meed-logo

line1 line2 line3
SIGN IN / REGISTER

Iraq electricity sector makes slow progress

9 May 2024

Latest news from Iraq's power and water sectors:

> Iraq plans new Baiji power plant
> Decision imminent on Iraq waste-to-energy project
> Iraq discusses nuclear projects with global watchdog
> Siemens Energy and SLB sign Iraq flare gas-to-power deal
> PowerChina in talks for Basra desalination plant
> US seeks firms for Baghdad power plant package
> Iraq plans green hydrogen project at refinery
> Iraq approves long-term grid expansion

 

In late March, Iraq’s Electricity Ministry struck a five-year gas supply deal with National Iranian Gas Company for up to 50 million cubic metres a day (cm/d), contingent on the needs of Iraqi power stations, in exchange for oil and gasoline.

The deal offers a lifeline to Iraq’s deteriorating electricity sector and replaces an existing agreement whereby contractual volumes were theoretically set at 70 million cm/d for summer and 45 million cm/d for winter.

The two countries signed the deal following nearly three months of longer-than-usual power outages in Iraq, and after Baghdad settled part of the multibillion-dollar debt it owes Iran. The power cuts occurred due to a drastic reduction in Irani gas supply, which dipped to 10 million cm/d and wiped out 4GW from Iraq’s grid.

The deal is a compromise for both countries. It allows Iraq some breathing space to implement projects to reduce its dependence on Iran’s gas exports – a long-running and elusive objective among Iraq’s policymakers and its allies in the GCC states and the US.

The crisis should prompt Iraq to push ahead with projects to boost domestic gas production and build solar power plants, according to the Electricity Ministry.

Supply and demand mismatch

There has been a persistent mismatch between supply and demand in Iraq’s electricity sector, with peak demand during the summer months outstripping available capacity by a sizeable margin.

In recent years, the deficit has returned during the winter when heating requirements rise.

With a few exceptions, however, the procurement process or negotiations for additional generation capacity have been proceeding slowly, leaving a gap that is typically addressed by diesel generators.

Iraq aspires to build 12,000MW of solar capacity by the end of the decade, which is nearly half its known available capacity today.

The Electricity Ministry has signed deals with several companies to develop sizeable solar photovoltaic (PV) capacity over the past two to three years in line with this objective. Yet, despite regular pronouncements that the construction phase for these projects is about to start, none have reached final investment decisions (FIDs) or the construction phase so far.

The Electricity Ministry remains the dominant client for these projects, although the National Investment Commission (NIC) has been an active participant, particularly in bilateral or public-private partnership projects.

For example, the UAE’s Masdar signed a deal to develop 2GW of solar capacity in Iraq with the NIC. The commission is also procuring a contract to develop the country’s first waste-to-energy (WTE) project in coordination with the Municipality of Baghdad, the Electricity Ministry and the Environment Ministry.

Located in the Al Nahrawan area of Baghdad Governorate, the planned WTE project will have the capacity to treat 3,000 tonnes of waste a day and generate nearly 80 megawatt-hours (MWh) of electricity.

Other companies that have committed to develop solar PV projects in Iraq include Power China, which has pledged to develop solar PV projects with a combined total capacity of 2GW, and France’s Total Energies, which has committed to build a 1,000MW solar farm in Artawi.

The solar project in Artawi is a small part of a $27bn package that TotalEnergies is developing in partnership with QatarEnergy. The package involves the development of a common seawater supply project and oil and gas fields in Iraq.

Awarded projects

As earlier cited, there are some exceptions to the endemic start-stop mode for Iraq’s power generation and distribution projects.

For example, Germany’s Siemens Energy and the US-based GE have ongoing projects that include retrofitting or upgrading existing gas turbine power stations or building new substations as part of agreements to help rebuild Iraq and support its goal of reducing carbon emissions.

Earlier this month, the Electricity Ministry signed a preliminary agreement with Germany’s Siemens Energy and US firm SLB, formerly Schlumberger, to explore the development of a power generation plant using flare gas.

According to Siemens Energy Middle East managing director Dietmar Siersdorfer, the planned flare gas-to-power project in southern Iraq will help reduce carbon dioxide emissions and capture value from gas that would otherwise be wasted.

The planned flare gas-to-power plant could have a generation capacity of up to 2,000MW.

In January this year, China-based Oriental International is understood to have signed a contract to convert a single-cycle unit at the Baghdad South power plant complex into a combined-cycle power plant.

In April, the Electricity Ministry awarded another Chinese company, China Machinery Engineering Corporation (CMEC), a second year of operation and maintenance contracts for the Salah Al Din gas-fired power plant.

CMEC was awarded the estimated $1bn contract to build the power plant in northern Iraq in 2011. After a series of delays and challenges, including the Isis uprising, the two 630MW capacity units began operating last year.

In December last year, Siemens Energy also signed a contract to deliver five high-voltage substations on a turnkey basis in Iraq. The 400-kilovolt substations, each with a capacity of 1,500MW, will be installed in Baghdad, Diyala, Najaf, Karbala and Basra.

Similarly, the US’s preoccupation with helping wean Iraq off Iran’s gas and electricity imports has spurred projects to interconnect Iraq’s grid with its neighbour Saudi Arabia through the GCC grid and Jordan.

In October last year, the governor of Saudi Arabia’s Eastern Province, Prince Saud Bin Naif Bin Abdulaziz, inaugurated the GCC grid's Iraq connection, which had been under development for several years. The 295-kilometre power transmission network will have a total transmission capacity of 1,800MW, with an initial phase expected to supply 500MW of electricity to Iraq.

Future projects

In February this year, Electricity Ministry spokesperson Ahmed Mousa said the government had approved funds for the long-term plans to expand the country’s power transmission and distribution network with Siemens Energy’s help.

Mousa said the ministry “received funds for long-term plans to develop the electricity sector in 2023 … the three-year budget approved in 2023 also includes funds this year and in 2025”. 

In early May, it was reported that the Electricity Ministry held discussions with Qatar’s UCC Holding to develop a 2,100MW gas-fired power plant in Baiji. The plant will replace a power station that was damaged during the war.

It is unclear if the project is part of a previous agreement between UCC Holding and NIC to develop two power plants with a capacity of 2,400MW in Iraq.

A new 2,000MW gas-fired power plant is also being proposed in Basra, which is expected to receive gas from the nearby West Qurna 1 and West Qurna 2 oil fields.

As it is, several projects are waiting for final approvals, such as the gas-fired 2,800MW Khairat independent power producer, which has yet to reach FID over two years after the contract was awarded.  

Going nuclear 

Project delays and indecision in Iraq do not appear to narrow down the options for future power generation expansion.  

In March, it was reported that senior Iraq and International Atomic Energy Agency (IAEA) officials had discussed Iraq’s plans for a possible nuclear energy programme, including small modular reactors.

According to the nuclear watchdog, discussions included maintaining strict adherence to non-proliferation norms.

IAEA director general Rafael Mariano Grossi said his agency has committed to supporting the foundations of what should be an entirely peaceful programme in Iraq.

Iraq, for its part, is considering nuclear energy to enable greater energy security and for water desalination projects as part of the country’s plans for a more sustainable future.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11745270/main.gif
Jennifer Aguinaldo

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

Click here to register
Exclusive from Meed
Related Articles
  • Abu Dhabi extends battery storage bid deadline

    14 March 2025

    Prequalified bidders were given a three-week extension to submit their proposals for a contract to develop and operate a battery energy storage system (bess) plant project in Abu Dhabi.

    The project client, Abu Dhabi-based utility offtaker Emirates Water & Electricity Company (Ewec), expects to receive bids by 24 March, three weeks from the previous tender closing date, according to a source familiar with the project.

    Called Bess 1, the 400MW project will closely follow the model of Abu Dhabi’s independent power project (IPP) programme, in which developers enter into a long-term energy storage agreement (ESA) with Ewec as the sole procurer.

    The first plant will be in Al-Bihouth, about 45 kilometres (km) southwest of Abu Dhabi, and the second plant will be in Madinat Zayed, about 160km southwest of the city.

    Ewec issued the request for proposals to prequalified companies in July last year and initially set 30 November 2024 as the last day to submit proposals. 

    MEED previously reported that up to four consortiums comprising infrastructure investors, developers and contractors have been formed and are preparing to submit their proposals for the contract.

    Ewec prequalified 11 managing partners that can bid either individually or as part of a consortium with other prequalified bidders. These are:

    • Acwa Power (Saudi Arabia)
    • China Electrical Equipment International (China)
    • EDF (France)
    • International Power (Engie)
    • Jera (Japan)
    • Jinko Power (China)
    • Korea Electric Power Corporation (Kepco, South Korea)
    • Marubeni (Japan)
    • Sembcorp Utilities (Singapore)
    • SPIC Huanghe Hydropower Development Company (China) 
    • Sumitomo Corporation (Japan)

    Ewec prequalified 18 other companies that can bid as part of a consortium. These are:

    • Abrdn Investcorp Infrastructure Investments Manager (UK)
    • AGP Capital (US)
    • Al-Masaood (UAE)
    • Al-Fanar Company (Saudi Arabia)
    • Alghanim International (Kuwait)
    • Aljomaih Energy & Water Company (Jenwa, Saudi Arabia)
    • Amplex-Emirates (local)
    • ATGC Transport & General Trading (local)
    • Amea Power (local)
    • China Electric Power Equipment & Technology (China)
    • China Machinery Engineering Corporation (China)
    • GE Capital EFS Financing (US)
    • Itochu (Japan)
    • Korea Western Power Company (Kowepo, South Korea)
    • Pacific Green (US)
    • Samsung C&T (South Korea)
    • Swift Energy (Malaysia)
    • X-Noor Energy Equipment Trading  (UAE)

    The planned facility is expected to provide up to 800 megawatt-hours (MWh) of storage capacity.

    The ESA will be for 15 years, commencing on the project’s commercial operation date, which falls in the third quarter of 2026. 

    According to Ewec, the bess project will provide additional flexibility to the system and ancillary services such as frequency response and voltage regulation.

    Global bess market

    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, according to a recent GlobalData report.

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

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13484751/main.gif
    Jennifer Aguinaldo
  • Indian and Spanish team wins Ras Mohaisen EPC package

    13 March 2025

    A team of India's Larsen & Toubro (L&T) and Madrid-headquartered Lantania has won the engineering, procurement and construction (EPC) contract for the Ras Mohaisen independent water project (IWP) in Saudi Arabia.

    State utility offtaker Saudi Water Partnership Company (SWPC) signed the water-purchase agreement contract for the project with a consortium comprising Riyadh-headquartered utility developer Acwa Power, Hajj Abdullah Ali Reza & Partners and Al-Kifah Holding Company in February. 

    According to L&T,  its Water and Effluent Treatment business division will execute the EPC contract for the desalination facility.

    The state water offtaker received two bids for the contract in April last year. The other bidder was Spain’s Acciona.

    The Ras Mohaisen IWP will be able to treat 300,000 cubic metres of seawater a day (cm/d) using reverse osmosis technology.

    It will also include storage tanks with a capacity of 600,000 cubic metres, equivalent to two operating days, intake and outfall facilities, process units and pumping stations.

    The build, own and operate project will also include electrical, automation and instrumentation systems and a solar photovoltaic plant. 

    The project is expected to reach commercial operation by the second quarter of 2028.

    The plant will be located in Al-Qunfudhah Governorate, about 300 kilometres south of Mecca, on the Red Sea coast in Saudi Arabia’s Western Region.

    The project is expected to enhance water supply chains and is intended to serve the Mecca and Al-Baha regions.

    Netherlands-headquartered KPMG acted as SWPC’s financial adviser, with UK-based Eversheds Sutherland acting as the legal adviser for the project.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13485233/main.gif
    Jennifer Aguinaldo
  • Egypt faces complex economic reality

    13 March 2025

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13483136/main.gif
    MEED Editorial
  • LIVE WEBINAR: GCC Projects Market 2025

    13 March 2025

    Register now

    Topic: GCC Projects Market 2025

    Date & time: 11:00 AM GST, 20 March 2025

    Agenda:

    • Introduction and overview of the GCC projects market
    • Data-driven historical and current performance
    • Top clients and contractors
    • Assessment of main market drivers
    • Summary of the Saudi gigaprojects programme
    • Market overview by country and sector
    • Market pipeline and outlook for 2025 and beyond
    • Key trends, opportunities and challenges
    • Selected major projects to watch
    • Q&A session

    Hosted by: Edward James, head of content and analysis at MEED

    A well-known and respected thought leader in Mena affairs, Edward James has been with MEED for more than 19 years, working as a researcher, consultant and content director. Today he heads up all content and research produced by the MEED group. His specific areas of expertise are construction, hydrocarbons, power and water, and the petrochemicals market. He is considered one of the world’s foremost experts on the Mena projects market. He is a regular guest commentator on Middle East issues for news channels such as the BBC, CNN and ABC News and is a regular speaker at events in the region. 

    Click here to register

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13483162/main.gif
    MEED Editorial
  • Dubai property market rebounds in February

    13 March 2025

    Property prices in Dubai rebounded in February following a decline in January. Average property prices hit a record high of AED1,505 ($410) per square foot, reflecting a month-on-month increase of 1.41% or a rise of AED20.94 compared to January 2025, according to a statement from property agent Better Homes.

    The report also said there was a 17% increase in sales volume, reaching AED41bn across 14,929 transactions, marking a 15% month-on-month rise. This resurgence underscores Dubai's resilience and enduring appeal as a global property investment hub.

    The rebound comes just a month after a slight decline in property prices, which had marked the first decrease in over two years.

    In January, average prices fell by 0.57% to AED1,484 per square foot, raising concerns about market stabilisation. The February figures indicate that the market has quickly regained its momentum, driven primarily by a surge in off-plan properties, which accounted for 59% of all sales.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13483150/main.jpg
    Colin Foreman