Warming erodes Kuwait’s power and water reserves

14 August 2023

More on Kuwait’s power and water sector: 

> IWPP: Firms respond to Kuwait independent utilities request
> POWERLocal firm wins 250MW Subiya package
> PRIVATISATIONKuwait thermal plant privatisation to go ahead


 

The temperature in Kuwait soared to 51 degrees Celsius on 1 August, sending its electricity load index up to 16,940MW. This breached its maximum expected load this year of 16,830MW by 0.7 per cent.

This year’s projected maximum load is already 4 per cent higher than the previous year's recorded maximum load. It leaves only roughly 8 per cent of reserve capacity against an available capacity understood to stand at 18,250MW.

Similarly, water consumption across the Gulf state on 2 August, when the temperature decreased to 50 degrees, exceeded production by 29 million gallons, prompting the state utility to access its strategic water reserve capacity to plug the shortfall.

The electricity consumption spike reportedly caused two feeders at the country’s main substation south of Surra in the capital to trip, which led to power outages in some parts of Zahra, a district in Kuwait’s Hawalli governorate.

Kuwait’s Electricity & Renewable Energy Ministry (MEWRE) assured the public that the maximum capacity available in the country’s electricity network during the current summer is 18,250MW, as earlier cited, and that it could safely provide up to 17,660MW.

Persistent delays

The following week MEWRE – through the Kuwait Authority for Partnership Projects (Kapp) – received prequalification applications for the contracts to develop Kuwait’s next two independent water and power producer (IWPP) projects.

The two schemes – Al-Zour North 2 & 3 and Al-Khiran 1 – will have a total combined power generation capacity of 4,500MW and a water desalination capacity of over 150 million imperial gallons a day (MIGD), which will go a long way to address Kuwait’s precarious electricity and water supply situation.

Ironically, these two schemes have been in the planning and early procurement stages since 2017 and have suffered significant delays in the intervening period.

It is the second time developers have submitted statements of qualification (SOQs) for the contracts over the preceding 11 months.

The delays have caused major frustration for some developers and contractors. One utility developer that submitted an SOQ in September last year told MEED they did not participate in the latest attempt to start the prequalification process for the IWPP schemes, without elaborating.

Others expect the country’s stakeholders to eventually approve and expedite the procurement process for the integrated power and desalination facilities.

“I’m not very optimistic, but we submitted an SOQ anyway,” another source tells MEED.

EPC projects motoring ahead

The ministry’s conventional power plant projects have been moving at a relatively faster pace. In June this year, the local company Heavy Engineering Industries & Shipbuilding (Heisco) won a contract for the phase 2 upgrade of the Subiya power plant complex in Kuwait.

Heisco saw off competition from two local companies, Alghanim International and Al-Zain United General Trading & Contracting, for the KD114.28m ($372m) contract.

The project aims to convert an existing 250MW simple-cycle plant into a combined-cycle gas-turbine plant.

In April, a consortium comprising Heisco and Japan’s Mitsubishi Power was also awarded a contract to retrofit the main thermal power generation plant at the power complex.

The contract is understood to be valued at KD90.9m. It entails the upgrade of eight steam turbines and electric generators at the Subiya power plant, which is expected to reach a capacity of 2,400MW once the project is complete.

The existing plant at the Subiya power complex was commissioned between 1998 and 2002. This implies that the steam turbines and generators in commercial operation for nearly 20 years require upgrades to continue operating and improve their performance.

Two steps forward

While the country has pledged to become carbon neutral by 2060, the state utility has yet to make any remarkable progress in procuring new renewable energy capacity.

The recent political deadlock has hampered the procurement of the next phases of the Shagaya Renewable Energy Programme (SREP), despite the award 12 months previously of the project’s transaction advisory contract to a team led by London-headquartered consultancy firm EY.

At the time, the advisory contract was understood to cover the Al-Dibdibah solar project, which will comprise SREP’s second phase, and a third phase expected to include a 720MW solar photovoltaic (PV) plant, a 1,150MW concentrated solar power (CSP) facility and a wind power farm.

Notably, two state-backed downstream operators – Kuwait National Petroleum Company and Kuwait Integrated Petroleum Industries Company (Kipic) – have launched a tender for a contract to undertake a pre-feasibility study identifying opportunities to use renewable energy in their operations.

Kuwait is also expected to make some progress on its first utility privatisation scheme, which forms part of the initiative to strengthen private sector participation in the sector.

In December last year, it was revealed that UK-headquartered Deloitte had submitted a low bid of KD1.2m ($3.9m) for the transaction advisory contract in line with the planned privatisation of the $1.26bn North Shuaiba power and water plant in Kuwait.

GCC grid

While working to boost its electricity reserves and make its electricity systems greener, Kuwait stands to benefit from the ongoing upgrade of the GCC electricity grid, through which other GCC states, such as the UAE, may decide to transmit excess clean energy.

The Al-Fadhili high-voltage direct current (HVDC) converter station upgrade in Saudi Arabia is expected to enable the exchange of 1,800MW of electricity between the six states once complete.

In October last year, the GCC Interconnection Authority (GCCIA) awarded India-based KEC International a contract for an overhead transmission line project linking the substations in Wafra in Kuwait and Fadhili in Saudi Arabia.

The estimated $120m project extends an existing double-circuit 400kV line from Al-Zour in Kuwait to Ghunan in Saudi Arabia. The line has an intermediate interconnection at Fadhili, with associated substations completed in 2009 as part of the first phase of the GCCIA network. The new project is expected to complete in 2025.


This month’s special report on Kuwait also includes: 

> ECONOMYStakeholders hope Kuwait can execute spending plans
> ENERGYKuwait’s $300bn energy target is a big test
> BANKINGKuwaiti banks enter bounce-back mode
> INTERVIEWKuwait’s Gulf Centre United sets course for expansion

https://image.digitalinsightresearch.in/uploads/NewsArticle/11069881/main.gif
Jennifer Aguinaldo
Related Articles
  • Facility E nears 25 July bid deadline

    19 July 2024

     

    The tender closing date of 25 July remains unchanged for the contract to develop and operate Qatar’s Facility E independent water and power producer (IWPP) project.

    At least one developer team is highly likely to submit a proposal to develop the gas-fired plant, sources close to the project tell MEED.

    Qatar state utility General Electricity & Water Corporation (Kahramaa) had previously extended the tender closing date for the contract in response to developers’ requests, as MEED reported.

    The Facility E IWPP scheme will have a power generation capacity of 2,300MW and a water desalination capacity of 100 million imperial gallons a day (MIGD).

    “We hear that at least one consortium is being formed … others are preparing proposals, but appear unsure if they will ultimately submit them or not,” a source close to the project told MEED in November last year. 

    Kahramaa initially expected to receive bids on 14 December 2023.

    The contract to develop the Facility E IWPP was first tendered in 2019. The three teams that submitted bids for the contract in August 2020 were:   

    • Engie (France) / Mitsui (Japan) / Yonden (Shikoku Electric, Japan)
    • Sumitomo / Kansai Electric (Japan)
    • Marubeni / Kyushu Electric (Japan)

    The original plan was for the Facility E IWPP to have a power generation capacity of about 2,300MW and a desalination component of 100MIGD once fully operational.

    However, the project owner revised the power plant’s design capacity to 2,600MW and sought alternative prices from bidders. 

    Kahramaa eventually cancelled and reissued the tender in September 2023. The current tender entails a power generation plant with the same capacity as initially tendered in 2019.

    MEED understands that the new target commercial operation date for the Facility E IWPP project has been moved to 2027. 

    The state utility’s transaction advisory team includes UK-headquartered PwC and Clyde & Co as financial and legal advisers, respectively, led by Belgrade-headquartered Energoprojekt as technical adviser.

    Facility E is Qatar’s fifth IWPP scheme. Completed and operational IWPPs include three projects in Ras Laffan – known as Facilities A, B and C – and Facility D in Umm Al-Houl.

    Awarded in 2015 and completed in 2018, Facility D was developed by a Japanese consortium of Mitsubishi Corporation and Tokyo Electric Power Company (Tepco). South Korea's Samsung C&T was the engineering, procurement and construction contractor.  

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12177605/main.jpg
    Jennifer Aguinaldo
  • Masdar’s second bond issue raises $1bn

    19 July 2024

    Abu Dhabi Future Energy Company (Masdar) has raised $1bn through its second bond issuance under its Green Finance Framework.

    The announcement comes one year after the company’s first successful issuance of $750m on the International Securities Market of the London Stock Exchange.

    Masdar said the issuance comprises dual tranches of $500m each, with tenors of five and 10 years and coupons of 4.875% and 5.25%, respectively.

    It said there was strong appetite from regional and international investors, with the order book peaking at $4.6bn – 4.6 times oversubscribed.

    The company finalised the allocation with an average split of 70% to international investors and 30% to Middle East and North Africa investors.

    The $1bn proceeds from the issuance will be deployed to fund Masdar’s equity commitments on new greenfield projects, including several in developing economies, as the company pursues a target portfolio capacity of 100GW by 2030.

    In line with Masdar’s corporate credit ratings, the second issuance was rated AA- by Fitch and A2 by Moody’s.

    First Abu Dhabi Bank, Abu Dhabi Commercial Bank, Citibank, HSBC, Standard Chartered, Credit Agricole CIB, Natixis and MUFG were the lead managers and bookrunners on the issuance.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12177600/main.jpg
    Jennifer Aguinaldo
  • Firms seek to prequalify for 12 Saudi water projects

    18 July 2024

     

    Local and international utility developers have submitted their statements of qualifications (SOQs) for the contracts to develop and operate 12 water public-private partnership (PPP) projects in Saudi Arabia. 

    State-backed offtaker Saudi Water Partnership Company (SWPC) received separate responses from companies for five independent water projects (IWPs) and seven independent sewage treatment plant (ISTP) projects by 4 July, industry sources tell MEED.

    Local and regional companies, in addition to Japanese, Spanish, French and Chinese utility developers, are understood to have sought to prequalify to bid for the contracts, which are set to be tendered in 2024-26. 

    SWPC's shift from a single-project to a multiple-project prequalification process saves time and resources, according to one of the companies that submitted an SOQ.

    "This is particularly true for international developers, which need to allocate resources across various geographies," the source said.

    Another source said he believes SWPC will prequalify companies for lead and technical roles, among others, and then allow these companies to form teams at a later stage.  

    The client previously said that the programme "will provide the opportunity to local and international developers to obtain pre-qualification approval and receive the request for proposal documents for its future projects … without the need to submit a separate qualification application for each project".

    The five IWP schemes have a total combined capacity of 1.7 million cubic metres a day (cm/d). The seven ISTP projects have a total combined capacity of 700,000 cm/d.

    The kingdom's water sector has been undergoing a restructuring programme, with the capacity procurement process linked to the National Water Strategy being undertaken by three other clients: Saline Water Conversion Company, which has been renamed Saudi Water Authority; Water Transmission & Technologies Company; and the National Water Company.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12167522/main.gif
    Jennifer Aguinaldo
  • Nama appoints 2027-29 procurement advisers

    18 July 2024

     

    Oman's Nama Power & Water Procurement (Nama PWP) has appointed a transaction advisory team to support its 2027-29 power and water procurement strategy.

    According to an industry source, the team comprises UK-headquartered Deloitte as lead transaction and financial adviser, Canada-based engineering consultancy WSP as technical adviser, and US firm CMS as legal adviser.

    The scope of work won by the advisory team includes preparing the overall procurement strategy, extending existing contracts expiring between 2027 and 2029, and undertaking procurement for new-build plants.

    The contracts for three independent power projects (IPPs) in Oman with a total combined capacity of 3,518MW are expiring between 2028 and 2029, according to the state offtaker's latest Seven-Year Planning Statement, which covers the years 2023 to 2029.

    These gas-fired plants and their power generation capacities are:

    • Barka 3 IPP: 750MW (2028)
    • Sohar 3 IPP: 750MW (2028)
    • Sur IPP: 2,018MW (2029)

    Phoenix Power Company, the project company for the 2,018MW Sur IPP, comprises Japan's Marubeni Corporation and Jera and Qatar's Nebras Power. 

    Shinas Generating Company – owned by Saudi Arabia's Acwa Power, Japan's Mitsui and China's Didic – is the project company for Sohar 3.

    Al-Suwaidi Power is the project company for Barka 3. It comprises France's Engie, Japan's Shikoku Electric and the local Suhail Bahwan Group.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12166689/main1708.jpg
    Jennifer Aguinaldo
  • UAE keen to start next nuclear plant phase

    18 July 2024

    The UAE government could start the tendering process this year for the state's next nuclear power plant, located in Abu Dhabi, according to a Reuters report citing a senior UAE government official.

    According to the report, Hamad Alkaabi, the UAE's permanent representative to the Austria-based International Atomic Energy Agency, said: "The government is looking at this option. No final decision has been made in terms of the tender process but I can tell you that the government is actively exploring this option."

    The government has yet to budget for a second power plant or decide on the size or location of such a project, but Alkaabi said it is possible a tender could be issued this year, the report added.

    A significant increase in electricity use over the next decade, driven by population growth and an expanding industrial sector, underpins the plan to proceed with the next phase of the state's civilian nuclear power programme.

    Any new power plant would likely consist of two or four reactors, said Alkaabi, who also serves as the deputy chairman of the board of management of the UAE's Federal Authority for Nuclear Regulation.

    The next phase of the Barakah power plant, comprising reactors five to eight, has been in the planning stage since 2019, according to regional projects tracker MEED Projects.

    The UAE became the first Arab state to operate a nuclear power plant when the first of the four reactors at Abu Dhabi’s Barakah nuclear power plant became operational in 2021.

    Each of the four reactors at the Barakah nuclear power plant can produce 1,400MW of electricity.

    Three of the plant’s four reactors are operational. Emirates Nuclear Energy Corporation's operating and maintenance subsidiary, Nawah Energy Company, completed the loading of fuel assemblies into Unit 4 in December 2023. 

    Unit 4 will raise the Barakah plant’s total clean electricity generation capacity to 5,600MW, equivalent to 25% of the UAE’s electricity needs.

    Korea Power Corporation is the prime contractor for the $24.4bn first phase of the Barakah nuclear power plant.

    GlobalData expects nuclear power capacity in the Middle East and North Africa region to grow from zero in 2020 to an estimated 7.1GW by 2030, mainly thanks to Abu Dhabi’s Barakah nuclear energy plant and the first reactors of Egypt’s El-Dabaa nuclear power plant.

    The UAE is one of more than 20 countries that committed to tripling global nuclear energy capacity by 2050 at the UN climate change summit Cop28, which was held in Dubai in late 2023.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12165779/main1220.jpg
    Jennifer Aguinaldo