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Manama jumpstarts utility sector

4 November 2024

 

On 21 October, Bahrain’s Electricity & Water Authority (EWA) held a market-sounding event in Manama to gauge investor interest in its two upcoming utility public-private partnership (PPP) schemes, the Sitra independent water and power project (IWPP) and the Al-Hidd independent water project (IWP).

The event did not disappoint, attracting 60 representatives from regional and international utility developers and contracting firms such as France’s Engie, Japan’s Mitsui and Saudi Arabia’s Acwa Power, among others. The EWA is expected to launch the prequalification process for both projects imminently.

The Sitra IWPP replaces the previously planned Al-Dur 3, which was in the early planning phases following the completion in 2021 of Al-Dur 2.

The planned Sitra IWPP is a combined-cycle gas turbine (CCGT) plant, which is expected to have a production capacity of about 1,200MW of electricity. The project's seawater reverse osmosis (SWRO) desalination unit will have a production capacity of 30 million imperial gallons a day (MIGD) of potable water. It is expected to reach commercial operations in 2029.

The Al-Hidd IWP is Bahrain’s first independent, standalone SWRO plant. It is expected to have a production capacity of about 60MIGD of potable water and be completed in 2028.

The imminent launch of the two projects boosts Bahrain’s lean projects pipeline, which has experienced muted growth in the aftermath of the Covid-19 pandemic and the completion of the Al-Dur 2 IWPP, which delivered 1,500MW of gas-fired generation capacity and 227,000 cubic metres a day (cm/d) of desalination capacity.

MEED understands that both the Sitra and Al-Hidd plants are being procured to cater for a combination of demand growth and some replacement capacity with more efficient and sustainable technology.

Commenting on the Al-Hidd IWP, Robert Bryniak, CEO of Dubai-based Golden Sands Management (Marketing) Consulting, says that it will be interesting to see what the tariff comes in at for a desalination plant of its size, and how many bids are received.

“Traditionally, Bahrain has done combined power and water plants, but given the inroads reverse osmosis (RO) technology  has made over the years, it does make sense to plan them as separate plants,” says Bryniak. “Capacity-wise, the Al-Hidd IWP can be considered a mid-size plant in the region these days, although at around 270,000 cm/d, this is a large RO plant for Bahrain.”

A different set of factors will be at play for the Sidra IWPP, however.

For one, it is likely to be the last IWPP for Bahrain, which aims to reach net-zero carbon emissions by 2060.

According to a source familiar with utility projects in the country, the EWA is planning for future capacity to be sourced from renewables despite Bahrain's space and land constraints, which have hampered the execution of at least one solar photovoltaic (PV) independent power project (IPP) in the past.

The source says that Bahrain could also consider other options to decarbonise its electricity systems, such as by developing offshore wind or importing clean energy – Bahrain, after all, has consistently secured electricity from the GCC grid – to supplement its available capacity and meet future demand.

Solar PV projects

The EWA awarded its first utility-scale solar PV IPP to a team comprising Acwa Power and Mitsui in 2019. However, the 100MW Askar solar PV was subsequently put on hold, with the utility issuing a new design-and-build tender for a similar-sized project in February this year.

China's TBEA Xinjiang Sunoasis Company is the sole bidder for the contract, offering to build the 90MW-100MW solar PV farm for BD27.6m ($73.4m).

In 2018, Bahrain's Electricity & Water Affairs Ministry awarded Deft Contractors a contract to build, own, operate and maintain grid-tied solar PV power panels with a minimum capacity of 72MW in Sakhir in the south of the country.

The power plant will be located at several premises, including­ at Bahrain International Circuit, the University of Bahrain, Bahrain International Exhibition & Convention Centre and Al-Dana Amphitheatre.

The solar panels are to be built on the rooftops, car park shades, electric vehicle (EV) charging stations and grounds of these organisations’ facilities, a measure that directly addresses the country’s space and land constraints.

The 20-year power-purchase agreement for the project was signed in August last year, at which time Electricity & Water Affairs Minister Yasser Bin Ebrahim Humaidan said that project is in line with Bahrain’s broader vision to adopt a circular carbon economy, with the aim of bringing carbon emissions to net zero by 2060.

Water and waste

Bahrain’s Works, Municipalities Affairs & Urban Planning Ministry is the other client for the island-state's power and water infrastructure-related projects.

It launched the prequalification process in 2022 for a project to develop an integrated waste PPP project, which is understood to include a waste-to energy (WTE) plant.

The WTE plant’s intended outputs are electricity, fed into the national grid through a power-purchase agreement; incinerator bottom ash and flue gas; and recyclable materials

However, no further developments on the project have been forthcoming since early 2023, when the ministry prequalified several consortiums to bid for the contract.

The construction of new power and water desalination plants in Bahrain will likely require the building of new power stations. Nine such schemes are in the planning stage, according to data from regional projects tracker MEED Projects.

As of November, bids are under evaluation for a contract to build two water distribution stations, one in Al-Hunayniyah and the other in South Saar. The bidders for the estimated $100m contract include the local Mohammed Abdulmohsin Al-Kharafi & Sons, Ahmed Mansoor Al-Aali and Panorama Contracting, as well as the UAE-based Tecton Engineering.

The scope covers the construction of two ground storage tanks, each with a capacity of 10 million gallons; two pump stations; and elevated storage reservoirs, in addition to the distributions stations.

https://image.digitalinsightresearch.in/uploads/NewsArticle/12832025/main.jpg
Jennifer Aguinaldo

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    Funding and liquidity is generally a strength for the region

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    Forbearance measures from the UAE, Kuwait and Qatar central banks have allowed additional headroom

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    “They were designed to boost confidence and limit that pass through from temporary deposit volatility. It was not to do with acute banking stress.”

    Market confidence

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    “When there is increased market uncertainty, larger banks may benefit from a flight-to-quality movement, with deposits moved away from smaller banks. Based on Q1 results, only a few smaller banks have reported a contraction in the customer deposits,” says Lescova.

    The GCC’s largest banks, including Al-Rajhi Banking & Investment Corporation, Saudi National Bank, First Abu Dhabi Bank, Qatar National Bank, Abu Dhabi Commercial Bank and Emirates NBD, remain highly profitable, although they may not perform as strongly as they would have had the conflict not occurred.

    “We already expected some softening in profitability before the conflict, because of the normalisation of the cost of risk upwards from incredibly low levels over the last three years, [which] were driven by a very strong recovery performance from the banks,” says Shubailat. 

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  • Saudi Arabia issues RFQ for third round of gas-fired IPPs

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    Dubai-based High Art Engineering Consultancy is the project consultant.

    Local architectural firms Bruno Guelaff and BG Group are the project designers.

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    https://image.digitalinsightresearch.in/uploads/NewsArticle/17785193/main.png
    Yasir Iqbal