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Transforming Bahrain’s electricity and water sector

19 December 2023

 

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In June 2022, Kamal bin Ahmed Mohammed was appointed president of Bahrain’s Electricity & Water Authority after overseeing the delivery of major projects, including the new terminal at Bahrain International airport, as transport minister. 

Mohammed is quick to stress how essential EWA is to Bahrain.

“EWA is an important entity in Bahrain. Its infrastructure is an enabler for economic growth as well as for the social development of Bahrain,” he says.

“The customer base of EWA is the whole of Bahrain – the Bahrainis and the people living here. It has the largest customer base in Bahrain, with 468,000 customers. It is also a big employer with about 2,200 people.

“We are one of the biggest asset-based entities in Bahrain. It has BD2.4bn ($6.4bn) of assets, and if it becomes a company, it would be one of the biggest companies in Bahrain,” he says.

Government company

Mohammed’s last point is crucial as Bahrain’s electricity and water industry embarks on a transformation.

“The plan now is to transform the industry as a whole,” he explains.

“I have been given a mandate to make sure we have the right structure for Bahrain’s electricity and water industry. We are now in the process of establishing a regulatory body for electricity and water. 

“We have a team working on that, as well as turning EWA from a government authority into a government company. That is the first stage, to corporatise.”

Transforming the industry is a major undertaking. “It requires a lot of things to be done,” says Mohammed. “EWA will need to be licensed by the regulator. For that, we have developed a transformation plan comprising different strategic themes and programmes. 

“Hopefully, within the next two years, we will be able to achieve and deliver our objectives.” 

When asked if the plan is for EWA to follow in the footsteps of Dubai Electricity & Water Authority (Dewa) and eventually launch an initial public offering (IPO), Mohammed says that will be a decision for the future.

“The first phase is to corporatise and be owned by the government. The government can decide at a later stage if it is the best decision to divest part of it in the local market. That is another phase; we are now focusing on corporatisation.”

Asked if the plan is to follow in Dewa’s footsteps and launch an IPO, Mohammed says that is a decision for the future

Energy transition

Bahrain’s electricity and water industry is being transformed at a time of great change in the industry globally as countries commit to decarbonisation targets. Bahrain has committed to achieving net zero by 2060.

“EWA has an important role to play in this process and this is why we have developed our energy transition plan,” says Mohammed.

“We have set our target to increase clean, renewable energy in our energy mix during the next one or two years. Our targets now are to be 5 per cent renewable by 2025, and 20 per cent by 2035.”

Reducing carbon emissions involves supply and demand measures. To help manage demand, in early December EWA launched the Kafaa programme in cooperation with Energy Service Companies to increase the efficiency of energy consumption in government buildings.

The aim is to save electricity consumption by around 975 gigawatt hours and reduce carbon emissions by about 488,000 tonnes by 2040. 

The programme will also work with the private sector. “We already have commitments from big entities and financial institutions. They are ready to take part because although they will spend a few hundred thousand dinars improving their efficiency, they will recover their money in two years. Our pilot study showed that it takes two to three years to recover the initial investment,” says Mohammed.

Although this may dent EWA’s revenues in the short term, Mohammed explains there is a bigger picture.

“In the long term, it is better for EWA because it means it can delay capital investments. And today, 67 per cent of EWA’s costs are production, so if we can delay future production, it means we will save money over time,” he adds.

For supply, Bahrain has introduced a net metering project, which allows people or businesses to generate electricity and, when not used, feed back into the grid.

“We already have 50MW connected to the grid. We have another 150MW in progress, and we think that by the end of 2026, we will have 300MW connected to the network,” says Mohammed.

Future projects

With limited land available for solar plants, floating solar plants are attractive future projects for Bahrain. Other alternative energy sources, including nuclear and small modular reactors, are also being monitored for future use.

As renewable energy projects come online, Bahrain is closing down old power-generating assets.

“The last part of our energy transition plan is to shut down the old cogeneration plants,” says Mohammed. “We closed the Sitra power plant, and we have also closed Riffa 1. During the next two to three years, we will close two plants: one at Hidd and the Riffa 2 power plant.”

With renewable energy unable to provide the baseload Bahrain needs at night, there are plans to build one more gas-fired power plant. “Using less gas, it will be what we hope will be the last gas-fired power plant in Bahrain,” says Mohammed.

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Colin Foreman

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    To see previous issues of MEED Business Review, please click here
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    Colin Foreman