Related Articles

• 
  UAE utilities ramp up capacity procurement

  4 October 2024

  Abu Dhabi state utility Emirates Water & Electricity Company (Ewec) invited bids for contracts to develop three independent power producer (IPP) projects in rapid succession in the third quarter of 2024.

  These projects comprise the 2,500GW Taweelah C combined-cycle gas turbine plant, the 1,500MW Madinat Zayed open-cycle gas turbine project and the 400MW battery energy storage system to be located in Al-Bihouth and Madinat Zayed.

  They bring the number of Ewec’s electricity generation IPP projects currently under tender to four, in addition to the 1,500MW Al-Khazna solar photovoltaic (PV) IPP, which it tendered in April.

  Ewec also issued the expression of interest notice on 1 October for a contract to develop the emirate’s fifth solar PV IPP, the 1,500MW Al-Zarraf project.

  This robust project pipeline implies that the offtaker and developers, investors and contractors bidding for these projects have entered a hectic period compared to the past few years.

  Abu Dhabi’s growing IPP pipeline will compete with Saudi Arabia’s equally robust pipeline for developers’ and contractors’ resources over the near to medium term as both states endeavour to meet their 2030 decarbonisation targets.

  Abu Dhabi plans to procure 1,400MW of renewable energy capacity annually between 2027 and 2037 and to meet more than 50% of the emirate’s electricity demand from renewable and clean energy sources by 2030. This is expected to rise to 60% by 2035.

  It also previously stated that it expects to reach a renewable energy installed capacity of 7,500MW by 2030, or three times its current capacity.

  The expiry of power-purchase agreements for several generation assets over the next couple of years and the likelihood of these contracts not being extended also drive Abu Dhabi’s procurement programme for gas-fired capacity.

  Dubai has a slightly different strategy. Dubai Electricity & Water Authority (Dewa) has abandoned any plans to procure additional gas-fired capacity in the foreseeable future.

  Dubai’s future generation projects will be focused on the Mohammed Bin Rashid Solar Park, which is expected to reach an installed capacity of 5,000MW by 2030.

  So far, Dewa has awarded contracts for the first six phases of the project, which have a total combined capacity of 4,600MW.

  Further phases are being planned, with the state utility expected to appoint transaction advisers for phase seven, for which the capacity has not yet been made public, next year.

  “The volume of projects coming to the market is almost unprecedented,” notes an industry source, who expects that utility developers are starting to be selective when bidding for new contracts regardless of the energy source.

  Nuclear capacity

  Notably, the UAE’s Federal Authority for Nuclear Regulation announced that the fourth reactor, or Unit 4, of the Barakah nuclear power plant in Abu Dhabi reached commercial operations in early September.

  It marks the completion of the $43bn, 5,600MW Barakah 1 project, which was jointly implemented by the UAE’s Emirates Nuclear Energy Corporation (Enec) and South Korea’s Korea Electric Power Corporation (Kepco).

  The entire plant reached full commercial operations approximately 16 years after Abu Dhabi first announced the project in 2008 and 12 years after construction works commenced on Unit 1.

  The completion of Barakah 1 also implies that the project’s next phase is likely to proceed in earnest.

  Hamad Alkaabi, the UAE’s permanent representative to the Austria-based International Atomic Energy Agency, said in July that the UAE government is considering initiating the tendering process for its next nuclear power plant this year.

  Apart from the final tendering process decision, the market is also keen to know who will be invited to bid or submit proposals for the contract to implement the nuclear power facility’s next phase.

  Washington and Abu Dhabi entered into the bilateral 123 Agreement for peaceful nuclear cooperation in 2009, which could determine to a large extent which companies or countries will be invited to participate in the project’s next phase.

  What the rush is about

  Ewec has made clear that expiring generation capacities and the need for gas-fired baseload as more renewable energy enters the UAE electricity grid underpin its ambitious capacity procurement pipeline.

  Other factors influencing future capacity procurement plans include the UAE’s multibillion-dollar national industrialisation strategy. This strategy involves expanding downstream industries, including clean hydrogen production for both domestic and export use, potentially resulting in an exponential increase in peak demand.

  This is in addition to the need to decarbonise while expanding the production of hard-to-abate sectors such as the oil and gas, steel and aluminium industries.

  In addition to these demand sources, many believe the UAE’s 2031 National Artificial Intelligence (AI) Strategy is a major contributor to Abu Dhabi’s ongoing generation capacity buildout.

  “They need to build power-hungry data centres to support their AI strategy,” notes an executive with an international infrastructure investment firm with offices in Dubai.

  The UAE’s AI strategy encompasses deploying AI in priority sectors and “providing the data and infrastructure essential to become a test bed for AI”.

  Meeting these and the other stated objectives, in addition to the data sovereignty regulations, has started driving a boom in data centre construction across the UAE.

  State-backed enterprises, utilities, banks, logistics, tourism and service industries, and real estate companies have launched or are expected to launch AI programmes to boost productivity and efficiency, in line with the UAE’s 2050 net-zero target and circular carbon economy strategy.

  These span industry-specific applications ranging from chatbots and small-language models to generative AI and large-language models, the latter of which require significant data bandwidth and consume enormous amounts of energy.

  AI applications in defence and national security are also presumed to be a major component of the overall AI plan. 

  “The AI programme is progressing,” notes an Abu Dhabi-based utility executive, confirming a plan to procure 5,000MW of AI-dedicated thermal capacity.

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  Jennifer Aguinaldo
• 
  Dubai Airports to install 39MW of solar rooftop

  4 October 2024

  Dubai Airports has signed an agreement with Etihad Clean Energy Development Company, a subsidiary of state utility Dubai Electricity & Water Authority (Dewa), for the installation of solar rooftop panels with a total capacity of 39MW.

  To be executed in phases, the solar farm is expected to be fully operational by 2026.

  The project involves the installation of 62,904 solar panels across Dubai International (DXB) and Dubai World Central – Al-Maktoum International (DWC) airports.

  The panels are expected to generate 60,346 megawatt-hours (MWh) of power annually.

  Dubai Airports said the project marks a “significant stride toward decarbonising airport operations”.

  The solar panels, which will span passenger terminals and concourses across both airports, are expected to offset 23,000 tonnes of carbon dioxide annually — equivalent to taking 5,000 cars off the road or powering 3,000 homes for a year.

  According to Dubai Airports, the energy generated will meet 6.5% of DXB’s power needs and 20% of DWC’s.

  Dubai Airports CEO Paul Griffiths and Etihad  Esco CEO Waleed Alnuaimi signed the agreement on 3 October during the World Green Economy Summit in Dubai.

  Sheikh Ahmed bin Saeed Al-Maktoum, chairman of the Dubai Supreme Council of Energy, chairman of Dubai Airports, and CEO of Emirates Airline and Group, and Saeed Mohammed Al-Tayer, vice chairman of the Dubai Supreme Council of Energy and managing director and CEO of Dewa witnessed the ceremonial signing of the agreement.

  This solar initiative complements ongoing environmental sustainability efforts by Dubai Airports, which include retrofitting hundreds of thousands of LED lights, optimising cooling systems, switching to biodiesel-powered ground vehicles, and cutting food waste to landfill.

  Photo: Dubai Airports

   

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  Jennifer Aguinaldo
• 
  Abu Dhabi extends Al-Khazna bid deadline

  4 October 2024

  

   

  Abu Dhabi state utility Emirates Water & Electricity Company (Ewec) has extended the deadline for prequalified developers to submit their proposals for a contract to develop Abu Dhabi's fourth utility-scale solar photovoltaic (PV) project to 14 October.

  The planned Khazna solar independent power project (IPP), also known as PV4, will have a capacity of 1,500MW.

  It will be located in Khazna, between Abu Dhabi and Al-Ain, and is expected to be commercially operational by 2027.

  Ewec requested proposals for the contract to develop and operate the solar IPP scheme in April and initially set the end of August as the last day for bidders to submit their proposals.

  The previous bid deadline was 3 October.

  The state utility prequalified nine companies and consortiums as managing members and another 10 that can bid as consortium members.

  Parties or companies prequalified as managing members are free to bid individually or as part of a consortium. These include:

  • Acwa Power (Saudi Arabia)
  • EDF Renewables (France)
  • International Power (Engie, France)
  • Jera Company (Japan)
  • Jinko Power (China)
  • Korea Electric Power Corporation (Kowepo, South Korea)
  • Marubeni Corporation (Japan)
  • Sumitomo Corporation (Japan)
  • TotalEnergies Renewables (France)

  The following companies can bid as part of a consortium with a managing member: 

  • Al-Jomaih Energy & Water (Jenwa, Saudi Arabia)
  • Avaada Energy (India)
  • Buhur for Investment Company (Saudi Arabia)
  • China Machinery Engineering Corporation (China)
  • China Power Engineering Consulting Group International Engineering Corporation (CPECC, China)
  • Kalyon Enerji Yatrimlari (Turkiye)
  • Korea Western Power Company (Kowepo, South Korea)
  • Orascom Construction (Egypt)
  • PowerChina International Group
  • Spic Huanghe Hydropower Development (Spic, China)

  A transaction advisory team comprising UK-headquartered Ashurst and Alderbrook Finance and Norwegian engineering services firm DNV is advising Ewec on the 1.5GW Al-Khazna IPP scheme.

  Solar energy is integral to achieving Abu Dhabi's target of producing nearly 50% of its electricity from renewable and clean energy sources by 2030.

  In April, Ewec awarded the contract to develop PV3, the 1,500MW Al-Ajban solar IPP, to a team led by French utility developer EDF Renewables and including South Korea’s Korea Western Power Company (Kowepo).

  Like the first three schemes, the Khazna solar PV will involve the development, financing, construction, operation, maintenance and ownership of the plant and associated infrastructure.

  The successful developer or developer consortium will own up to 40% of the entity, while the Abu Dhabi government will retain the remaining equity.

  The developer will enter into a long-term power-purchase agreement with Ewec.

  Once fully operational, the Khazna solar PV, along with Noor Abu Dhabi, the Al-Dhafra solar PV and Al-Ajban solar PV, will raise Ewec's total installed solar PV capacity to 5.5GW and collectively reduce CO2 emissions by more than 8.2 million metric tonnes a year by 2027. 

  On 1 October, Ewec issued the expression of interest notice for a contract to develop the emirate's fifth solar PV in Al-Zarraf.

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  Jennifer Aguinaldo
• 
  Riyadh looks to boost FDI

  3 October 2024

  Commentary
  Colin Foreman
  Editor

  Read the October 2024 issue of MEED Business Review

  This year and next will be pivotal years for the Saudi economy. After years of heavy investment in projects by the state and its related entities – most notably the Public Investment Fund (PIF) – the economy is now shifting towards one that is more reliant on foreign investment. 

  This is partly due to the kingdom running a budget deficit due to oil production cuts and oil prices, but also because creating business opportunities and attracting foreign direct investment (FDI) was a key part of Vision 2030. 

  There are early signs of success, although the largest deals in terms of dollar value have been concentrated on sectors that Saudi Arabia is already well known for, such as oil and gas and, to a lesser extent, industry. 

  Other sectors have so far needed more convincing. The new ambitious development projects, including the gigaprojects, follow a business model that involves state actors developing the first phases of a project. The private sector then takes over once the concept or business model has been proven. 

  This is a tried-and-tested strategy. The best example in the region in recent decades was in the UAE, with Emaar building the first towers at Dubai Marina before the private sector developed many of the remaining towers.

  Many of Saudi Arabia’s projects are nearing that point today as initial phases start to be completed. Over the next few years, the hope is that the development companies leading Saudi Arabia’s projects will be ready to take a slight step sideways and allow the private sector to step in and shoulder more of the investment. 

  For that to happen, Saudi Arabia must successfully deliver the initial phases of its projects. If projects fail to meet their stated ambitions, they may risk scaring off FDI rather than attracting it.

  ---

  Must-read sections in the October 2024 issue of MEED Business Review include:

  > AGENDA: 
  > Riyadh redoubles efforts to boost inward investment
  > Foreign investment trends align with Vision 2030

  > CURRENT AFFAIRS:
  > Iran benefits from energy disruption in Iraqi Kurdistan
  > Jordan election results in Islamist gains

  INDUSTRY REPORT: MEED's 2024 GCC Power Developer Ranking > Local firms rise in GCC Power Developer Ranking > Brisk pace of IPP awards set to continue

  > IRAQ-CHINA: Chinese companies win 95% of all Iraqi energy projects

  > PROJECT SERVICES: Bringing scale to project delivery

  > HIGH-SPEED RAIL: UAE’s high-speed rail moves ahead

  > INTERVIEW: Ducab undaunted by global market headwinds

  > SAUDI ARABIA MARKET REPORT: 

  > COMMENT: Riyadh modifies its narrative
  > GOVERNMENT: Riyadh is forced to reassess its spending priorities
  > BANKING: Saudi banks continue to lend, lend, lend
  > UPSTREAM: Aramco spending lifts Saudi upstream market
  > DOWNSTREAM: Saudi downstream programmes gain traction
  > UTILITIES: Saudi Arabia’s power sector motors on
  > CONSTRUCTION: Companies confirm Saudi gigaproject slowdown
  > TRANSPORT: Infrastructure schemes support Riyadh’s ambitions

  > MEED COMMENTS: 
  > More scrutiny for highly paid expatriates in Saudi Arabia
  > Economic change is inevitable for major projects
  > UAE bucks the trend of rising construction risk
  > Riyadh AI goals require colossal mindset and capital shift

  > GULF PROJECTS INDEX: Gulf projects index halts its decline

  > AUGUST 2024 CONTRACTS: Value of deals signed drops in August

  > ECONOMIC DATA: Data drives regional projects

  > OPINION: Desperate days drag on

  > BUSINESS OUTLOOK: Finance, oil and gas, construction, power and water contracts

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

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  Colin Foreman
• 
  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.”

   

   

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  Jennifer Aguinaldo