meed-logo

line1 line2 line3
SIGN IN / REGISTER

Rumah and Nairiyah tariffs set precedent

19 November 2024

Commentary
Jennifer Aguinaldo
Energy & technology editor

The levelised costs of electricity (LCOEs) for the four combined-cycle gas turbine independent power projects (IPPs) recently awarded in Saudi Arabia are expected to set a precedent for tariffs in upcoming thermal IPPs procured in the GCC region.

Two separate developer consortiums bid for and won the contracts to develop the Rumah 1 and 2 and Nairiyah 1 and 2 IPPs, which are located in Riyadh and the Eastern Province, respectively.

A consortium comprising Saudi Electricity Company (SEC), Riyadh-based utility developer Acwa Power and South Korea’s Korea Electric Power Corporation (Kepco) won the contract to develop the Rumah 1 and Nairiyah 1 IPPs, each with a capacity of 1,800MW.

The team offered an LCOE of $cents 4.5859 a kilowatt-hour ($c/kWh) for Rumah 1, and $c4.6114/kWh for Nairiyah 1.

A consortium comprising the UAE-based Abu Dhabi National Energy Company (Taqa), Japan’s Jera Company and the local Albawani Company won the contract to develop and operate the Rumah 2 and Nairyiah 2 IPPs. 

The Taqa-Jera-Albawani consortium offered an LCOE of $c4.5613/kWh for Rumah 2, and $c4.4960/kWh for Nairiyah 2.

LCOEs represent an all-in tariff including capital and operating expenditures during the power-purchase agreement (PPA) period. In this case, the principal buyer, Saudi Power Procurement Company, agreed to buy the electricity from the project companies for 25 years.

The last comparable IPP procured by SEC in Saudi Arabia was Rabigh 2, for which Acwa Power proposed a tariff of $c1.9/kWh in 2012-13. Rabigh 2 is older than the Fadhili IPP, which was awarded in 2016, but the latter is a cogeneration plant, which was won by France's Engie.

Engineering, procurement and construction (EPC) contractors and original equipment manufacturers say that capital expenditure (capex) for building thermal plants has significantly increased compared to before the Covid-19 pandemic.

Estimates indicate that EPC costs have increased from about $500/kWh to $700-$800/kWh since around 2020.

Despite this, the latest thermal IPP tariffs in Saudi Arabia do not appear significantly higher compared to the tariff for the Fujairah F3 IPP in the UAE, which was procured in 2020.

Several factors underpin tariff trends, according to experts. LCOEs cover fuel capex recovery and operating expenses, where fuel can represent 70%-80%, depending on the prevailing fuel price during the proposals stage.

It should also be noted that the fuel prices and project ownership structures vary depending on jurisdiction, which directly affects the LCOE.

Scale, with the four Saudi plants being awarded together, is also an important factor, as is the technology, because more energy-efficient gas turbines could have contributed to keeping the Saudi tariffs lower than initially expected.

A transaction adviser also notes that the 2024 cost of debt outlook is lower, so swap rates are lower.

Crucially, MEED understands that the tariffs submitted for Rumah and Nairiyah do not yet include potential exit costs, assuming a carbon capture, utilisation and storage (CCUS) solution is not reached while the PPAs are in force.

According to an industry source, CCUS discussions for the Rumah and Nairyah IPPs are set to begin in the 2030s, and the tariffs agreed today will be adjusted based on the outcome of those discussions. 

All this suggests that interesting comparisons will be soon drawn between the Rumah and Nairiyah tariffs in Saudi Arabia and the tariffs that bidders plan to propose for the Taweelah C and Madinat Zayed schemes in Abu Dhabi.

 

https://image.digitalinsightresearch.in/uploads/NewsArticle/12941265/main.jpg
Jennifer Aguinaldo

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

Click here to register
Exclusive from Meed
Related Articles
  • UAE GDP projection corrects on conflict

    24 April 2026

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16554417/main.gif
    MEED Editorial
  • April 2026: Data drives regional projects

    24 April 2026

    Click here to download the PDF

    Includes: Commodity tracker | Top 10 global contractors | Brent spot price | Construction output

    MEED’s May 2026 report on the UAE includes:

    > COMMENT: Conflict tests UAE diversification
    > GVT &: ECONOMY: UAE economy absorbs multi-sector shock
    > BANKING: UAE banks ready to weather the storm
    > ATTACKS: UAE counts energy infrastructure costs
    > UPSTREAM: Adnoc builds long-term oil and gas production potential
    > DOWNSTREAM: Adnoc Gas to rally UAE downstream project spending
    > POWER: Large-scale IPPs drive UAE power market
    > WATER: UAE water investment broadens beyond desalination
    > CONSTRUCTION: War casts shadow over UAE construction boom
    > TRANSPORT: UAE rail momentum grows as trade routes face strain

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16553627/main.gif
    MEED Editorial
  • Firms announce 129MW Dubai data centre

    24 April 2026

    Dubai’s Integrated Economic Zones Authority (DIEZ) has signed a joint-venture agreement with Netherlands-headquartered data centre developer Volt to build a new artificial intelligence (AI)-ready data centre in the emirate.

    Planned for Dubai Silicon Oasis, the development will take the form of a campus covering up to 60,000 square metres.

    The project will be delivered in two phases, starting with 29MW of immediately available capacity, followed by a second phase adding a further 100MW of committed power.

    Under the arrangement, DIEZ will supply the land and essential infrastructure, while Volt will finance and develop the project, lead construction, and manage the design, leasing, implementation and day-to-day operations.

    French firm Schneider Electric, which has its regional headquarters in Dubai Silicon Oasis, will support the development by supplying advanced electrical systems, power distribution capabilities and smart data centre infrastructure.

    The GCC currently has more than 174 active data centre projects, representing over $93bn in investment, led by international players such as AWS, Google and Huawei, alongside regional developers including Khazna and Moro, supported by government-led localisation strategies.

    More than a dozen large-scale facilities valued at over $100m each are currently under tender, with further packages expected to reach the market over the next six to 12 months.

    The UAE is one of the leading data centre markets, with hyperscale campuses, sovereign cloud initiatives and edge data centre deployments underway.

    Data centre development is closely aligned with the UAE’s digital economy and AI roadmap, as well as the wider smart city programme.

    Priorities include hyperscale and colocation facilities to support cloud service providers; edge data centres to reduce latency and enable 5G and IoT use cases; energy-efficient designs using advanced cooling, modular construction and renewables; and strategic partnerships between global hyperscalers, local developers and utilities.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16548972/main.JPG
    Yasir Iqbal
  • Iraq signs upstream oil contract

    24 April 2026

    State-owned Iraqi Drilling Company (IDC) has signed a contract with China’s EBS Petroleum for a project to drill 17 horizontal wells in the southeastern portion of the East Baghdad field.

    Mohamed Hantoush, the general manager of IDC, said the contract signing came after a “series of successful achievements” by the company at the field.

    The achievements included the completion of a project to drill 27 horizontal wells and another project to drill 18 horizontal wells, according to a statement released by Iraq’s Ministry of Oil.

    In January, Iraq’s Midland Oil Company (MOC), in collaboration with EBS Petroleum, completed the country’s longest horizontal oil well in the southern part of the East Baghdad field.

    The well, which was called EBMK-8-1H, reached a total depth of 6,320 metres, and had a 3,535-metre horizontal section, making it the country’s largest horizontal well ever drilled.

    Senior officials from the Iraqi Oil Ministry and representatives of EBS Petroleum attended the well’s completion ceremony.

    EBS Petroleum is a subsidiary of China’s ZhenHua Oil, which is focused on Iraq.

    ZhenHua Oil is the operator of the field and is working with Iraqi partners to oversee the field’s development.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16543675/main4942.jpg
    Wil Crisp
  • Jordan tenders oil and gas terminal project

    24 April 2026

     

    Jordan’s Aqaba Development Corporation (ADC) has tendered a project for the development of the facilities at the Aqaba Oil and Gas Terminal.

    The project has been divided into two packages, and a bid deadline has been set for 15 June 2026.

    The oil and gas terminal is located south of the city of Aqaba in Jordan’s Southern Industrial Zone.

    The scope of Package 1 includes:

    • Rehabilitation of petroleum product pipelines of various sizes and their accessories (such as supports, structures and valves), including rectification of painting defects
    • Inspection and repair of pipe welds
    • Rectification and overall maintenance of the product booster pump
    • Inspection, maintenance, testing and commissioning of liquefied petroleum gas (LPG) booster pumps
    • Rectification of two overhead cranes
    • Rectification and calibration of instrumentation, including pressure indicators and valves

    The scope of Package 2 includes:

    • Rehabilitation of control rooms and security rooms, replacing them with concrete control rooms, including infrastructure works and all required services
    • Removal of unused tanks and equipment previously used for exporting crude oil
    • Rehabilitation of the existing gate in order to improve safety and security with the installation of a tire killer
    • Carrying out maintenance and repairs for the oil berth dolphins and trestle with inspection
    • Maintenance, repair and reinstallation of oil berth concrete slabs
    • Removal and extension of the jetty platform
    • Installation of a lighting system at pipelines beside booster pumps
    • Installation of stripping pumps at the LPG terminal
    • Replacement of drain line path for slop tank of LPG booster pumps
    • Rehabilitation of the existing closed drain drum
    • Rectification of cone sealing issue of all truck loading arms
    • Conversion of manual valves to motor-operated valves
    • Remote operation of shut-off valves on the main pipeline alongside and near the entrance gate
    • Upgrading of the firefighting system

    The last date for questions and clarifications related to the project will be 13 May 2026.

    The Aquaba Oil and Gas Terminal was built to meet demand for petroleum products and LPG imports into Jordan.

    It is operated by state-owned Jordan Oil Terminals Company (JOTC), which was established in 2015 as a private shareholding company.

    Earlier this year, Abu Dhabi’s AD Ports Group signed an agreement with ADC to manage and operate the Aqaba multipurpose port.

    AD Ports is managing and operating the port under a 30-year concession agreement.

    Under the agreement, AD Ports and ADC will establish a joint venture to oversee port operations.

    AD Ports will hold a 70% stake in the joint venture, with the remaining 30% held by ADC.

    AD Ports Group will also invest AED141m ($38.4m) in the joint venture.

    The signing ceremony was held at the Aqaba Special Economic Zone Authority headquarters in Aqaba on 5 February.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16543632/main.jpg
    Wil Crisp