a solar and storage conference held in Riyadh.

    According to Hithium, "These systems feature advanced sandstorm protection and robust high and low-temperature designs, supporting ultra-long discharge cycles of 12+ hours."

    It added that the new product line is "customised to meet the unique demands of the Middle East and Africa region".

    Nabilah AlTunisi is the founder and owner of Hithium Manat's local partner.

    "This strategic alliance will not only provide access to world-class energy storage technology but also generate local employment opportunities, stimulate technological innovation and actively contribute to realising the kingdom's Vision 2030 objectives," AlTunisi said.

    Battery energy storage market

    In August, National Grid Saudi Arabia, a subsidiary of state utility Saudi Electricity Company, awarded the engineering, procurement and construction (EPC) contracts for three energy storage systems to Riyadh-based investment group Algihaz Holding. The estimated $800m projects are located in Najran, Madaya and Khamis Mushait.

    National Grid also recently tendered contracts for the construction of five battery energy storage systems with a total combined capacity of 2,500MW across the kingdom.

    The planned facilities, each with a capacity of 500MW or roughly 2,000 megawatt-hours, are located in or within proximity of the following key cities and load centres:

    • Riyadh
    • Qaisumah
    • Dawadmi
    • Al-Jouf
    • Rabigh

    Every utility in the region is procuring or planning to procure bess capacity in light of growing intermittent renewable power in their grids. 

    The overall capacity of deployed bess globally is expected to reach 127GW by 2027, up from an estimated cumulative deployment of 36.7GW at the end of 2023, a GlobalData report issued in June said.

    The report cited Chinese companies BYD and CATL and South Korean companies LG Energy Solutions and Samsung SDI among the top battery technology providers globally.

    Related read: Battery storage gains foothold

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12742375/main.jpg
    Jennifer Aguinaldo
  • Kahramaa invites Ras Laffan substation bids

    17 October 2024

    Qatar state utility General Electricity & Water Corporation (Kahramaa) has tendered a contract to upgrade the Ras Laffan C substation.

    The scope of work covers the upgrade of existing 220-kilovolt (kV) and 400kV substations and the addition of 220kV gas-insulated switchgear bays and an 800-megavolt amps transformer.

    Kahramaa issued the tender on 15 October and expects to receive bids by 28 November.

    The project bid bond is valued at QR1.5m ($410,000).

    Separately, Kahramaa invited firms to submit their proposals for a contract to supply and install power transmission and distribution equipment, including providing and connecting substation main earth and equipment earthing, commissioning fitted substations and pre-commissioning protection testing for 11kV switchgear panels.

    Kahramaa expects to receive bids for this contract, with a bid bond of QR3m, by 14 November.

    Kahramaa is expanding its power generation capacity. Negotiations are under way with the sole bidder led by Japan's Sumitomo Corporation for a contract to develop and operate Qatar’s Facility E independent water and power producer (IWPP) project.

    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.

    Earlier this month, Qatar Electricity & Water Company announced plans to develop a 500MW peak power unit in Qatar's Ras Abu Fontas area.

    Construction is also under way for two solar farms with a total combined capacity of 875MW in Mesaieed and Ras Laffan.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12742343/main.jpg
    Jennifer Aguinaldo
  • Neom starts Tabuk highway prequalifications

    17 October 2024

     

    Saudi Arabian gigaproject developer Neom expects firms to submit their prequalification applications for a project to build a mountain road near Tabuk later this month.

    The 11.5-kilometre (km) Tabuk mountain road project comprises a 4km tunnel and 7.5km dualisation of an existing road, according to an industry source.

    Neom expects to receive statements of qualifications from interested engineering, procurement and construction contractors by 29 October.

    The tender proceedings for Neom's transport infrastructure projects are gathering momentum.

    Neom received expressions of interest for a contract to build a coastal highway and infrastructure project catering to the Magna development on the Gulf of Aqaba on 15 October.

    The project, called Magna Infrastructure Packages, is split into three. Package one is 13km, package two is 42km and package three is 41km. The packages cater to the development’s north, central and south areas.

    The design-and-build project covers utilities for water, power, mobility, sewer, buildings and highways, in addition to the coastal highway. The project is expected to be completed by 2027.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12738632/main.gif
    Jennifer Aguinaldo
  • Adnoc completes Fertiglobe stake acquisition

    16 October 2024

    Register for MEED's 14-day trial access 

    Abu Dhabi National Oil Company (Adnoc) has completed the transaction to acquire a majority stake in UAE-headquartered Fertiglobe, the largest nitrogen-based fertiliser producer in the Middle East and North Africa region.

    Adnoc has increased its shareholding in Fertiglobe to 86.2% through the acquisition of 50% + 1 share held by Netherlands-based OCI Global, which is backed by Egyptian billionaire Nassef Sawiris. The Abu Dhabi energy giant previously held a 36.2% stake in Fertiglobe.

    The remaining 13.8% of Fertiglobe’s shares trade on the Abu Dhabi Securities Exchange following the company's stock listing in October 2022.

    Adnoc announced the transaction to become the majority shareholder in Fertiglobe last December. Fertiglobe’s shares were priced at AED3.2 ($0.87) a share, valuing the deal at $3.62bn.

    Following the completion of the majority acquisition, “Fertiglobe’s current management team will stay in place”, including Ahmed El-Hoshy in his role as CEO, Adnoc said in a statement on 15 October.

    “Ahmed El-Hoshy spent 15 years growing OCI’s US and European business in ammonia and methanol via greenfields, brownfields and acquisitions, generating significant value for shareholders by leading recent divestments,” Adnoc said.

    Growing chemicals business

    Fertiglobe is the world’s largest seaborne exporter of urea and ammonia combined, exporting to 53 countries with a collective market share of about 10% of global trade in these products.

    “The acquisition represents … the expansion of Adnoc’s low-carbon fuels business, and supports its goal to become a top-five global chemicals player,” Adnoc said.

    “Fertiglobe will become the platform for Adnoc’s growth in fertiliser and low-carbon ammonia,” Adnoc said in its statement.

    Adnoc added it will transfer its stakes in existing and future low-carbon ammonia projects to Fertiglobe “at cost and when ready for startup”, including its two projects in Abu Dhabi and other projects in its global portfolio. Adnoc has yet to specify the low-carbon ammonia and blue ammonia production projects.

    MEED understands that the first Abu Dhabi project in question is the blue ammonia facility in the Taziz Industrial Chemicals Zone in Ruwais. Fertiglobe has partnered with South Korea’s GS Energy Corporation and Japanese investment firm Mitsui & Company to build the complex, which will have a production capacity of 1 million tonnes a year (t/y).

    In February last year, the joint venture awarded Italian firm Tecnimont the main contract for executing the engineering, procurement and construction works on the Taziz blue ammonia project.

    The second Abu Dhabi blue ammonia project that Adnoc could be referring to in its statement is a proposed scheme for which it signed a joint feasibility study agreement with British energy producer BP in May 2022.

    Adnoc further said that the two projects in Abu Dhabi will add 2 million t/y of output potential, more than doubling Fertiglobe’s current commercial ammonia capacity of 1.6 million t/y and increasing its total sellable capacity to 8.6 million t/y of net ammonia and urea combined, in addition to other announced global projects.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12735570/main1542.jpg
    Indrajit Sen
  • Neom receives interest for Magna coastal highway

    16 October 2024

     

    Saudi Arabia’s gigaproject developer Neom has received interest from firms for the contract to build a coastal highway and infrastructure project linking Neom to the Magna development on the Gulf of Aqaba.

    The project, called Magna Infrastructure Packages, is split into three. 

    Package 1 is 13 kilometres, package 2 is 42km and package 3 is 41km.

    The packages cater to the development’s north, central and south areas.

    According to an industry source, the design-and-build project covers utilities for water, power, mobility, sewer, buildings and highways. It could cost between $250m and $500m.

    Local and international engineering, procurement and construction (EPC) contractors are understood to have submitted their expressions of interest to participate in the tender on 15 October.

    The coastal highway and infrastructure project is expected to be completed by 2027, the source said.

    Magna consists of 12 developments featuring 15 hotels that offer 1,600 hotel rooms, suites and apartments and over 2,500 residences.

    The development will span a 120km-long coastal strip with an average width of 3.5km. The total land area is about 430 square kilometres.

    The Magna infrastructure is divided into six districts, as follows:

    • District 1 – Northern Gateway: includes 13 bridges and underpasses with a length of 1.9km, 18 wadi culverts and five drainage culverts
    • District 2 – Romantic Bay and the Cube: includes two bridges and underpasses spanning 360 metres, 40 wadi culverts and 24 drainage culverts
    • District 3 – Wadi Tayyib: includes two bridges and underpasses, 26 wadi culverts and nine drainage culverts
    • District 4 – Jungle Club: includes three bridges and underpasses and 17 wadi culverts
    • District 5 – Magna: includes two bridges and underpasses, 14 wadi culverts and two drainage culverts
    • District 6 – Southern Gateway: includes three bridges and underpasses, 31 wadi culverts and one drainage culvert
    https://image.digitalinsightresearch.in/uploads/NewsArticle/12735899/main.jpg
    Jennifer Aguinaldo