fichtner opportunities and challenges in the kingdoms power generation and water production sectors...
TRANSCRIPT
FICHTNER
Opportunities and Challenges in the Kingdom’s
Power Generation and Water Production Sectors
Panos KonstantinSenior Consultant
Fichtner, Stuttgart - Germany
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Consultancy
Comprehensive technological know-how as foundation
• conventional technologies
• innovative technologies / renewable energies
Extensive planning experience in all project phases
Classical planning services are rounded off by
our over-arching expertise in consultancy
Planning Technologies
Power Supply
Energy Technology
Environmental Technology
Water and Infrastructure
IT, Economics and Finances
Complete solutions on a sound technical and economic footing
Broad-based range of services from one source
Fichtner’s profile
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Contents
• Key indicators – current and projected power and water demand
• First IPPs and IWPPs in Saudi Arabia
• Partnering for production, of power, power/water
• Investment opportunities in integrated power and water and in stand
alone power projects
IWPPs (SWCC, WEC)
Power sector
Industrial sector cogeneration projects
• Investment size, investment options
• Conclusions
• Glossary
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Population: growth 1993 - 2002: 3.5% / a expected 2.5 % /a population 2003: 22.7 m 2025: 40 m
Power: peak load
• growth 2002 - 2004: 7.9 % /a expected 3.8 % /a
• 2003: 29 GW 2025: 59 GW installed capacity:
• 2004: 30,5 GW 2025: 70 GW• reserve margin: 15 %
Water: demand 2004 : 6 m m3/d 2025: 8.0 m m3/d (10.0 m m3/d) production 2004: 5 m m3/d 2025: 8.5 m m3/d
• desal water: 3 m m3/d 5.5 m m3/d
Key indicators - power and water demand
Sources: MoWE Annual report 2003; WEC 2005
High growth of population triggers substantial increase of power and water demand
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First Saudi IPPs / IWPPs Projects
*) decision with regard to technology pending CCGT: Combined Cycle Gas Turbine; NG: Natural Gas; ST: Steam Turbine (xxxx) estimated project budget
Capacity Project
IPP / IWPP Projects Power Steam Water Budget Technology IPP /IWPP
MW t / h m3 / d m $
SADAF cogen 250 510 - 169 Saudi-US-Consortium
Saude Aramco cogen 1,074 2,000 - 510 CCGT - NG British-Saudi Consortium
Rabigh 475 2,070 228,000 1,100 CCGT - NG International consortium
Shuaibah III (WEC) 900 - 880,000 2,400 ST - crude Saudi-Malaysian Consortium
Shuqaiq Ph II (WEC) 850 - 212,000 (1,900) ST - crude 3 bids submitted / evaluation
Marafiq 2,500 - 800,000 - CCGT-NG final negociations
3,000 - 1,000,000 (3,000) CCGT-NG
1,100 - 1,000,000 (2,900) ST - crude
Request for proposals 1st. Qt 2007
Ras Az Zawr (WEC) *)
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Partnering for production of power and water
MoWEMinistry of Water and Electricity
MoWEMinistry of Water and Electricity
SECSaudi Electricity Company
SECSaudi Electricity Company
SWCCSaline Water Conversion Corp.
SWCCSaline Water Conversion Corp.
WECWater and Electricity Company
(off taker of power & water)
WECWater and Electricity Company
(off taker of power & water)IWPP´s Generation
WaterTransmission
7 regional WaterDistribution Companies
IPP´sBU Generation
BU Power Transmission
BU Power Distribution
Large Industry
residential commercial Industry
residential Industry Agriculture
A
A
Responsibility
Power/water flow
buy & sell(SA, Sabic, Ma´aden)
A
ECRAElectricity & Cogeneration
Regulatory Authority
ECRAElectricity & Cogeneration
Regulatory Authority
50% 50%
BU : Business Unit
Private Investoropportunities
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Projected water demand and supply 2005 - 2025
Source: SWCC, Marafiq, MoWE, Booz Allen Analysis, Fichtner
SWCC Existing &Planned Production
Capacity Planned & Private Desalination
Production Capacity
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Water demand and supply balance and project budget for IWPP
Item m m3 / d
required production capacity, total 8.5
./. ground & surface water -3.0
required desal production capacity 5.5
./. existing SWCC old capacity after 2010 *) -1.0
required new desal production capacity 4.5
planned IWPP & private capacity 2006**) -2.9
required additional capacity 1.6
project budget for planned capacity 9.0 billion US$
of which already contracted 5.8 billion US$
estimated budget for additional capacity ***) 5 - 7 billion US$
*) existing capacity 2005 = 3 m m3/d to be retired until 2010 = 2 m m3/d remaining 1 m m3/d**) Shuaiba, Shuqaiq Ph II, Raz Az Zawr, Marafiq***) roughly estimated by Fichtner
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Resolution 5/23 of the Supreme Economic Council
• Establishes framework for the participation of private sector in
power/water production projects
• Establishes WEC as LLC in which SEC and SWCC hold a 50%
stake
• IWPPs will be developed on BOO basis adopting ECA model
• Project companies’ stakeholders: 60% project developer, 32%
PIF, 8% SEC
• A joint team from SWCC and SEC will prepare and supervise
the tender process for the projects
• Tenders will be assessed according to five principal criteria• price, capacity, Saudi employment, technical performance, use of local goods
and services
• State credit support will be made available
• Some fiscal and financial incentives for project companies
Key provisions of the resolution to attracting private investors
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GovernmentMOF
SEC
SWCC AramcoProject
Company WECFuel (ECA)
EPCContractor
O&MContractor
SWCC
WPA
PPA
FSAPWPA
Contract Contract
LLA
Agreement
Credit Support
EPCO&M
Shareholders’
Developers
60%PIF
32%SEC
8%
PWPA : Power & Water Purchase Agreement
ECA : Energy Conversion Agreement
FSA : Fuel Supply AgreementLLA : Land Lease AgreementOSA : On Sale AgreementPIF : Public Investment Fund
Contractual structure for IWPPs
Source: WEC, HSBC Contractual structure results
to a very low risk for private investors
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Shuaibah
Raz Azzour
Tender 2006
900 MW880,000 m³/d
Shuqaiq850 MW
212,000 m³/d
Closed Jan06
In Tender
3,000 MW1,000,000 m³/d
The three WECs IWPPs
In May 2003 a Consortium of Consultants consisting of:
•HSBC bank, financial•Clifford Chance/Al-Jadaan, legal•Fichtner, technical
were appointed as advisers to WEC for the three IWPP projects
Note (WEC): Raz Az Zawr to be decided between 1,100 MW ST-crude oil or 3,000 MW CCGT-NG
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The Shuaiba IWPP - first IWPP project in Saudi Arabia
Technical Constraints
• Location: West Coast
• 900 MWe - 880 m3/d, base-load plant
• crude oil fired steam power plant, with FGD
• fully meets WB’s and PME environmental standards
• MSF desalination plant
Financial constraints
• First IWPP in Saudi Arabia
• World’s largest, crude oil fired new-build IWPP
• Project budget 2,4 billion USD
• 20 year PWPA, availability based tariff including indexation
• fuel supply by WEC based on ECA
• Payment obligations of WEC guaranteed by MOF
• Financial closing in Jan. 06 with a Malay-Saudi consortium
Successful closing of the Shuaiba project establishes a model for the involvement of private sector for IWPPs in the Kingdom
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• Following successful closing of the Shuaiba IWPP contractual constraints has largely been accepted by Bidders. On the same basis the other two WEC IWPPs are being developed
• For the Shuqaiq IWPP - 850 MW / 212,000 m3/d, estimated project budget $1,9 billion - three bids from credible international and Saudi developers have been received and are being evaluated
• This is an evidence that crude -oil fired IWPPs are bankable
• For the Raz-Az Zawr IWPP on the East Coast - 3,000 / 1100 MW *)
1,000,000 m3/d, estimated project budget $3,0 billion - tender doc’s are
under preparation. Pre-qualification and RFP to be issued 1st Qt 2007
Advancing the WEC programme
WEC’s strong project development pipeline offers significant investment, financing and contracting opportunities for private investors IWPP
*) 3,000 MW if CCGT / 1,100 MW if ST- crude oil
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The power system of SA consists of four main grids. The grids of the Eastern and Central Region are interconnected, those of the Western and Southern Region are isolated networks.
Length of the lines in 2004:• Transmission: 33,685 km• HV-distribution: 141,054 km• LV-distribution: 148,688 km• Total 323,427 km
Peak load by SEC Region in 2003:Eastern Region: 11.0 GWWestern Region: 8.0 GWCentral Region: 8,6 GWSouthern Region: 1.9 GWTotal: 26,3 GW
Magnitude of investment rqrd until 2020total: 92 - 117 billion US$of which: generation 51%
transmission 28%distribution 21%
Power system of Saudi Arabia
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• Generation capacity about 30.5 GW (of which SEC 27.7 GW) in 2004
• Small, insufficient reserve capacity margin
• outdated PPs in the West, Central and Southern region need
replacement
• New capacities of 30 GW to 40 GW required to cover growing demand
• Four grids, only Eastern and Central grid interconnected:•Transmission 33.7 th. km, HV-distribution 141 th. km, LV-distribution 148,7 th. km
• Construction 1st-Phase GCC-Interconnection project started •SA, Bahrain, Kuwait, Oman, Quatar (48 MW)
•400 kV line from Kuwait to SA and SA - Bahrain , HVDC-interconnector to SA 60Hz/380 kV
grid
• Interconnection of the four SA-grids planned in the medium term
• Investment in the range of $92 to $117 billion acc. MoEW´s 25-year
electrification plan•in billion $ minimum: generation 46.9, transmission 26 distribution 18.9
Sources: www ://eia.doe.gov/emeu/cabs/saudi.html, US commercial service, bfai
Significant investment opportunities for private investors and suppliers of hard ware
Participation of IPPs in power generation is the prerequisite for the future competitive market in the power sector of SA
Power sector investment opportunities
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List of SEC-Projects for the period 2006 - 2010
Required capacity addition until 2024 about 30,5 GW
Size and time requirements for investment call for participation of the private sector - IPP - in the implementation of the programme
Plant MW
Tabuk power plant expansion 200
Shuqaiq-III power plant 600
Muzahimiyah power plant 1,725
Rabigh-II power plant 2,400
Quarayyat-II expansion 3,600
Salboukh power plant 1,725
Power plant # 10 1,725
Yanbu-II power plant 2,400
Riyadh power plant-7 expansion 500
Quasim power plant expansion 360
Al-Khafgi power plant 200
Total 15,435
estimated CAPEX range billion $ 12 - 15Source: US-commercial service, June 2006
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Industrial sector investment opportunities
• Industrial cogen - IPPs already implemented:• SADAF cogen 250 MW• Saudi Aramco 4 cogen plants, total capacity 1,074 MW• Rabigh cogeneration plant, 475 MW
• Huge cogeneration potential in the oil/gas, petrochemical and basic industries
• BOO schemes most suitable with the industrial facility on-site as off taker of cogen power and steam
• Possible excess power production can be sold to the Single Buyer (Transmission Company) in future
• Preferred option, however, is the transmission of excess power to other facilities of the same enterprise against reasonable transmission fee. This approach may accelerate process
• Favorable conditions for IPPs with regard to financing and payments even without state guarantees.
Cogeneration of power and industrial steam is a highly energy efficient technology achieving fuel savings of about 35%.
Possibilities to utilize process waste heat for power generation
Small attention given to this opportunity in SA until now.
Provide attractive investment conditions for IPP without subsities and state guarantees
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Conclusions
• Size of the projects and the magnitude of investment in the power and
power/water sector SA call for participation of private sector
investment
• Legislation in SA provides favorable conditions for IPPs and IWPPs
• Successful closing of the Shuaiba project has established a model for
IWPPs in Saudi Arabia
• Stand alone power generation projects could be developed in a similar
model
• Participation of IPPs is the precondition for competition in the power
sector of SA
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BOO Build, Own & Operate
BU Business Unit
ECA Energy Conversion Agreement
ECRA Electricity & Cogeneration Regulatory Authority
EPC Engineering Procurement Construction Contract
FSA Fuel Supply Agreement
GCC Gulf Co-operation Council
GW Giga Watt
IPP independent Power Producer
IWPP Independent Water & Power Producer
LLC Limited Liability Company
MoF Ministry of Water and Electricity
MW Mega Watt
PIF Public Investment Fund
RFP Request for Proposals
PPA Power Purchase Agreement
PWPA Power & Water Purchase Agreement
SABIC Saudi Basic Industries Corporation
SEC Saudi Electricity Company
SWCC Saline Water Conversion Corporation
WEC Water & Electricity Company LLC
Glossary
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Thank You for Your Attention
FICHTNER Your contact person:Panos KonstantinPhone +49 711 / [email protected]