Neom to fix construction25 April 2023
The global construction industry is in a parlous state. Construction companies typically operate with low single-digit margins if they are doing well, and one bad project could mean they join a growing list of bankruptcies.
Developing the world’s largest project may seem like a step too far against this backdrop, but for David Heron, Neom’s director of industrialised design and construction, the scale of development at the $500bn Saudi gigaproject offers the scope and continuity required to solve the industry’s problems.
“There is a general recognition within the industry that it is broken. The challenge has been that individual companies are too small to have the required level of impact to change the industry,” says Heron.
“Neom is a unique opportunity because of its scale, in terms of spending and the longevity of the project. It will be able to build up the evidence base that demonstrates that things can be done differently.”
Neom has grand ambitions as it sets about transforming the construction industry. “We want to achieve 30 per cent reductions in cost, speed and time, and we think we can go beyond that,” he adds.
The key to unlocking those efficiency improvements is integrating the design and the construction processes. “When we say design and construction, most people think construction, but we are constantly trying to shift the conversation back to design,” says Heron.
Before design work can start, the brief has to be clear. “The starting point is understanding what people want, and most construction projects today are too small to warrant that kind of investment.
“You need to do market research to really understand what you want, so what happens in most construction projects is that 40 per cent of the design spend goes on during the course of construction as people figure out what it is they actually wanted to build,” says Heron.
“If we understand more clearly what we are designing, we can deliver it more efficiently. We call that an end-to-end process, or industrialised design and construction, because we are industrialising both the design process and the delivery.
“We would even love to not use the word construction because it is really much more about manufacturing and assembly. When you say construction, people think concrete blocks and mortar. We are trying to shift away from that.”
The proposed shift requires moving construction activity off-site and rethinking how projects are delivered. “It is completely rethinking the whole process for understanding what we are trying to create, as an experience.
“The starting point for Neom is that we are the investor, so it is incumbent on us to be clearer about what we want,” he adds.
“When we start thinking about the design process, we need to be clear. We will probably be much clearer than on many other projects about who the target population is and what the experiences are that we want to create for that population.”
Neom will build up the evidence base that demonstrates that things can be done differently
David Heron, Neom
Heron explains that manufacturing environments are far safer and provide higher-quality jobs with more diversity.
Gender diversity has been easier to achieve in the manufacturing environment than on the construction site. Quality control is also easier in a manufacturing environment, as it can be monitored from both a process and product perspective.
For a manufacturing approach to work, different processes must be adopted from the beginning of the architectural design process.
“Typically, it is the general contractor that starts to think about how the site is organised. If we are going down a prefabricated route, you start to think about it at the beginning. Logistics becomes an issue for architects because the access to the site influences the way we design buildings,” says Heron.
Innovation is essential to Neom’s vision of transforming the industry. “If we are going to transform the industry, the opportunity is absolutely massive. We are not talking about incremental innovation, we are talking about fundamentally transformative innovation, and we want that to be done here at Neom,” Heron says.
“Because of the scale of Neom, there is a massive economic return on investing in innovations that just do not exist outside of Neom,” he adds.
The benefits are not just financial. In the modern world, construction has come under pressure for its carbon emissions, and while it is developing large projects, Neom is reducing the impact on the environment.
“Thirty-eight per cent of global carbon dioxide emissions come from building, and 40 per cent of what goes to landfill is construction and demolition waste. Something like 70 per cent of all the embodied carbon in a building is from the concrete.
“We are building big buildings, so one of the very first things we did two years ago was to look at how we can significantly reduce emissions from concrete, and there is a whole host of levers that we are pulling,” says Heron.
“We are working closely with local industry. On the cement side, we are looking at different cement mixes, looking at using alternatives to clinker, looking at Neom-specific concrete mixes that maximise the use of locally available materials, and we have minimised the logistics.
“We are also looking at design and challenging the engineers that are designing buildings. We see that as a massive opportunity. Everyone talks about construction, but really the opportunities lie in design.”
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Oman expands grid connectivity
10 December 2023
Oman’s power and water sector has awarded an annual average of approximately $1.5bn-worth of contracts over the past 11 years – a relatively low value compared to the total awarded every year by some of its GCC neighbours.
However, 2023 can still be considered a good year for the sultanate, as contracts worth an estimated $1.2bn have been awarded.
This is an improvement on the performance of the previous two years, which saw very limited project activity within the sector, with contract awards valued at just $104m in 2021 and $244m in 2022.
Having adopted a policy to not procure further gas-fired thermal power plants, Oman awarded the contracts to develop its second and third utility-scale solar photovoltaic (PV) plants in early 2023.
The Manah 1 and 2 solar PV independent power projects (IPPs) each have a capacity of 500MW. Wadi Noor Solar Company, comprising France’s EDF Renewables and South Korea’s Korea Western Power Company (Kowepo), will deliver and maintain the Manah 1 solar IPP project for 20 years.
Another team, comprising Singapore’s Sembcorp Industries and China-headquartered Jinko Power Technology, will develop the Manah 2 IPP scheme. The country’s first utility-scale solar project, Ibri 2, became operational in 2021.
Oman’s Ministry of Regional Municipalities & Water Resources also awarded a $108m contract for the construction of a flood protection dam in Wadi Ajay Gorge in Muscat in early 2023. The rest of the awarded contracts comprise water and power transmission pipeline projects across the sultanate.
Nama Power & Water Procurement Company (PWP), formerly Oman Power & Water Procurement Company (OPWP), expects peak electricity demand for the main interconnected system (MIS), the sultanate’s main electricity grid, to grow by an average of 3.54 per cent annually from 2022 to 2029, reaching 8,350MW at the end of the forecast period.
Most of this growth is expected to occur in the near term, as the economy recovers from the effects of the Covid-19 pandemic, according to PWP’s most recent Seven-Year Statement, which covers the years 2023-29. It is also higher compared to the 2.5 per cent average annual peak demand growth rate seen between 2015 and 2022.
PWP’s low-case forecast scenario shows an average annual peak demand growth of 1.3 per cent, with the base growing from 6,628MW to just over 7,200MW. A high-case scenario, on the other hand, indicates an annual demand growth of 5.2 per cent, which can drive the demand to reach 9,430MW.
Annual peak demand growth in the smaller Dhofar grid is expected to average 5 per cent between 2022 and 2029.
The first phase of Oman’s North-South Interconnection project, known as Rabt, became operational in November. The 400-kilovolt (kV), 670-kilometre (km) project required an investment of about $966m.
The first phase of Oman’s North-South Interconnection project, known as Rabt, became operational in November
The project enables the MIS, serving the northern half of the Oman grid, to connect with Nihada in Al-Dhahirah Governorate and Duqm Special Economic Zone (SEZ) in Al-Wusta Governorate.
Al-Wusta offers an optimal location for solar and wind projects, which the country aims to develop as part of its green energy ambitions.
Also part of Rabt's first phase, the isolated networks of Petroleum Development Oman and the Rural Areas Electricity Company (Tanweer) in Duqm SEZ, have been interconnected.
A second phase is being planned for Rabt. To be launched later this year, it will comprise a 500km, 400kV transmission line from Duqm to Dhofar.
Peak water demand in the MIS is expected to increase by an average of 2 per cent annually between 2022 and 2029, while peak water demand in Dhofar is expected to grow by an average of 7 per cent a year.
To meet the expected demand rise in the MIS, several independent water projects are being developed or planned. These include the Barka 5 scheme, which has a capacity of 100,000 cubic metres a day (cm/d) and is expected to come online in 2024. Ghubrah 3, which has three times as much capacity, is expected to be operational two years later.
A third project, a replacement capacity for the Barka zone of about 102,000 cm/d, is also expected to be added in 2024.
In addition to the second phase of Rabt, Oman is in the early procurement phase of several solar and wind projects, in line with meeting demand growth and replacing expiring contracted capacity.
The power and water purchase agreement for the gas-fired Barka 2 independent water and power facility, for instance, expires in 2024, while the contract for the Barka 3 IPP expires in 2028.
KPMG Lower Gulf, a subsidiary of the Netherlands-based consultancy company, has been selected to provide financial advisory services to Nama PWP for the Ibri 3 solar IPP, which will have a capacity of 500MW. Ibri 3, along with the planned 100MW Jalaan Bani Bul Ali wind power project, will cater to the MIS.
Another key scheme being planned to connect to the MIS is Oman’s first waste-to-energy plant in Barkah. When complete, the facility is expected to treat 4,500 tonnes of municipal waste a day, produce 130MW-150MW of energy, and reduce the carbon footprint of Oman's landfills by 1.3 million tonnes annually.
For the Duqm grid, a 100MW wind IPP is being planned, in addition to a potential concentrated solar power plant. These plants are expected to become operational in 2026 and 2028, respectively. A 100MW wind project is also being planned for Dhofar, although there has been no fixed target for when it is expected to become operational.
In May, it was also announced that Oman Electricity Transmission Company is planning a second link to the GCC grid. The planned 400kV power transmission link is scheduled to start operations in the first quarter of 2026.
There are major plans to develop green hydrogen hubs in Duqm and Dhofar, in line with Oman's ambition to produce up to 1.25 million tonnes a year of green hydrogen by 2030.
The proposed projects will integrate renewable energy plants that will supply power to the electrolyser plants, which split water into hydrogen and oxygen, as well as the other units of the facilities.
The government has so far awarded land concessions to international consortiums looking to develop integrated green hydrogen and ammonia facilities in the country.
The programme will have a potentially significant impact in terms of Oman’s future gross renewable energy capacity growth, with some of the earliest announced projects requiring several gigawatts of wind and solar power.
However, since most of the planned projects include captive renewable energy power plants, they will not necessarily affect the Omani utility companies' future capacity procurement plans.
On the other hand, water demand may be affected as the electrolysis plants require pure water to be split into hydrogen and oxygen.https://image.digitalinsightresearch.in/uploads/NewsArticle/11354723/main.jpg
Oman 500MW solar project secures financing
8 December 2023
Oman's Manah 1 solar photovoltaic (PV) independent power producer (IPP) project has signed financing deals worth $302m with France's Societe Generale, the Export-Import Bank of Korea (Korea Eximbank) and Bank Muscat.
The Manah 1 IPP developers and investors, comprising Korea Western Power Company (Kowepo) and France's EDF Renewables, signed the deal on 6 December.
According to a local media report citing a Kowepo statement, the Korea Eximbank plans to provide $170m in project financing.
A team comprising EDF Renewables and Kowepo started mobilising to construct the 500MW Manah 1 solar IPP project in Oman, as MEED reported in September.
The solar power plant will span over 7.8 square kilometres in Oman’s Al-Dakhiliyah governorate.
The developer intends to deploy over 1 million bifacial photovoltaic (PV) modules mounted on a single-axis tracker system for the plant.
A project company, Wadi Noor Solar Power Company, has been formed to deliver and operate the project for 20 years.
The company will work with Australia-headquartered Worley, which has recently been appointed as the owner engineer for the project.
Oman Power & Water Procurement Company (OPWP) signed the 20-year power-purchase agreements (PPA) for the Manah 1 and Manah 2 solar IPP projects in March this year.
Both plants are expected to be operational by 2025.
A team of Singapore’s Sembcorp Industries (Sembcorp) and China-headquartered Jinko Power Technology was awarded the 500MW Manah 2 solar PV IPP contract.
Manah 1 and 2 were previously named Solar IPP 2022 and 2023.
To be located 150 kilometres southwest of Muscat, the Manah 1 and 2 solar projects comprise the second utility-scale renewable energy projects to be tendered by OPWP, after Ibri 2, which has been operational since 2021.https://image.digitalinsightresearch.in/uploads/NewsArticle/11358677/main.jpg
Masdar and OMV sign green hydrogen agreement
8 December 2023
Abu Dhabi Future Energy Company (Masdar) and Austrian energy and chemicals firm OMV have signed a preliminary agreement to partner in the production of green hydrogen for the decarbonisation of industrial processes in OMV’s refineries.
The non-binding heads of terms (HoT) agreement forms the basis of a joint agreement to develop an industrial large-scale electrolysis plant, which will be powered by renewable energy, Masdar said in a statement on 8 December.
The statement added that the partners will collaborate to develop the project and plan to make a final investment decision in the second half of 2024.
The HoT signing follows an initial memorandum of understanding (MoU), which the two parties signed in Abu Dhabi earlier this year.
The agreement with OMV is a step in the right direction towards building a robust hydrogen value chain and supports Masdar's ongoing aim of 1 million tonnes of green hydrogen per annum globally by 2030, according to Masdar's chief green hydrogen officer, Mohammad Abdelqader el-Ramahi.
Green hydrogen oasis
According to MEED data, there are at least 12 known and planned green hydrogen projects in the UAE, with a budget of at least $12bn.
In addition to the planned $5bn green hydrogen hub planned by Masdar and French utility developer and investor Engie, the other major planned green hydrogen projects in Abu Dhabi involve its largest industrial firms, including Abu Dhabi National Energy Company (Taqa), Emirates Steel, Fertiglobe and Brooge.
One of these projects, the 150MW green hydrogen-based ammonia production facility planned in Ruwais, is expected to reach a financial investment decision (FID) shortly.
The UAE's Green Hydrogen Strategy envisages the production of 1.4 million tonnes a year (t/y) of hydrogen by 2031, with green hydrogen accounting for 70 per cent of the target.
This is expected to increase to 7.5 million t/y by 2040 and 15 million t/y by 2050.https://image.digitalinsightresearch.in/uploads/NewsArticle/11358471/main.jpg
Sheikh Mohammed inaugurates Dubai CSP plant
7 December 2023
Sheikh Mohammed bin Rashid al-Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, has inaugurated the fourth phase of the Mohammed bin Rashid al-Maktoum (MBR) Solar Park in Dubai.
The 950MW fourth phase of the MBR solar park required an investment of AED15.78bn ($4.34bn).
It uses hybrid technologies: 600MW from a parabolic basin complex, 100MW from the CSP tower, and 250MW from solar photovoltaic (PV) panels.
The independent power producer (IPP) project features the tallest solar tower in the world, at 263.126 metres, and a thermal energy storage facility with a capacity of 5,907 megawatt-hours (MWh), the world's largest according to the Guinness World Records.
The project covers an area of 44 square kilometres. It features 70,000 heliostats that track the sun’s movement. The molten salt receiver (MSR) on top of the solar power tower is the core and the most important part of the CSP plant. It receives solar radiation and turns it into thermal energy.
The MSR contains over 1,000 thin tubes that enable the absorption of sun rays and their transfer to the molten salt within these tubes.
The project can power approximately 320,000 residences with clean and sustainable energy. It will reduce carbon emissions by about 1.6 million tonnes annually.
The completion of the project's fourth phase brings the total capacity of the MBR solar park to 2,863MW so far. The phases and their capacities are:
- 13MW solar PV phase one: Completed in 2013
- 200MW solar PV phase two: Commissioned in 2017
- 800MW solar PV phase three: Commissioned in 2020
- 950MW hybrid CSP/solar PV phase four: Inaugurated in 2023
- 900MW solar PV phase five: Commissioned in 2023
Dewa is aiming for the MBR development to reach 5,000MW of capacity by 2030. It recently awarded the UAE-based Masdar the contract to develop the solar park's sixth phase, which has capacity of 1,800MW.
Dubai Electricity & Water Authority (Dewa) awarded a consortium of Saudi Arabia’s Acwa Power and China's Silk Road Fund the contract to develop a 700MW CSP plant with storage for the fourth phase scheme in November 2017. Since then, the project has been expanded to include a 250MW solar PV component.
Acwa Power then awarded Shanghai Electric the $3.8bn EPC contract for the hybrid CSP/PV plant in early 2018.
The project reached financial closure in March 2019. The cost will be met through $2.9bn of debt and $1.5bn of equity.
According to the project structure, Dewa is to provide $750m, or half of the project equity. Project developers Acwa Power and the Silk Road Fund will provide 51 per cent and 49 per cent, respectively, of the remaining equity.
The fourth phase project achieved a tariff of 7.3 $cents a kilowatt hour ($c/kWh) for the CSP component and 2.4$c/kWh for the PV capacity, two of the lowest tariffs for CSP and PV solar technology in the world at the time of award.
Dewa holds a 51 per cent stake in the project company, Noor Energy 1, set up to develop the plant, with Acwa Power and the Silk Road Fund holding the remaining stake. The developer consortium has signed a 35-year power-purchase agreement to supply power to Dubai’s grid.
Firms win Saudi Landbridge
7 December 2023
The team of US-based Hill International, Italy’s Italferr and Spain’s Sener has been awarded the contract to provide project management services for the estimated $7bn Saudi Landbridge project.
The Landbridge is a rail project that will connect the Red Sea coast of Saudi Arabia in the west and the Gulf coast in the east. It is one of the largest infrastructure projects planned in Saudi Arabia. The scheme is being implemented by the Saudi Railway Company (SAR).
The project comprises six lines. The first line involves upgrading the Jubail Industrial City internal network, which is currently under construction. It will require 10 kilometres (km) of track to be built.
The second is the upgrade of the Jubail to Dammam railway line, which is also currently under construction. It will require 35km of track to be built.
The third line involves the upgrade of the Dammam to Riyadh railway line, with 87km of track to be built.
The fourth line, known as the Riyadh bypass, is from the existing network in the north of the city to the south. It is split into two packages: the first has 67km of track, and the second has 35km.
The fifth line is a link from Riyadh to Jeddah and then on to King Abdullah Port with three stations at Jamuma, Moya and Al-Doadmi. The Riyadh to Jeddah line will have 920km of track, and the Jeddah to King Abdullah Port link will have 146km of track.
The sixth line is a new 172km line from King Abdullah Port to Yanbu Industrial City.
There will also be seven logistics centres: Jubail Industrial City Logistics Centre, Damman Logistics Dry Port, a relocated Riyadh Dry Port, King Khalid Airport Logistics Centre in Riyadh, Jeddah Logistics Dry Port, King Abdullah Port Logistics Centre and Yanbu Industrial City Logistics Centre.
MEED reported in November that negotiations with the Saudi China Landbridge Consortium that will build the rail link are in the final stages.
The consortium signed a memorandum of understanding to implement the project on a public-private partnership basis in October 2018. It was formed by SAR and China Civil Engineering Construction Company.
Al-Ayuni Contracting was named as the local partner for the consortium. Other members include French firms Systra and Thales; Canada’s WSP; Aldhabaan & Partners, the local partner of UK legal consultancy Eversheds & Sutherland; ALG Infrastructure; and Calx Consultancy.https://image.digitalinsightresearch.in/uploads/NewsArticle/11354086/main.jpg