Middle East
ESSENTIAL INSIGHTS FOR MIDDLE EAST WATER, GAS AND ELECTRICITY PROFESSIONALS Licensed by Dubai Media City
August 2010
• Vol 4. Issue 8
TURBINE TROUBLES The gas turbine MRO market is expanding
SCARCE
The region is waking up to the need to save water
RESOURCE GENERATOR GAME Temporary power is filling the energy gap
KUWAIT: OIL RICH, ENERGY POOR. HOW DID IT COME TO THIS? In spite of vast resources, the country has neglected its power infrastructure. BusinessPublication Publication An An ITPITP Business
CONTENTS
August 2010 Issue 8
12
Kuwait is feeling the effects of chronic underinvestment.
2 COMMENT Governments should do more to curb wasteful water consumption.
4 REGIONAL UPDATE A round-up of some of the biggest headlines in the region.
10 WEBPAGE A look at the web content of utilities-me.com.
12 NEWS ANALYSIS Kuwait has both huge oil reserves and huge energy problems. Why?
Water consumption in the GCC is putting a huge strain on utilities. What is being done to curb excessive use?
18
Turbine maintenance and repair work is a growing business in the region.
A look at how Abu Dhabi is building up its water reserves. Green buildings are coming into focus, say real estate players.
18 WATER WORLD Water conservation is still in its infancy in the GCC.
24 TURBINE MRO Gas turbine manufacturers are best placed in the MRO market.
31 TIMELY SUPPLY How generator rental companies are filling the power gap.
24
38 PEOPLE METER Cummins ME general manager Wassim Aboushaar in profile.
Short term fix: rented power capacity.
41 PROJECTS A listing of the latest projects in the region.
Cummins ME general manager Wassim Aboushaar.
43 TENDERS UME lists the business opportunities that are to be had.
46 INDIA SNAPSHOT
38 www.utilities-me.com
31
Whats going on in the Qatar Power and Water sector?
48 THE BIG PICTURE Transformers on the move.
August 2010
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Utilities Middle East 1
COMMENT Middle East
Governments have to make wasteful water consumption prohibitive
ITP Business Publishing Ltd CEO Walid Akawi Managing Director Neil Davies Managing Director, Itp Business Karam Awad Deputy Managing Director Matthew Southwell Editorial Director David Ingham
GETTY IMAGES
Time for a change
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Fountain displays can be run with recycled wastewater, saving vast amounts of potable water.
W
ater and power are the bread and butter topics of Utilities Middle East. After water had received relatively little coverage over the last few months, page after page of the August edition is dedicated to the issue of water conservation. A timely topic. As we swelter in the summer heat, we spent little thought on this most precious commodity. But maybe we should. The GCC is the biggest per capita consumer of water, with the average Abu Dhabi resident using a record 550 liters per day, three times the world average. In a country were 100 percent of potable water comes from desalination, this represents no insignificant cost to the government. Producing a cubic meter of desalinated water in the UAE is estimated is to cost 3.76 dirham, and this expense is not passed down to consumers in full, as water and power in the region is subsidised. Money apart, desalination is a significant drain on power resources, at a time when utilities are engaged in a constant struggle to satisfy ever growing energy needs. What’s more, it is a big contributor to the carbon footprint of the region. A nascent but growing environmental consciousness, and the realisation by governments that their resources are stretched, has now set the wheels of change in motion. And it is surprising how easy a saving can be had. Abu Dhabi, the worst culprit, has launched a remarkable campaign to install simple water saving devices in the taps of households in one
of the city’s districts. Over the next three to five years, the programme is to be rolled out across the entire emirate, with the government providing the devices and paying for the installation. It is hoped that this will reduce domestic water consumption by thirty percent, at negligible cost, as one such device costs less than two dollars. Abu Dhabi has also made inroads on the regulation side, mandating a green standard for new buildings. All this is encouraging. There is, however, still a real hesitancy amongst governments in the region to compel its citizens to save water. While trying to change consumption patterns by running awareness campaigns, they shy away from enforcing change by raising water tariffs, or imposing regulation. Yet most experts see more prohibitive tariffs, and more stringent building standards, as vital to reduce consumption. This hesitancy is rooted in the desire by local rulers to provide a generous living, in return for the loyalty of its subjects. This age-old social agreement has been working well, so far. But the region is now confronted with modern agendas such as environmentalism, while industrialisation and population growth make generous subsidies of power and water increasingly unfeasible. It is time governments embraced change, and take the necessary steps to ensure a sustainable future.
Florian Neuhof, Editor Email: florian.neuhof@itp.com
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● August 2010
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FB 340 SmartMetering engl 205x275.indd 1
19.07.2010 17:15:50 Uhr
REGIONAL UPDATE
DEWA to commission smart metering “within six months” Smart metering and district cooling regulation part of initiatives to reduce consumption Dubai Water and Electricity Authority (DEWA) CEO and managing director Saeed Mohammed Al Tayer has said in July that smart metering will be rolled out in Dubai within six months. “We have already started to look into smart metering. The commissioning will be within six months,” confirmed Al Tayer at the signing of a Memorandum of Understanding (MoU) with the Dubai Courts. Smart metering devices give utilities and end users more information about consumption, and help utilities to bill consumers according to their use of power and water. Conversely, they help end users to keep track of and reduce their consumption. Per captia consumption in Dubai far exceeds the world average.
With both water and electricity subsidised, DEWA is looking to contain growing demand with a host of measures to promote conservation and reduce power and water use, according to the CEO. Al Tayer mentioned district cooling as one of the areas where DEWA is looking for efficiency gains. “We are now waiting for district cooling providers to modify their plants with thermal storage, because with their current plants are not sufficient for energy reduction.” New district cooling plants are required to be fitted with thermal energy storage, which reduces energy consumption during peak loads. DEWA is also encouraging the use of treated wastewater to reduce the amount of desalinated water, Al Tayer said.
Saeed Mohammed Al Tayer, DEWA CEO.
DEWA awards US$142 million in power station contracts
DEWA mandates HSBC as advisor to Hassyan IWPP
The Dubai Electricity and Water Authority (DEWA) said on Monday that it has awarded US$142million in contracts to expand its facilities. It said in a statement that it has signed a long term agreement with Ansaldo Energia to supply spare parts and services for the Jebel Ali Power Station. The deal is for a period of 10 years and the contract is worth at $122 million. DEWA also inked two contracts with ABB Industries and Areva T&D ME for transmission system upgrades involving various substations. The total volume of the busi-
Dubai Electricity and Water Authority (DEWA) has mandated HSBC as financial advisor for its first independent water and power project ( IWPP) the bank said in a statement. Clifford Chance will act as legal consultant, and Mott MacDonald as technical consultant, as DEWA is seeking to attract private investment into power and water generation. The IWPP will be located at Hassyan, near the border with Abu Dhabi, and have the capacity to produce 1500MW and desalination capacity of 120 million imperial gallons per day, the statement said. The IWPP model “represents a sound and timely solution to meet the
4 Utilities Middle East
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August 2010
ness with ABB will be around $19 million and $0,7 million with Areva T&D Middle East, the utility added. Saeed Mohammed Al Tayer managing director and CEO of DEWA said: “DEWA dedicates a great importance to the networks of power transmission and the main substations which constitute the backbone of Dubai Electricity. “DEWA will equip its facilities with the-state-of-the art technologies to further enhance their reliability and efficiency in order to serve Dubai’s urban and economic expansion,” commented the chief execture officer.
growing demand for key infrastructure in Dubai” that has been welltested across the Gulf region, said Jonathan Robinson, HSBC’s head of project finance for the Middle East and North Africa region. DEWA in January announced its decision to invite international developers to help it build power and water plants, in a bid to free up the city state’s funds for other investments. The state utility has in the past funded its spending by tapping debt markets and export credit financing. The state utility in April sold US$1 billion of 5-year bonds, the first debt to be issued to a Dubai entity after the Dubai World restructuring proposal. www.utilities-me.com
REGIONAL UPDATE
GE to supply Salalah IWPP Oman turbine contracts worth almost US$300 million
HIGHLIGHTS SEC SIGNS OFF US$122M PLANT CAPACITY BOOST The Saudi Electricity Company (SEC) has signed a contract with alfanar Construction to extend the power generation capacity of the Hail-2 power plant, the EPC contractor announced on Monday. The US$122 million project will increase capacity by 160MW. The first new units of the extension will be operational within the first half of 2011, according to alfanar Construction.
ATKINS JOINT VENTURE AWARDED RAS AL-ZWAR CONTRACT
GE has secured a lucrative contract supplying gas turbines to IWPPs in Oman.
General Electric (GE) has received contracts totaling nearly US$300 million to provide 6FA gas turbines and long-term services for the Salalah Independent Water & Power Project (IWPP). The plant, located in the Taqah area of Salalah, about 1,000 kilometres southwest of the Omani capital city of Muscat, will have a capacity of 445MW and produce 15 million imperial gallons per day of desalinated water to help meet the region’s growing power and clean water needs. The electricity and water output from the plant will be sold under a 15-year power and water purchase agreement executed by the Oman Power and Water Procurement Company and Sembcorp Salalah Power & Water Company, which is 60 percent owned by Sembcorp Utilities and 40 percent owned by www.utilities-me.com
the Oman Investment Corporation. “This project is another example of the worldwide trend we are seeing toward the integration of power and water production at a single site, especially in the Middle East where population and industrial growth rates exceed many other regions of the world. Water and energy are interdependent; energy is needed to generate desalinated water and water is needed to produce energy. GE has the scale, diversity and expertise to effectively support power and water projects around the world,” said Joseph Anis, GE Energy’s President for the Middle East. GE is supplying five heavy-duty Frame 6FA gas turbines, which are equipped with GE advanced emission control technologies. GE also has signed a 15-year contractual service agreement (CSA) for the proj-
ect, which will include the supply of parts, repairs and field services, and will provide performance services for the gas turbine-generators and accessory equipment. To date, GE has service agreements, including CSAs, in place at more than 600 sites worldwide. The Salalah project further expands the presence of GE’s F-class gas turbine technology for projects in the Middle East. The 6FA gas turbines have been used in a wide range of applications worldwide and have compiled more than two million hours of commercial service in 30 countries. The Salalah IWPP project further expands GE’s presence in Oman and the Middle East. More than 1,000 GE turbines have been installed throughout the Middle East, providing more than 70 gigawatts of electricity.
A joint venture led by engineering design consultancy Atkins, has been appointed by the Royal Commission for Jubail and Yanbu to deliver engineering design services for the longterm development of the city of Ras Al-Zawr. The contract value is around US$16 million, said the company. The project involves front end engineering design and master planning for the proposed minerals industrial city at Ras Al-Zawr.
MASDAR HOSTS RENEWABLE ENERGY CONFERENCE IN MOROCCO Masdar, the Abu Dhabi’s government-owned company promoting sustainability, hosted the ““Renewable Energy - A Leap Towards Human Development” international renewable energy conference as part of the 32nd Assilah International Cultural Festival in the Kingdom of Morocco.
August 2010
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Utilities Middle East 5
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REGIONAL UPDATE
Siemens secures Saudi deals Company secures orders worth nearly $130m to supply gas turbine packages The components are to be installed in the Hail Extension II and Al Qurayat Expansion II power plants, the company said in a statement. The buyers are the Alfanar Construction Company and Saudi Services for Electromechanic Works (SSEM) who will perform the project on turnkey basis for the Saudi Electric Company (SEC). Delivery of the components is scheduled for 2010 and 2011, with an order volume of around US$130 million, the company added. The Hail Extension II gas turbine power plant is located in central Saudi Arabia and is comprised of two units, with a total capacity of 160MW. As demand for power in the Hail region is increasing by 10 percent annually, the plant is fast-
Siemens are supplying gas turbine components to be used in two Saudi Power plants.
tracked to come online as early as summer of 2011. The new Al Qurayat Expansion
II gas turbine plant is located in the North West of Saudi Arabia. Consisting of two power plant units,
the plant will have a total installed capacity of 136MW. Siemens will supply a total of four of the powerful and reliable SGT6-2000E gas turbines for the two plants, along with four generators and the auxiliary equipment. “Siemens is in an excellent position to contribute with its technology to the rapid growth in Saudi Arabia,” commented Lutz Kahlbau, CEO and president of Siemens Saudi Arabia. At the beginning of the year, Siemens handed over the Shuaibah integrated water and power plant to the Shuaibah Water and Electricity Company (SWEC). The plant produces approximately 880,000 cubic metres of drinking water daily for the cities of Makkah, Jeddah, Taif and Al Baha.
Saudi Electricity Company Q2 profit buoyed by lower costs
Drake & Scull awarded district cooling plant contract by Dohaland
Saudi Electricity Co posted a 50 percent rise in second quarter net profit on lower costs and higher revenues. Further gains are expected after a rise in power tariffs for some users, writes the Reuters Newswire. The Gulf’s largest utility by market value made US$285.3 million in the three months to end June, compared with $190.6 million a year earlier, it said in a statement to the Saudi bourse. The result was 13 percent higher than the top forecast by analysts. Operating profit rose 55 percent to $256.5 million, said the SEC. The state controlled company usually posts its best quarterly earnings during the second and third quarters as a hotter climate underpins a spike in power consumption, especially for air conditioners. As of July 1 it started applying higher tariffs for govern-
Developer Dohaland today announced that it has awarded US$50 million design and build contract for two district cooling plants in its flagship Musheireb project to Drake & Scull Water and Power – a subsidiary of Drake & Scull International. The contract scope of work includes detailed design and construction of district cooling plants comprising the chiller plants, cooling towers, and includes all equipment and services. The total capacity of the two proposed district cooling plants is 29,250 tonnage of refrigeration (TF) for the development in Qatar’s capital Doha. The contract also covers the design and construction of a chilled water reticulation network including valves and valve cham-
www.utilities-me.com
ment, commercial and industrial users, which would add $426.6 million to revenues during the second half of 2010 and boost its profitability. It was the latest step sponsored by the government to help the power utility cope with power demand that is growing at an annual eight percent and which is expected to require investments close to $80 billion in the ten years to 2018. Strongly outperforming the all share and other sector indices, shares in the firm gained about 19 percent this year, with much of the gains realised after the announcement of the higher tariffs. The government granted the cash strapped firm a $3.99 billion soft loan in April to support its finances and ease the burden of lending from commercial banks.
ber details, the design and construction of complete Mechanical Electrical and Plumbing (MEP) building services for the plants, the testing and commissioning of the plants as well as the operation and maintenance of the district cooling plants for a minimum period of five years. Dohaland had recently confirmed that work on the project was proceeding on schedule and raft concrete pouring for phase 1A of the project was currently under progress. Phase 1A of Musheireb is due for completion in 2012 with the overall project expected to be ready by 2016. Dohaland is a subsidary of the Qatar Foundation for Eductation, Science and Community Development. August 2010
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Utilities Middle East 7
REGIONAL UPDATE
Iran to be nuclear by September Salehi: Testing and commissioning of Bushehr plant drawing to a close Iran is scheduling the definitive start-up of its Russian-built Bushehr nuclear power plant (NPP) in the country’s south-west for late September, as commissioning and final testing of the facility is drawing to a close. “We reached the point of no return and the ground is paved for the reactor to go on stream,” Ali Akbar Salehi, the head of Iran’s Atomic Energy Organisation, was quoted by Reuters as saying, adding that “the last and some of the most important tests before going on stream”, including the warm-water tests, had already been completed. The 1,000MW reactor will come online after years of delays as Iran has suffered cash-flow problems, although most of the delays have come from Russia using the project’s progress as a lever for diplomatic pressure towards Iran and in bargains with the United States—which has been highly critical of the project since its inception about 15 years ago,
Iranian students combine politics with style as they protest against US-led sanctions in front of the Bushehr nuclear plant.
writes IHS Global Insight analyst Sam Ciszuk in a research note. The Bushehr NPP is, however, unrelated to Iran’s internationally criticised enrichment programme—with its alleged military connotations—as the facility will run on Russian-supplied nuclear fuel, which, when spent, will be collected and sent back to Russia for
reprocessing in a closed fuel-cycle. The facility will alleviate widespread Iranian power shortages, which come to bear at this time of the year as temperatures rise and increased air conditioning usage strains the power system’s capacity, although the absolute electricity and gas peak demand season in Iran takes place in the winter
months of December to March. Iran has failed to develop its gas reserves fast enough to meet domestic demand at the same time and increased sanctions are hitting its ability to gain the necessary technologies and production efficiency, while continued subsidies keep encouraging wasteful usage levels, says Ciszuk.
Approval granted for work on United Arab Emirates nuclear project Nuclear corporation gives green light for work on UAE’s first site The nuclear regulatory authority has given its approval for preparatory work to begin at the proposed site of the United Arab Emirates’ first atomic power station, writes The National newspaper. Two licences issued to the Emirates Nuclear Energy Corporation (ENEC) pave the way for the South Korean consortium in charge of the project to start building basic infrastructure such as roads, and components important to the safety of the power plants, such as steam genera-
8 Utilities Middle East
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August 2010
tors and coolant pumps. Further approvals from the Federal Authority for Nuclear Regulation will be needed before the site at Braka, a stretch of beach west of Ruwais, is deemed acceptable. Approval from the Environment Agency-Abu Dhabi is also needed before infrastructure work can start. ENEC has submitted an environmental impact assessment for the construction and operation of the plants and has promised to preserve any heritage sites found during con-
struction. Dr William Travers, the authority’s director general, told the paper that while the two licences had been granted it did not mean it had approved the 13-square-kilometre site 300km west of the capital. The nuclear energy corporation will have to apply “later this year” to construct the four power plants, he said. ENEC expects to begin building the first plant on the site by late 2012 and have it in operation by 2017. It evaluated 10 sites, but ultimately settled on Braka for the first
four reactors because of its remote coastal location, stable geology and proximity to the electricity grid. The government expects that within a decade the four plants will deliver almost a quarter of Abu Dhabi’s power and be staffed by more than 2,000 engineers and other workers. A South Korean consortium led by Korea Electric Power Corporation has been chosen to build the first four plants at a total cost of US$20 billion. www.utilities-me.com
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WEBPAGE
EDITORS PICK
ONLINE ANALYSIS
Increased tariffs amid shortages in Yemen
Most popular headlines
IHS Global Insight analyst Sam Ciszuk comments on the dire state of the Yemeni utilities sector, and assesses the impact of higher tariffs.
ONLINE NEWS
Masdar moves on Record power consumption in Bahrain Drake & Scull to build DC plant in Dohaland Marafiq tenders US$1bn KSA power plant Dewa mandates HSBC as advisor to IWPP ABB to built substation in Fujairah Bring on green building, survey says Dewa mandates HSBC as IWPP advisor Wastewater byproduct holds profit potential Empower to cool Mirdif development in Dubai
SPOT POLL
ABB commissions world’s longest transmission link in China The company breaks his own record by commissioning a link that transmitts 7,200MW of power over 2,000 kilometres.
Oman’s OPWP announces RfP for revised power project The OPWP revises plans to built a power and water plant near a residential area, instead splitting the project across different sites.
Adwea is building self-powering sewage plant An innovative project harvests the biogas created by wastewater processing to power the process itself.
10 Utilities Middle East
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
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August 2010
Should power and water subsidies in GCC countries be abolished?
58% 32% 10%
Yes, excessive demand needs to be curbed No, governments should rely on other measures to reduce consumption No, subsidies are an imporant socioeconomic factor www.utilities-me.com
NEWS ANALYSIS
The heat is on for
Kuwait
For a country that holds around eight percent of global oil reserves, it may be difficult to believe that Kuwait faces domestic power concerns, writes Oliver Cornock, Oxford Business Group's GCC regional editor.
K
uwaitis have been experiencing record temperatures in June, prompting power outages in a number of residential areas and bringing to light concerns over the country's pressing need for increased power generation capacity. The nation has one of the world's highest per capita consumption rates of electricity, and during the summer months, when temperatures hover around 50°C, it is estimated that around 70 percent of energy is consumed by air conditioning units. At present output levels, Kuwait is capable of producing 11,200MW of electricity. Yet on June 13, with soaring temperatures in the low 50s, consumption reached a record 10,823MW (98.5 percent of grid capacity). Analysts forecast demand to reach around 11,000MW during the coming few months, up 13.4 percent from last year's peak
12 Utilities Middle East
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August 2010
summer demand of 9961MW. Considering that most countries strive to operate with a spare capacity of around 15 percent, authorities in Kuwait have been setting up emergency meetings and working out strategies to ensure summer outages do not become a regular occurrence. Kuwait has not built new plants since nce 1998, and over that period d has seen an annual average growth rowth rate in power demand of eight percent. While new power plants are in the planning and nd construction stages, no new plants lants are set to come online until til next summer at the earliest. t. In September mber 2009 the government signed a US$2.7 billion lion deal with General ral Electric and Hyundai Heavy Indusndustries of South outh Korea to build uild a 2000MW MW
gas-fired plant at Subbiya in the north of the country. The plant is expected to be operational in June 2011 and produce 1320MW, with an additional 680MW to be produced by 2012. In the meantime, it is believed that deteriorating cabling has caused up to 80 percent of the recent outages experienced, prompting calls for immediate efforts on maintenance and repairs. "While the government is spending billions building new power plants, for far less money and with
more immediate results, they should also invest in refurbishing and improving the efficiency and output of existing ones," says Walid K Al Hashash, the chairman of Aref Energy. Existing power and desalination plants are owned and operated by the Ministry of Electricity and Water, and many believe improvements in quality and delivery could be made through privatisation. "Evidence shows that when a sector is opened to market competition, customer service and product delivery improve dramatically," says Faisal Hamad Al Ayyar, vice hairman of the Kuwait Projects Company (KIPCO). "However, unlike other economies where the primary role of privatisation is to bring investment funding, what Kuwait requires is private sector expertise." To this end, in May parliament passed a bill to allow private sector involvement in the operation of the country's power plants. The legiswww.utilities-me.com
NEWS ANALYSIS
lation allows for the establishment of shareholding companies to build new power and water desalination plants in the country, the first time private entities will have a stake in the local power sector. Under the terms of the law, up to 50 percent of shares in the company will be sold to nationals in an initial public offering, while the government and state institutions will hold up to 24 percent of newly formed companies. The remaining 26 percent will be sold to publicly listed Kuwaiti companies or foreign companies approved by the government. While it is believed that investments in new power facilities and an engagement with the private sector will result in additional supply down the road, equally important from many observers' view is the need to better manage electricity
www.utilities-me.com
demand and discourage excessive consumption. The residential sector accounts for around 60 percent of the total current load, with the government heavily subsidising electricity and charging households a mere $0.07 per kilowatt hour, about half the average price in the US. In addition, many households do not pay their bills and are rarely penalised for not doing so. According to Dr Saad Akashah, an advisor the Arab Fund for Economic and Social Development, "there is huge wastage and overuse of electricity in this country, and it is harming future generations. So long as electricity is essentially free, people will not concern themselves with how much they use. We do not need to get rid of subsidies entirely, but should introduce some tiered pricing that charges people
an affordable rate while at the same time making them think before they consume." The financial implications of such high energy usage are also significant, not only for industries concerned over a steady supply of energy, but also for the government due to the high fuel bill and large capital investments. According to the Kuwait Institute for Scientific Research, if current demand trends persist, Kuwait will need to add another 14,000MW in generating capacity by 2025, bringing overall capacity to 25,000MW at a cost of $24.1 billion. The accompanying fuel bill to meet this extra capacity would reach approximately $13.1 billion, at current prices. As a stop-gap measure, the government has signed deals with Shell and Vitol in 2009 and April
2010 respectively for the import of approximately 500,000 cubic feet per day of liquefied natural gas to help fuel its power stations. In addition to the environmental benefits of being a cleaner-burning alternative, importing gas is considered less costly than using export-revenue-earning oil-derived fuels to generate electricity. Kuwait is also hoping to boost its natural gas production and has targeted levels of 5bn cubic feet per year, up from current level of 1.2 billion cubic feet of non-associated gas from its northern gas fields. To achieve this, the government has enrolled the help of Royal Dutch Shell, signing a deal estimated at $700 million in February that will entail the energy giant providing expertise and technology to help tap the complex reservoirs.
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Utilities Middle East 13
NEWS ANALYSIS
Abu Dhabi secures water supply Adwea to award contract for world's largest water storage project soon The Abu Dhabi Water and Electricity Authority (Adwea) is close to awarding the contract for a landmark water storage project that will create a three months emergency supply for the Emirate’s one million inhabitants, a source involved in the project has revealed. The Strategic Water Storage/ Recovery Project will significantly increase the strategic drinking water reserves of the UAE’s largest emirate, says Peter Menche, director or projects at GTZ, a German governmental organisation that plays an advisory role. To safeguard against the disastrous consequences of production outages at the Emirate’s desalination plants, 26 million cubic meters of desalinated water will be pumped into the ground at Liwa, Abu Dhabi. Of these, 16.3 million cubic litres can be recovered as drinkable water, enough to supply each resident with 182 liters of water over a three months period. Abu Dhabi currently only has enough capacity to store around two million cubic meters of potable water, sufficient to bridge a three day production gap, accord-
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August 2010
ing to Menche. The contract will most likely be awarded at the end of the month, according to Menche. While Adwea has remained tightlipped about the project, there has been speculation that a UAE contractor will win the tendering process. Once the contract has been awarded, three basins will be constructed, filled with gravel and topped with a ‘geotextile’ cover over a period of 30 months. The cover will prevent evaporation and contamination. When completed, the five meter deep basins will allow water to seep into the groundwater via PVC pipes. While concept of artificially bolstering groundwater levels is not new, the scale of the project is unprecedented. “This is the world’s largest project of its kind, and the fact that it is executed in the harsh desert terrain and will make use of desalinated water mean that this is ver y much a landmark for the region,” explains Menche. The water storage capacity of the scheme can be expanded in future, provided extra water basins
Running out: Abu Dhabi’s water reserves are currently only sufficient for three days.
are constructed. Abu Dhabi’s population is expected to increase to 3,1 million by 2030, according to GTZ estimates. Abu Dhabi produces around 800,000 cubic meters of desalinated water per day. Apart from the risk posed by natural disasters and accidents, its production facilities are easy targets for sabotage or military attacks. “All it would take is a few paratroopers dropped over a desalination plant by a hostile neighbour,” says Menche.
“And there are a few of those.” Other options to secure an emergency water supply had included the concept of a ‘GCC water grid’, emulating the GCC Interconnection Grid that will be completed in 2011, and enable GCC countries to shift electricity between them to prevent power outages in member states. At a projected cost of US$5.3 billion, the concept was deemed too expensive to have been put into action, says Menche.
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NEWS INTERVIEW
Building Green Landmark Properties CEO Charles Neil discusses the results of a study assessing the feasibility of green buildings :Can you explain the benefits of retrofitting? Typically in a house you could reduce energy consumption by 70 percent through proper cladding, triple glasing, and so on. You can do these things after a house has been built, even the cladding. Retrofitting is about insulation, the way your house your A/C units how the air circulates in a building. You can also put permafrost in the ducting, because you get a lot of energy loss in the ducting. While there is coating around it, if you coat the inside with an insulation package as well, you reduce the loss. There is a lot of energy loss between the chiller and the outlet. :What else can be done to make a building greener? The positioning of a building can save you energy. The Index Building here in the DIFC in Dubai, for example, has been positioned differently, you can see it slightly sticks out. They’ve positioned it for the sun, so the sun doesn’t eat into the windows, it hits the side of the building, which is clad and insulated.
Charles Neil, CEO, Landmark Properties.
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:What can be achieved in terms of water conser vation? Green buildings could do a huge amount. Retrofitting is quite expensive for buildings, because you would need double piping. With wastewater, you’d clean it up, you’d have a wastewater filtration plant in the basement, and it doesn’t have to be very big, and grey water is then used in the toilets. But you need separate piping. So you can only do it when you are building a new building. But you can still do quite a lot. You can for instance do something called sewage mining. Its an Aus-
“There was a rush to build in Dubai in the period between 2004 and 2008, and no one really stopped to consider the environmental impact” tralian concept, and I’ve actually looked into it. Typically what you could do for a development is take the wastewater that goes into the main sewage system back out of the sewer, clean it up and use it for cooling plants. :How would ffeasible sewage mining be here in the UAE? mine you just need For sewage mi the permission of the municipality to mine the sewage. And the cooling providers like big district cool Tabreed, Emicool, Empower, Ta on a standard would have to agree ag that is to go into the for the water th systems. They use fresh cooling system water now, which is a desalinated wat huge waste. :Please ex explain the potenwastewater holds for tial that waste cooling? district cooling A lot of water is wasted in district cooling, as they add chemicals to iit. You can only circulate culat that water six times before to seven s that water gets saturated with those ura
chemicals, and you have to dispose it into the sewage. If you instead use cleaned up wastewater, which can be cleaned up to 98 to 99 percent purity, you may not be able to use it six to seven times, maybe only four times. But the cost for desalinated water is huge. I think for freshwater its about 18 dirham per cubic meter, for treated water it is only six dirham. So as you can see, there is a huge differential, and a huge potential for these master planned developments like the Burj Khalifa or the Dubai Investment and Financial Centre to start reusing that water, for cooling or for landscaping. :Are there other aspects to air conditioning that can be optimised? Air conditioning units at the moment are very wasteful. They give up a lot of water because they release it when they compress air. That’s pure fresh water just going straight into the drains at the moment, which is not being used again. There is tremendous potential for savings there. August2010
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Utilities Middle East 15
NEWS INTERVIEW
:The technology to make buildings greener already exists and is used elsewhere. Why is it not being applied freely in the region? The technologies are not new, and are pretty standard in places like Australia. There was a rush to build in Dubai in the period between 2004 and 2008, and no one really stopped to consider the environmental impact. Now construction has slowed down, but they are committed to all of these buildings, so we’re going to have to wait for this construction cycle to end. But the next one will go off on a much more sustainable basis. And this is what we would like to do. We would like to
see regulation brought in for that. But what you could do immediately is retrofitting, which isn’t as efficient and cost more but you still get a return on investment . This is the data that we now want to start to research and publish. :So is current legislation not sufficient? No, I think it has got to be more. We need more standards on insulation, the fitting out of AC units, recirculation of air in buildings. All new buildings should be double skinned. If you got a double skin you can circulate the air around the building, and this is where you get the energy saving benefits.
“Typically in a house you could save up to 70 percent of energy through proper cladding, tripple glasing, and so on.”
Dubai’s Burj Khalifa uses treated wastewater for its fountain display.
AND THE SURVEY SAYS… Survey participants think that developers could start building green Landmark Advisory’s green buildings survey, conducted in conjunction with Cityscape Intelligence, asked 241 stakeholders in the real estate sector about the feasibility of green buildings in the United Arab Emirates. The results showed a general optimism towards the construction of green buildings, with 66 percent of respondents believing that developers are now ready to build green. This optimism has to be tempered with the constraints arising from the current economic climate, and the depressed state of the property market, believes Jesse Downs, director research & advisory services at Landmark, who was in charge of the survey. “The majority of developers currently considering launching a new project or constructing a new building are focused on shortterm budgetary constraints,” she says. “There are, however, exceptions. Masdar City is, of course,
Jesse Downs, Landmark Advisory
the best example in the region of a development committed to the principles of sustainability.” The survey also asked the stakeholders what return on investment they would need to be convinced about retrofitting a building to enhance its green credentials, with the majority of
Do you think developers are now willing to build green buildings? Don't know, 13%
No, 21%
Yes, 66%
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August 2010
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NEWS INTERVIEW
of existing space and consider ways to improve the sustainability of new developments before the next residential cycle starts,” sums up Downs. The participants felt that government subsidies were required to induce owners to retrofit buildings, and developers to build green. They also believed that regulation was essential for making green buildings feasible. They remained unconvinced, however, that regulation and financial penalties should be used to force through retrofitting. “Given our location in an area with limited renewable resources, there is a strong case for sustainable regulation,” concludes Downs, who expects that regulation launched in the near future will apply only to new launches. This is unfortunate, as the pressure is on. “Economic growth locally is correlated with high population growth rates, which put enormous pressure on the environment through urbanisation, natural resource consumption, and increased pollution.“
To retrofit my building, I would require a return on investment over 5 years of...
0-5%
7%
18%
6-10%
11-15%
17%
20%
16-20%
21-25%
26-30%
>30%
3%
4%
3%
I would not consider retrofitting my building to be a green buildings
4%
Don't know
12%
Doesn't apply to me
12% Source: Landmark Advisory
respondent opting for a figure of between six and 20 percent. Downs stresses the importance of adding energy and water saving devices and technology to existing buildings. Given the stagnant construction market, it will take years for new buildings to make an environmental impact. “Retrofitting buildings is crucial due to the current and projected oversupply in the market, particularly in the commercial market. The commercial oversupply in Dubai is already visible. Abu Dhabi’s commercial oversupply is just starting to develop, but will increase significantly in the coming two to three years. According to our estimates, absorbing this oversupply will probably extend longer than a decade,” says Downs, who thinks that it is unlikely that many new commercial office buildings will be launched in the UAE within the next seven to 10 years. On the residential side, the situation is less dramatic. Abu Dhabi
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is still experiencing an undersupply of residential units, which in turn has a knock on effect for Dubai. New residential projects could be launched as early as 2013, believes Downs.
“Over the next decade, the most impact will be achieved through improving the sustainability of office space through retrofitting. On the residential side, we will need to consider both retrofitting
The government should give, not take
Source: Landmark Advisory
1
3.94
2
3.98
3
3.80
4 3.20
3.52 3.30
3.40
3.50
3.60
3.70
3.80
3.90
4.0
4.10 Key
1 Governments subsidies are required to induce landlords to retrofit existing buildings.
1 = Strongly Disagree
2 Governments subsidies are required to induce developers to build green buildings.
2 = Disagree
3 Green buildings will only become feasible once green building regulation is implemented.
3 = Neutral 4 = Agree
4 Regulation and financial penalties are required to induce owners to retrofit their buildings in line with green building standards.
5 = Strongly Agree
August2010
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Utilities Middle East 17
WATER CONSERVATION
Water
Wisdom
Despite the huge costs of delivering drinkable water to end users, water conservation in the GCC is still a long way from making a real impact
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I
f water is a precious resource in this region, you would not be able to tell it. Extravagant urban landscaping, water displays and generously private lawns are a common sight in GCC cities. They are the most visible signs of a propensity to waste that greatly exacerbates high water needs arising from cooling, cleaning and drinking requirements in a hot and arid environment. Potable water is expensive, as it is mainly derived from seawater, and has to go through an elaborate desalination process. The cost of desalinating a cubic litre of water in the UAE is 3.76 dirham, according to alternative energy and water treat-
ment company EnviTech. The costs experienced by end users, however, are negligible, thanks to extensive subsidisation across the region. Perhaps unsurprisingly, per capita water consumption in the GCC is the highest in the world. Abu Dhabi has the dubious honour of topping the list, an average resident consuming an astonishing 550 litres a day. In comparison, the average person in India only needs 25 litres to satisfy his daily water needs. This extraordinary waste is a headache to utilities. Already stretched by the energy demands of a growing, increasingly urbanised and industrialising population, they could do without the energy costs
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WATER CONSERVATION
“The tariffs should be such that people respect the use of water and energy. ” Mario Seneviratne, Green Technologies
gramme, which requires a minimum standard of water and energy savings in newly constructed buildings. The EAD in May launched a pilot project installing water saving devices in taps. (see Simple Savings section below)
With water conservation here in its infancy, opinions are divided as to how best encourage moderate consumption. Water can be saved in variety of ways. These range from awareness campaigns, enforcing green buildings regulation, install-
ing water saving devices in households to increased water tariffs. Higher tariffs for water would certainly help fight the biggest cause of waste: irrigation. According to Alexander Klomsdorff, chief technical officer at EnviTech, irrigation accounts for 76 percent of desalinated water use in Abu Dhabi. Klomsdorff supports the idea of higher tariffs: “I think water tariffs should be altered. They should reflect the real cost of water consumption in order to make people feel that water is a valuable good which needs protection.”
SIMPLE SAVINGS Abu Dhabi’s Environment Agency is looking to save 75 billion litres of water every year by installing a two dollar device in taps
associated with desalinating water for superfluous use. Together with a developing environmental awareness, these concerns have pushed some governments in the region to take action.
FIRST STEPS The United Arab Emirates is the first country taking tentative steps towards curbing consumption. Dubai’s DEWA and Abu Dhabi’s Environment Agency (EAD) have been running awareness campaigns to encourage a less wasteful approach. The Abu Dhabi Urban Planning Council has introduced the Pearls Ratings System as part of its Estidama sustainability pro-
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In May, Abu Dhabi’s Environment Agency, the EAD, started its outreach to residents of the Tourist Club Area, the most densely-populated area in Abu Dhabi city. It plans to install an average of five to six water-saving devices in 55,000 household over the next 12 months. The campaign aims to eventually install the tiny devices into every tap in every home, mosque, government and commercial building in the emirate. The devices, which comprise of an O-ring and mesh gauze and are installed free-ofcharge, will save as much as 30 percent on domestic water consumption per household without noticeable effect to the consumer, says the EAD, while costing less than two dollars each. Once Phase 1 is complete, Abu Dhabi will save approximately 11 billion litres of water every year, according to the Environment Agency. After evaluating the first phase, the EAD will move to
install the devices in the rest of Abu Dhabi City, Al Ain, and Al Gharbia. “In the next three to five years, we aim to install the devices in every home, government office and business premise in the Emirate of Abu Dhabi, which will save 75 billion litres of water every year – the equivalent of 30,000 Olympic swimming pools, or 50 million large water bottles,” says Dr. Mohamed Dawoud, manager of the Water Re-
sources Department at the EAD. “It seems that people are beginning to understand the seriousness of water conservation in the Emirate of Abu Dhabi,” adds Dawoud. Experts fear that Abu Dhabi could face water shortages as soon as 2012 because of projected population growth. 100 percent of Abu Dhabi’s piped drinking water originates from the Arabian Gulf and is then desalinated in processing plants located along the coastline.
August 2010
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Utilities Middle East 19
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WATER CONSERVATION
“The biggest obstacle to water conservation is the lack of awareness in the population. As water has been subsidised for a long period of time the people are not aware that it is the most precious resource,” adds his colleague Alexander Bergfeld, business development manager at EnviTech. “The tariffs should be such that people respect the use of energy and water,” agrees Mario Seneviratne, director at Green Technologies, a consultancy specialising on sustainability and green buildings, who perfers tariffs to forcing people into installing water saving devices, or mandating minimum savings. “Adjusted tariffs are more important than regulation. ” Toufic Halabi, project manager at Grohe, also believes that waiting for government regulation, in effect in other parts of the world, is not enough. “Its nothing we can rely on, that’s going to take years. In the short term, its about convincing people, one at a time.” Grohe sell water saving devices for domestic use, such as aerators which mix air into the water coming out of a shower, so reducing the flow rate. Talabi has been active in launching campaigns to raise awareness for water conservation, and the ease with which water consumption can be reduced by installing these simple yet effective devices. Halabi recently received the
results of a pilot project Grohe had undertaken with the help of DEWA, installing their Contropress taps in the ablution area of a mosque. The results show that monthly water consumption was reduced by around 30 percent. Armed with such figures, Halabi is confident he can convince the public of the financial viability of the installing such devices. “We think we can convince the public.” Wheras Halabi is hesitant to call for government regulation he does think that financial incentives, like reducing bills to cover installation costs, might be helpful. The EAD scheme is an example of how households are receiving financial help from the government, as the water saving devices are being distributed and installed free of charge. Seneviratne is sceptical about regulation, he believes that regulation would only ever implement a minimum standard, and would be inadequate in reducing the environmental impact of government or commercial buildings. “Regulation cannot be adequate, because regulation means that everyone will be doing this. The threshold will be low. Everyone can save 10 percent of energy and water, but we want private industries and government funded projects to be setting their benchmark at savings of 30 to 40 percent.” Seneviratne advises companies in the region on LEED cer-
SOLAR AND GREEN BUILDINGS Solar panels are derided as gimmicks by experts on green buildings. To make a real impact, solar power generated on residential rooftops must be fed back into the grid. Abu Dhabi aims to do just that.
Critics argue that it is a misconception that the Middle East is a natural home for solar power, just as it is that solar panels can substantially reduce the energy gain of a building. Solar may help boost a building’s green credentials, but in terms of energy saving there are far better options available, they say. On a large scale residential or office building, even covering the entire façade with solar photo-voltaic panels will likely only succeed in providing two percent of energy needs, says Nicholas Lander, senior associate at Inhabit. The real drain on most office developments is lighting, which can account for up to 50 percent of a building’s total power output. “If you are looking at a small building with no local power access then PV panels can be an excellent source of power for the building. But if you are talking about commercial, PV panels are only useful as part of large scale power plants,” he told the Architect Middle East magazine in July. It is not that solar panels
are inherently useless, if every home was to install them the effect could be dramatic, but currently there is little financial incentive to do so. This problem has been identified by the Abu Dhabi Distribution Company (ADDC), who are about to launch the Solar Rooftop Programme (SRP). The programme aims to install a total capacity of 500MW of solar power in small-scale application on private homes by 2030, and feed excess capacity into the grid. At the same time, it will provide financial incentives to households who install solar panels, the ADDC have said on its website. While the company has not provided details on these incentives, they could involve a variation of feed-in tariffs, a form of renewables subsidy practiced by countries around the world. Nick Carter, director general of the Abu Dhabi Regulation & Supervision Bureau announced in June that Abu Dhabi would be paying the operators of solar plants the differential between the cost of production and the retail price for electricity.
Wagner Gulf Biro are using a wastewater to cool solar panels, increasing generation capacity.
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August 2010
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Utilities Middle East 21
WATER CONSERVATION
tifications for buildings, a US based system similar to the Peals System. Both systems require savings of electricity and water at the levels demanded by Seneviratne.
GREEN BUILDINGS Beside the issue of irrigation, the concept of green buildings is crucial to water conservation. Initial steps towards mandating green standard may have been taken in the UAE, but the rest of the GCC have yet to follow suit. And while there seems to be a general reluctance by govenments to force water conservation
on companies and households, the case for following Abu Dhabi’s lead is strong, some say. “What’s happening in Oman, Qatar, what’s happening in Saudi Arabia? Do we see that happening there? No. People don’t care. And that’s the point, you need to have those mandated green building codes everywhere. Otherwise you are going to have wasteful consumption,” comments Abhay Bhargava, industry manager at consultancy Frost & Sullivan. Given the state of the property market, it is also questionable
GREEN HOTELS The hotel industry is starting to cater for to the green awareness of its clientele Hotels are massive consumers of both water and electricity. But travellers’ increasing awareness of green issues has encouraged hotels to adopt a more eco-friendly approach to business. So now is the time for hoteliers to improve on their hotel’s eco-credentials, writes Harriet Sinclair from Hotelier Middle East. And there are simple steps that can make a significant difference. Improving the eco-credentials of a hotel can be done without resorting to a complete overhaul of the buildings system, says Louis Hakim, chairman of Philips Middle East, who highlights the benefits of energy efficient lighting. “LED bulbs use 20 percent of the power of a current incandescent bulb and last up to 25,000 hours, compared with 1,000 hours for a standard bulb.” Tarek Zakaria, intelligent building system manager at ABB says that going green can have several desirable effects. “Many guests want com-
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panies to promote the ‘go green’ initiative by adopting solutions that would increase comfort and also have less impact on our environment,” says Zakaria. “A second reason why we do believe people care, even indirectly, is because of cost. If a hotel is saving 30 percent on energy costs they could pass those savings on to the customer. It doesn’t take much to work out that people will be happier if the cost of a service is reduced,” adds Zakaria. While existing hotels can benefit from new technology, new hotels have the opportunity to integrate the greenethos in to their building on a much larger scale. “Hoteliers may be coming in to green projects a little late. Often how green a hotel can be is decided from the blue-print stage. That is when we need to be getting involved and looking at being a green hotel,” says cluster director of technology for Mövenpick, Issam Abbas.
550 litres Per capita daily amount of water consumed in Abu Dhabi.
even whether Abu Dhabi’s Pearls System will do enough in the near to medium term, however. The recession has caused an overhang of existing buildings, or buildings coming onto the market soon, especially on the commercial properties side. Landmark Properties, a Dubai real estate company, predict that no genuinely new commercial office developments will be launched in the UAE within the next seven to 10 years. “If we take the building stock done over the last 10 years, in relation to today’s benchmark, I don’t even want to say how inefficient they are,” comments Seneviratne. But government regulation for retrofitting existing buildings to enhance their green credential is seen by many as unfeasible. Adding simple instruments such as aerators, can be done at little additional cost. But many features of green buildings are best incorporated into the design, and would be costly to retrofit. “It is crucial to implement green technology at the planning phase of each project,” stresses Klomsdorff.
WASTEWATER REUSE To be able to reuse wastewater, for instance, adequate piping would have to be installed. Reused water is an important aspect of water conservation. Grey water, which has been used in showers and the kitchen, is relatively unpolluted and can be easily treated. After treatment, it can be used for flushing toilets or feeding irrigation systems. As the technology develops, sewage treatment plants are becoming more compact, making it easier to use in buildings and developments.
Reusing wastewater at the source benefits water conservation, as it reduces the loss of water through transportation. The amount of water lost in leaking pipes is considerabl, with up to 50 percent of water coming from centralised water production lost on the way, according to Envitech’s Bergfeld. Another use for treated grey water is district cooling. Dubai has been making headway in this regard, issuing a directive to district cooling providers to develop alternatives to using potable water. Dubai-based Palm Utilties, which encompasses both Palm Water and Palm District Cooling, have already set up a pilot plant set up which makes use of treated water for cooling purposes. Black water, sourced from the toilet, can also be purified to the extent that is can be used in district cooling, but can not legally be used for irrigating crops. However, there are ways to reduce the use of potable water in irrigation. Water can simply be dispensed underground explains Klomsdorff. “Instead of just spraying fresh water over all plantation areas, which causes high losses as a significant portion of the water will evaporate in the heat before it reaches the roots of the plants, efficient irrigation systems will direct the water on the ground or even underground to the roots. Water savings of around 50 percent are normal.” Irrigation and wastewater treatment can even be combined. Reed ponds can be used to filter sewage, explains Peter Neuschaefer, director of environment, water and energy at construction company Wagner Gulf Biro. The roots of the www.utilities-me.com
WATER CONSERVATION
plants clear the effluent, which acts as a fertiliser, producing water of sufficient quality to use in swimming pools. The company has so far sold 18 such wastewater treatment plants so far in Dubai and Qatar, according to Neuschaefer. Water conservation is an issue in which innovation and creative thinking is pushing the boundaries. Wagner Gulf Biro currently runs a labour camp in Dubai, a pilot project in which effluent treated by one reed bed is used to cool and clean solar
Treated wastewater could be used for district cooling.
panels, greatly increasing their performance before being used for irrigation and landscaping purposes.
RETURN ON INVESTMENT Mario Seneviratne, director, Green Technologies
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If environmental concerns are not sufficient to sway companies and the public into turning to water conservation, financial considerations provide an equally good incentive. From a cost perspective, there is no excuse to not fit buildings with wastewater recycling facilities, thinks Seneviratne. “With energy it is difficult recovering your investment, as the rates are cheap. Water rates are also cheap, but the disposal charges, especially if there is no sewer and wastewater has to be transported by tanker, are pretty expensive.” In the GCC, where many places
are not connected to a sewer, the decentralised self-sufficient wastewater treatment is appealing to municipalities and owners alike. “A sewer is a major undertaking for a city. Dubai inner city has a perfect sewer, but if you go out to Jebel Ali there is no sewer there. So the payback period of putting a blackwater treatment system there is, lets say, three years,” says Seneviratne. The payback period for an entire green building is not much higher, believes Klomsdorff. “A return on investment of five to eight years is realistic considering around 30 percent higher initial investment compared to conventional buildings. In remote areas where water and power, in the form of diesel for generators, is supplied by tanker trucks even shorter return on investment periods can be achieved.” The case is even more convincing for water saving devices. Installing a simple water saving device in a tap can save around 73,000 litres a year, according to Klomsdorff. Halabi is keen to stress that the economic feasibility of his product range: “You don’t have to pay more to save more. You can buy any product from us, from the top of the line to the most commercial, they all have water saving devices in them.” With a little forward planning, governments, companies and households not only end up saving water, but also money.
August 2010
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Utilities Middle East 23
GAS TURBINES
More
MRO
Efforts to grow power generation capacities in the region have led to a steady increase in the the installation of gas turbines, which is in turn fuelling growth of the maintenance and servicing business
24 Utilities Middle East
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August 2010
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GAS TURBINES
N
o edition of Utilities Middle East would be complete without reference to the growing demand for power in the GCC, resulting in a massive expansion of power generation capacity across the region. It is only natural that the subsequent increase of installed gas turbines in power plants across the Arabian Peninsula should lead to a burgeoning maintenance, repair and operations (MRO) market. A study completed by consultancy Frost & Sullivan estimates total 2008 revenue in the GCC gas turbine MRO market across the different sectors of power, oil
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and gas and process industries at US$246.6 million, with 236 units in operation. Lakshman Sutrave, senior research analyst at Frost & Sullivan expects the market to grow by 6.5 percent year on year through to 2013, when revenue will reach $337.3 million. The biggest markets are Saudi Arabia and the United Arab Emirates. The market is so healthy that not even the global recession has done much dent its performance. “In 2008, the seven to eight percent growth of previous years declined to about five percent,” says Sutrave. “The market completely depends completely on the installations that are happening,
August 2010
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Utilities Middle East 25
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“In a growing market, not all the service needs can be satisfied by OEMs ” Lakshman Sutrave, Frost & Sullivan
so there have been very few cases where the end user has postponed maintenance due to the recession.”
PRIVATISATION AND OUTSOURCING Apart from sector growth, a shift towards private investment has provided a huge boost to MRO
service providers, thinks Dietmar Siersdorfer, CEO at Siemens Energy Middle East. The deregulation of the energy market started when Abu Dhabi paved the way for Independent Power and Water Projects (IWPPs) with its privatisation programme in 2000. The outsourcing of power generation
ADVANTAGE OEM
TOTAL GAS TURBINE MRO SERVICES MARKET: COMPANY MARKET SHARE BY REVENUES (GCC), 2008
Total Gas Turbine MRO Services Market - $246.6 Million
TOTAL GAS TURBINE MRO SERVICES MARKET: UNIT SPLIT BY END USER (GCC), 2008
Total Gas Turbine MRO Services Market - 236 Units
TOTAL GAS TURBINE MRO SERVICES MARKET: PERCENT OF REVENUES BY COUNTRY ( THE GCC), 2008
Total Gas Turbine MRO Services Market - 236 Units
Note: All figures are rounded; the base year is 2008. Source: Frost and Sullivan
www.utilities-me.com
by the state in the shape of public private partnerships (PPP) has in turn encouraged the outsourcing of repair works. “The operating requirements of an independent power project (IPP) are different to those of government owned utilities. The financing model differs mainly for two reasons. Firstly, IWPPs fund their projects through lenders, which expects operators to outsource the MRO with fixed contracts to have a better cost overview and secondly, insurances insist on reliable MRO through competent service providers to manage minimize their risk exposure,” says Siersdorfer.
While IPPs are providing a boost to the MRO market, they thus ensure that original equipment manufacturers (OEMs) such as Siemens or General Electric are capturing the biggest share of the market. The owners of those power plants are required by their money men to go into long term service agreements (LTSA) with OEMs, according to Siersdorfer, who thinks that long term agreements also provide the best return on investment: “LTSA agreements provide long term planning and financing security for funding of big projects for around 15 to 20 years. Given this, banks and other funders of IPPs, as well as insurances in general demand LTSA for a project. With the privatisation of the energy markets, lifecycle costs and return on investments have become major criteria in assessing service business.” This is bad news for third party service providers, such as the Wood Group or MJB International, who do not produce gas turbines, and are limited to servicing works. As well as being sidelined from the big driver in power generation, IPPs, they are also not the preferred partner of choice of oil and gas companies, or in the petrochemical sector, says Sutrave. “Oil and gas companies prefer OEMs,
INDUSTRY CHALLENGES Availability of Skilled Manpower: Scarcity of skilled manpower for turbine services, hence dependent on manpower from other parts of the globe. Localization policies making MNC depend on local players for manpower Electricity Subsidy System: Financial burden on the part of utilities and government controlled electricity authorities due to subsidized rates of electricity Preference for OEM Services: Most of the end-users in Petrochemical and Oil & Gas segment prefer OEM services. This is an industry challenge for third party service providers. New private utility facilities are increasingly preferring LTSA with OEMs Source: Frost & Sullivan
August 2010
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Utilities Middle East 27
HOW TO BE GREEN AND PROFITABLE
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because they have the perception that OEMs have the best knowledge about their product and are the best people to service turbines.” Third party service providers will thus have to content themselves with servicing older gas turbines in plants run by state utilities, thinks Sutrave, and will witness a decline in market share. As the installation of gas turbines will continue apace, however, even a smaller piece of the cake will represent increased business. “They are going to grow in line with market growth,” says Sutrave. “There has been an incremental increase and not all the service needs can be satisfied by the original service providers. This is where third party service providers will leverage their experience and get into the market.”
“It is vital to have strong engineering capabilities to be able to overcome the technical challenges faced by operators. ” Dietmar Siersdorfer, CEO Siemens Energy Middle East
MARGIN PRESSURE, MANPOWER SHORTAGES Sutrave believes that in spite of the unequal battle being fought, competition between third party service providers and OEMs will lead to increasing pressure on margins. Siersdorfer remains to be convinced on this point. “It depends on how third party service providers will develop capabilities, expand capacities and enhance their engineering and
$337 million
Projected GCC gas turbine MRO market revenue in 2013 Source: Frost & Sullivan
MRO work is a growing business in the GCC.
Dietmar Siersdorfer, Siemens Energy.
R&D knowledge base,” he asserts. “In the energy business it is vital to have strong engineering capabilities to be able to overcome the technical challenges faced by operators.” Finding the right people for the job is indeed a chal-
lenge for MRO providers in the region. Because the region did not have a large power sector until recently, the pool of qualified local staff is still small, with key engineering personnel traditionally coming from Europe and the US. “For third party service providers, finding skilled manpower will be a real challenge, they will probably have to depend on manpower from India and other South East Asian countries,” says Sutrave. OEMs, on the other hand, will in future increasingly rely on training up local staff. Siemens for one are active developing local skills.”For this kind of business highly educated and experienced experts are needed. Siemens is supporting this through its regionalisation program. Engineers from across the Middle East region are participating in a two year training program to prepare them for future deployments as field service engineers. This training is an important piece in the puzzle to provide competent engineers for the region’s MRO requirements,” explains Siersdorfer.
Original Equipment Manufacturers are profiting from a trend towards Independent Power Projects in the region.
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August 2010
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Utilities Middle East 29
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GENERATORS
Purchasing power Business has done remarkably well in turbulent economic times, say providers of temporary power, as companies are seeking to keep their investments down, while utilities are struggling to meet rising demand Aggreko supplied the Fifa World Cup with temporary power this spring.
A
global economic downturn will not pass anyone by unnoticed. And so providers of temporary power, used to making good money from supplying the construction business, keenly felt the effects of the slump in building activity in the region. “We were heavily involved in the construction industry in the Middle East, so the downturn did affect that part of the business in particular,” says Phil Burns, managing director at Aggreko, one such provider of generators. The construction slump has not stopped Aggreko in its tracks, however. The company was able to remain utilisation rates, and even add US$30 million worth of generators to their Middle East fleet, as www.utilities-me.com
it benefited from clients adapting to the uncertainties of the recession. “The rental option is becoming increasingly popular as it has a cushioning effect for companies who are uncertain about the long-term future of their projects. If a company which has purchased large amounts of equipment decides that a project must be put on hold, the financial damage incurred can be a major blow. Ultimately, renting equipment means that because ownership lies with Aggreko, so do all the risks,” explains Burns. The appeal of rental power is not confined to construction, it is now popular with companies in all industries, including manufacturing, cement production, events and the oil and gas industry, who
“The rental option is becoming increasinlgy popular as it has a cushioning effect for companies who are uncertain about the long-term future of their projects” Phil Burns, managing director, Aggreko
are all trying to prevent a large capital expenditure. “Capex might affect the cash flow of the clients and rental power is a viable option during the economic crisis,” says Robert Bagatsing, group marketing head at RSS, another rental provider. Bagatsing also notes a broadening of his client base. “Our market has not only deep-
ened, but also widened. Instead of focusing on construction and real estate projects, we are now seeing a wide demand in industrial, oil and gas, commercial and defense related projects.” In spite of the recession, RSS have managed to grow their business every year since its inception in 2007, and has beaten its forecast for 2009. August 10
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Utilities Middle East 31
GENERATORS
POWER SHORTFALL Having kept the ship steady in troubled waters, rental companies are able to profit from the demand placed on utilities in the hot summer months in particular. In the baking Middle Eastern heat, demand for electricity shoots up in line with increased air conditioning usage. Furthermore, as Burns points out, temperatures around the 50 degrees Celsius mark are hamper power production. “Due to elevated tempera-
tures in the summer, power plants, especially those powered by gas turbines, operate at reduced efficiency and with larger transmission losses, which makes the impact of increased loads even greater. This yearly trend puts a significant strain on the utility grid.” Aggreko has recently signed a contract with the Oman Power and Water Procurement Company to provide 117MW of power across five sites during the peak load period in summer. Utilities in the Middle East are, of course, not just sweating over power shortfalls during peak load times since yesterday. Nor will the problem go away tomorrow. Racing to keep up with the increasing demand for power from a growing and industrialising society, many countries have failed to convince companies that a secure power supply can be taken for granted. “Production cannot be compromised due to insufficient power supply, so companies are taking ownership to keep business at peak capacity by installing their own power plants," says
Phil Burns, Aggreko managing director.
Other reasons for p power shortfalls are unexp unexpected rises in demand in ccertain areas, especially indu industrial zones, the late delive delivery of equipment to power plants p for the delayed completion comp of power grids. Whatever Whatev the reason, there seems plenty plen of scope for rental companies compan to fill short term voids void in a developing power p infrastructure. infrastructure
WHO RENT RENTS?
Michael Sagermann, regional business line manager at Atlas Copco, who manufacture generators. “We expect this to continue for some time, as expanding or building new power generation plants is not an overnight exercise.” One often overlooked aspect of the difficulties utilities are facing in building up their power generation capacities is the access to finance. With large power plants coming at a big price, it is challenging for utilities to procure the funds, says Lee Cox, RSS general manager for the Southern Gulf. “Most of the power problem is financially driven, due to the enormous amount of investment required. Banks, government, independent power provider companies, distribution companies and investors must agree on terms and conditions. This requires years of negotiations and most of the time, the conclusion changes due to the economic environment.”
Against this backdrop, it is small surprise that rental providers name utilities as their biggest sources of income in the region. “The biggest proportion of our business in the Middle East is focused on working with utilities. Over the past year, we have provided multi-megawatt power projects to support local utilities in Oman, Saudi Arabia and Yemen,” says Burns. Do rental companies experience a similar rush for their services from the private sector, with clients keen to safeguard against potential shortfalls, especially prior to the summer heat? No, says Cox. “Seventy percent of the companies leave it up to the last minute. After the 2009 economic crisis, companies tend to be more reactive and passive. If they can delay the hiring of the power, they will do so. There are cases where problem already exists and they will only increase their power requirement after the problem has been triggered.” Cox
“Most of the power problem is financially driven, due to the enormous amount of investment required”
Lee Cox, RSS general manager for the Southern Gulf.
Lee Cox, general manager, RSS
32 Utilities Middle East
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August 2010
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AGGREKO - UTILITIES MIDDLE EAST Ad. 20.5 x 27.5.ai
1
7/20/10
4:26 PM
GENERATORS
believes that this cheapskating can come to haunt companies, as they face the prospect of production gaps and subsequent sales shortfalls. Another money maker for generator rental companies is the events sector. Events only account for around five percent of RSS’s total segment share, says Bagatsing. Nevertheless, the company provided power to such high profile events such as Yas Island after-race-concerts, powering the performance of Beyonce, Aerosmith, Jamiroquai. For Aggreko, events are increasingly important both in the region and globally. “The events sector has been an area of growth over the past 18 months.” This year alone Aggreko provided temporary power for the World Cup and the Vancouver Winter Olympics. In the Middle East, the company has powered the Bahrain Grand Prix since its inception in 2004 and the Dubai Rugby 7s for over a decade.
GENERATING TRENDS Clients might at times be a little tardy when it comes to renting power, but they do seem to know what they want. Providers have seen a number of trends developing both in a regional and a global context. “Regionally we are pleased to see the shift away from open-type generators and towards silenced units in the construction sector. In the West, this has been mandated for decades, and it does offer the users and the surrounding environ-
Rental companies are benfiting from increased demand for power during peak load times.
ment benefits,” says Sagermann. “Worldwide we see more electronics integrated within the products, and greater attention given towards environmental aspects like exhaust emissions and spill containment. This has been long a cornerstone feature of our products, since ours are built with European norms conformity as a key driver.” This is not the only example where generator manufactures and rental companies may need to adapt to keep abreast with the changing demands of their clients. “One of the trends we are currently seeing is that customers are looking to diversify their energy port-
“The biggest proportion of our business in the Middle East is focused on working with utilities” Phil Burns, managing director, Aggreko
folios,” says Burns. "Rather than relying on one type of fuel, they are looking to expand their generation capacity to include two or more fuel types. For example, one of our customers, a cement com-
Utilities are a big clients of rental companies as they are struggling to catch up with demand for power.
34 Utilities Middle East
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August 2010
pany in Ras Al Khaimah, had their own gas-powered turbine but they contracted a diesel-powered package from Aggreko to provide additional capacity to their facility.” In response to this demand, Aggreko in 2005 diversified their product range to offer generators that run on natural gas, and is now working with customers to determine how they can utilise gas resources in their respective regions. In addition, most of Aggreko’s generators can be run with biofuels, as the company proudly point out. Rental providers, it seems, will be finding, and providing, opportunity in the Middle East for some time to come. www.utilities-me.com
SPONSORED CONTENT – CUMMINS MIDDLE EAST
Terminal power Cummins Middle East was tasked with powering the Dorelah terminal cranes in the in the Port of Djibouti in 2008.
M
aritime terminal operator DP World and the government of Djibouti established a joint venture in 2000, with DP World being awarded a twenty-year concession to operate the Port of Djibouti. The joint venture invested in building the nearby Doraleh Container Terminal. The biggest and most modern terminal in East Africa, the Doraleh terminal can handle 1.2 million twentyfoot equivalent unit (TEU) per year, with the potential to expand capacity to around three million TEU over time. With its 18 metre draft and 1,050 metre quay, the terminal can easily accommodate the largest ships in service, including the 15,000 TEU Super-PostPanamax vessels. Cummins Middle East won the order to supply a turnkey solution for the container terminal electrical power requirements. This was no easy task as the requirements placed on the plant at the terminal are complicated due to the diversity of the container load.
The plant had to be capable of providing the power requirements as stated below on a continuous basis throughout the year.
RESPONSE TO TERMINAL CRANE LOADS The terminals six container handling cranes presented a cyclic load with individual cranes demanding power when lifting and moving, while generating power when lowering. The container handling cranes work in isolation from each other. For this reason, and due to terminal utilisation and cargo weights it is difficult to predict the plant load.The power plant was designed to absorb the simultaneous step load of up to two container handling cranes whilst maintaining the system frequency within the specified frequency limits. Thus the design case for the plant consisted of 3 x 1.6MW connected sets exporting 1000kW to serve the two container handling cranes at the same time. To compensate for the regeneration of power by the container handling
SCOPE OF SUPPLY FOR THE PROJECT Six C2250D5 11 KV units in acoustic enclosures with fire detection systems Containerised MV switchgear and DC system. 2000 KW resistive load bank to absorb the regenerative power developed by the port cranes Fuel System complete with centrifugal purification system On site air conditioned containerised office room with ablution units for the plant operators. Power plant area lighting system Plant earthing and lightning arrestors Complete electro – mechanical Installation works of the power plant Comprehensive testing and commissioning of the power plant.
REQUIREMENTS FOR THE POWER PLANT Port estimated maximum load 9.3 MW Frequency limits 50Hz +/-4%. Voltage limits 11 kV +/-5%. Power factor leading (at generator) 0.8 Port estimated plant reliable base load 1.5 MW Cyclic load from 6 container handling cranes (maximum demand) 7.8 MW Cyclic load from 6 container handling cranes (maximum regeneration) 3 MW Typical maximum average demand 4 MW Installed capacity (prime power) 6 x1.6MWSets Cummins Middle East offers extensive aftermarket support to its clients.
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August 10
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Utilities Middle East 35
SPONSORED CONTENT – CUMMINS MIDDLE EAST
cranes, one load bank was supplied and connected to the 11kV switchboard via a 3MVA transformer. The load bank with multiple switchable elements is capable of dissipating up to 2000kW. It is supervised by a programmable controller which facilitates the switching of the elements based on the base load and running capacity, the system frequency, the rate of the rise and fall frequency. The maximum reactive power step change was at 240 kVAr. The power plant can absorb the maximum reactive power step change whilst maintaining the system voltage within the voltage and frequency limits.
A Cummins paralleling genset
CUMMINS EXPLAINED Cummins Inc., is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, USA, Cummins serves customers in more than 160 countries through its network of 550 Company-owned and independent distributor facilities and more than 5,000 dealer locations. In 2008, Cummins Inc. achieved record sales of U$14.34 billion, with a total of around 900 engines built. Cummins Middle East FZE, the first wholly owned dependant distribution entity of Cummins Inc. in the region, was established in early 2000 in order to strengthen the distribution network’s reach and better support the increasing engine population in the area. Cummins Middle East are headquartered in Jebel Ali Free Zone, Dubai, and responsible for the following countries: UAE, Bahrain, Yemen, Qatar, Jordan,
36 Utilities Middle East
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Oman, Afghanistan, Lebanon, and Iraq. In the UAE, the company is represented by three branches, jointly owned with local sponsors. Cummins Middle East constitutes a conclusive representation of all Cummins business units. Cummins Power Generation Cummins is a worldwide provider of electrical generators and power generation systems, components and services in standby power, distributed power generation, as well as auxiliary power in mobile applications to meet the needs of a diversified customer base. Cummins Power Generation products include diesel and alternative-fueled electrical generator sets from 2.5 to 2,700 kW, alternators from 0.6 KVA to 30,000 KVA, transfer switches from 40 amps to 3,000 amps, paralleling switchgear and generator set controls. Cummins Power Generation brand products include power systems and related accessories, components and services including the preintegrated PowerCommand system, plus diesel and natural gas
generator sets, transfer switches, and switchgear used in commercial facilities for emergency backup and prime power. Cummins Power Generation is also a worldwide supplier of rental generator sets and related services. Along with generator retail sales, a highly qualified engineering team provides support that ranges from the design and engineering of power systems to the installation of power plants. Cummins Power Generation is able to provide generator Set related support which includes the sizing of gensets based on connected loads, installation supervision, project management, start-up and commissioning, and on-site training. Cummins Engines Cummins engine products are categorised as on-highway, offhighway and marine, and are found in nearly every type of vehicle and equipment on earth -- from emergency vehicles to 18-wheelers, berry pickers to 360-ton mining haul trucks. You will also find them everywhere
there is water, with a full line of recreational and commercial marine diesels. Aftermarket Support Cummins’ strategy is based on a very strong distributors’ network that provides specific requirements for local needs. Cummins Middle East FZE, aftermarket support covers the product’s whole life span needs and requirements in terms of parts and service. The service includes holding branch workshops, giving customers access to the full range of the parts inventory, a large range of reconditioned parts to suit various customer strategies and budgets. The most recent improvements to Cummins’ service include the introduction of 24 hour service and a quick serve 24/7 answering service and service support, and the introduction of fixed price servicing programs including engine health checks, overhaul, and supply and fit. Another recent addition to Cummins’ service is a certified training centre dedicated to the training of internal and external customers.
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INSIDER INTERVIEW
PEOPLE METER Generating business f
Wassim Aboushaar, general manager at Cummins Middle East, talks about the company’s power generation business in the region
Wassim Aboushaar is no stranger to his line of business; he has been active in selling power generation equipment in the Middle East for the past 22 years. Having been with Cummins, who supply engines for power generation, transport and other machinery, since 1990, he moved to regional subidary Cummins Middle East in 2008. He arrived in time to witness the boom times before the recession hit home. “I have seen both trends. 2008 when things were booming, when we were picking up those orders from the fax machine we wanted to respond to, and left the ones we didn’t need to, because there was enough meat on the bone for us,” he recalls. “And I’ve seen 2009, when the whole industry was struggling.” The downturn hit business hard, as Abou Shaar is free to admit. A big chunk of revenue is generated from the construction business, as construction sites will not have access to the grid, and are reliant on generators as self-reliant sources of power. Thus the sharp decline in building activity in the Middle East did not pass Cummins by unnoticed. Nevertheless Aboushaar feels he is engaged in a market in which demand will remain strong for
38 Utilities Middle East
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August 2010
some time to come. Power is a precious commodity in the region, as utility providers are forever catching up with the demands of increasingly urbanised and industrialised societies. “Our sales went down by 30 percent year on year in 2009. But now we are catching up quickly. Power generation is one of most important segments in the Middle East, as the supply is insufficient. With the unrealistic growth witnessed in many markets, utilities were not coping with expanding supply. This is why power generation remained a good segment, at least to maintain its level. It will start growing much quicker than other
“Power generation is one of the most important segments in the Middle East, as the supply is insufficient. ”
markets,” he says. Covering a variety of different markets also helped alleviate the effects of the recession, Aboushaar explains. And it was Cummins Middle East's involvement in countries that are not high on every company’s To Do list, in particular, that provided impetus to business.
SERVICING THE GREEN MACHINE Based in the harsh desert climate of Iran and Afghanistan without access to a reliable grid, US and coalition forces have a huge demand for small-scale power stations as well as machine engines. “What made the difference for
CUMMINS IN ACTION In one of its most notworthy projects of late, Cummins Middle East is equipping a ‘landmark’ sewage plant contracted by the Abu Dhabi Water and Electricity Authority (Adwea) with gas and diesel generators. The plant will harness biogas stemming from the sewage process as feedstock to be used in the gas generators, says Aboushaar. The heat emanat-
ing from the generators will be used for the treatment process, and excess power will be fed into the Abu Dhabi power grid, he adds. The plant will be fully operational by the end of the year. “We are now doing the installation, the final commissioning and handover should be at the end of 2010.” The size of the contract for the
generators, piping and the installation is between US$20-30 million, says the general manager. “This is really a landmark and a unique project in the Middle East,” he concludes . Aboushaar also revealed that Cummins won a US$10 million tender for a 10MW power station in Abu Dhabi's second largest city Al Ain in July.
www.utilities-me.com
INSIDER INTERVIEW
A big part of Cummins Middle East's business comes from supplying generators to power plants.
us was that we cater for almost the entire Middle East from our headquarters here in Dubai, so if market slows down a little bit in UAE, for instance, it can pick up in Afghanistan, in Iraq,” says Aboushaar. “In Iraq and Afghanistan, our clients are the military. All these camps need power for their soldiers, and they won’t compromise. They need the power now and they need reliable power, they need reliable products.” To service the equipment, the company even had permanent staff stationed in Iraq. “During the peak times, we had a team based with the military in the camps. We had about 20 engineers with managers and the logistics in the camps, just to support the end users and our equipment. This way, thousands of units were sold in Iraq, and now we are doing the same in Afghanistan.” In line with the new US strategic focus, business has grown in Afghanistan since 2009. As the military presence there has grown
in an effort to bring stability to the country, Cummins was busy fitting out new army camps with power generating equipment.
ONE STOP SHOP Aboushaar, who has visited Iraq several times himself, clearly feels that that satisfying the needs of demanding customers like the army is a testament to the quality of Cummins equipment and service. He also believes that he his customers benefit from the fact that the company produces all the components for their engines themselves. “It gives the end user one warranty, one safe source. With us, he is getting one warranty and all the spare parts from one vendor. Then there is also the consistency of the supply, we own the channel, so the end users knows he will always get the component he needs.” During summer, peak demand for electricity puts additional strains on supply, frequently lead-
ing to power cuts. Providers of rented generators make good money in those months, as customers shield themselves against the prospect of a power outage. While Cummins notices this trend through increased equipment orders from rental companies, Aboushaar points out that
short term demand is not the main driver of his business. “The area that we compete for is the big power stations. We are not so competitive on the small range, like the lower lower kVa’s and the small portables, because the market here is very saturated, and a lot of cheap quality, and the end user is not interested in the long term,” he says. “Seasonal demand is for small products. Larger plants take time to build.” Letting the small fry slip through the net does not seem to have impaired business prospects, with Cummins having resumed a brisk trade this year. “In 2010 things are really picking up. We are experiencing at least 20 percent year-on-year growth for our product mix, stemming mainly from the power generation sector,” says Aboushaar. The biggest revenue earners this year have been Abu Dhabi and Oman, and supplying the military in Iraq and Afghanistan. “I don’t know if that market is growing, but we really have secured big projects in Oman,” he says.
“In 2010 things are really picking up. We are experiencing at least 20 percent year-on-year growth” Wassim Aboushaar has experienced a good start to 2010, with growth of at least 20 percent.
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August 2010
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Utilities Middle East 39
PROJECTS
UTILITIES PROJECT TRACKER Information is supplied by Ventures Middle East. Tel: +971 2 622 2455. URL: www.ventures-uk.com MIDDLE EAST
Project Title
Client
Consultant
Main Contractor
Value / Value Range (US$. Mn)
Al Fanar Contracting
Project Status
Project Type
46
project under construction
Power Transmission
64
project under construction
Power Transmission
53
project under construction
Desalination Plant
245
project under construction
Desalination Plant
SAUDI ARABIA
9023/9001 Underground Cables
Saudi Electricity Company (SEC)
380kV Transmission Line North of Riyadh
Saudi Electricity Company (SEC)
Desalination Plant & Drinking Emaar Economic City,Saudi Water Infrastructure Desalination Plant in Jeddah - Phase 3
Saline Water Conversion Corporation (SWCC)
115kV Underground Cables in Madina 2nd Industrial City
Saudi Electricity Company (SEC) Saudi Electricity Company (SEC) Royal Commission for Jubail and Yanbu (RCJY)
Salwa IPP 10J Substation & 101 Satellite Substation in Yanbu Princess Noura Bin Abdulrahman University - High Voltage Substation
Ministry of Higher Education / Ministry of Finance
Kuljian Engineering Corporation
KEC International / Al Sharif Group for Contracting & Development Trading Huta-Hegerfeld & Huta-Marine Limited Company Doosan Heavy Industries & Const. Company / Saudi Berkefeld Filter (Witco)
project under construction project in concept stage project under construction
Power Transmission
Siemens
35
Not Appointed
290
Siemens
150
ABB Contracting Co. / Al Fanar Contracting
167
project under construction
Substation
Power Plant Substation
Yanbu IWPP
The Power & Water Utilities Company for Jubail & Yanbu (Marafiq)/Saline Water Conversion Corporation (SWCC)
Mohammed A.Turki Mott Not Appointed MacDonald
4000
project under design
Power and Desalination Plant
Qsai Dam at Jizan
Ministry of Water and Electricity,Saudi Arabia
Bin Jarallah EstablishZuhair Fayez ment for Trading & & Partners General Contracting (Bin Jarallah Group)
40
project under construction
Dam
380/110/13.8-kV Substation Expansion in Al Aziziyah Area
Saudi Electricity Company (SEC)
Siemens, Saudi
20
project under construction
Substation
Power Plant Expansion Duba
Saudi Electricity Company (SEC)
Najm Al Jazirah for Trading Contracting & Agriculture Co.
120
project under construction
Power Plant
King Abdullah Economic City (KAEC) - Power Grid Package
Emaar Middle East Properties
Siemens
400
project under construction
Substation
Not Appointed
2500
EPC Bid
Power & Desalination Plant
16
project under construction
Dam
ABB Contracting Co.
120
project under construction
Substation
Not Appointed
300
EPC Bid
Power Plant
ABB Contracting Co., Saudi Arabia
48
project under construction
Substation
Saudi Arabian Mining ComPower and Water Plant in Ras pany (Maaden) / Rio Tinto Al Zour Alcan New Dam in Abha Substations 9024 and 8183/8184 Interim Power Plant at Yanbu
Rabigh IPP - 380-KV Substation www.utilities-me.com
Ministry of Water and Electricity Saudi Electricity Company (SEC) The Power & Water Utilities Company for Jubail & Yanbu (Marafiq) Saudi Electricity Company (SEC); ACWA Power International; Korea Electric Power Corporation (Kepco);
Bin Jarallah EstablishZuhair Fayez ment for Trading & & Partners General Contracting (Bin Jarallah Group)
August 2010
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PROJECTS
Saudi Electricity Company (SEC) Saudi Electricity Company (SEC) Saudi Electricity Company (SEC)
Uqair Power Plant 380 Substation at Al Dhahiyah - Stage2 PP11 Power Plant in Riyadh Karan Gas Field Exploration - Utilities and Co-generation Package
Saudi Aramco
Qurayyah - 2 Simple Cycle Power Plant
Not Appointed Al Toukhi Company for Industry & Trading Hyundai Heavy Industries (HHI) Foster Wheeler, Saudi Arabia
Saudi Electricity Company (SEC)
1500 70 2133
project in concept stage project under construction project under construction
Power Plant Substation Power Plant
project under construction
Co-generation Plant
Arabian Bemco Contracting, Saudi Arabia; 1900 Doosan Heavy Industries & Const. Company, Saudi Arabia;
project under construction
Power Plant
Not Appointed
3000
EPC Bid
Power and Desalination Plant
Power Magic Electrical Works
3
Alstom Power / Sidem
3,000
Metito Abu Dhabi LLC
21
Petrofac, Saudi
500
UAE
Hassyan Complex - Station P - Phase 1 (P1)
Dubai Electricity and Water Authority (DEWA)
Mott MacDonald, Dubai
Water Treatment Plant - Das Island
Dubai Electricity and Water Authority (DEWA) ADWEA/ Marubeni Corporation/ International Power Abu Dhabi Marine Operating Company (Adma-Opco)
Desalination Plant near Hamriyah Free Zone
Sharjah Electricity and Water Authority (SEWA)
Aqua Engineering, Techton Engineering & Construction
122
project under construction
Desalination Plant
Upgrade of Irrigation Networks and Pumping Stations
Department of Municipalities & Agriculture-Abu Dhabi
Not Appointed
10
EPC Bid
Pumping Station
Nuclear Power Plant in Abu Dhabi
Abu Dhabi Water and Electricity Authority / Emirates Nuclear Energy Corporation
Korean Electric Power Company / Hyundai Engineering & Construc20000 tion Company/Samsung C & T Corporation/ Doosan Heavy Industries
project under construction
Power Plant
Installation of 11kV Cables in Dubai
Dubai Electricity and Water Authority (DEWA)
Econ Contracting LLC
25
project under construction
Power Transmission
Two Desalination Plants in Ajman
Federal Electricity & Water Authority (FEWA)
Tecton Engineering & Construction / Aqua Engineering;
200
project under construction
Desalination Plant
National Contracting 11 Company (NCC), Kuwait
project under construction
Power Transmission
Not Appointed
30
EPC Bid
Substation
Not Appointed
500
EPC Bid
Water Distribution
Doosan Heavy Industries & Construction Kuwait
320
project under construction
Desalination Plant
Not Appointed
120
EPC Bid
Desalination Plant
Not Appointed
1000
Feasibility Study
Power Plant
Hyosung Group / Siemens
1500
project under construction
Power Transmission
Installation of 11 kV Cables Fujairah 2 (F2) IWPP
Fichtner
project under construction project under construction project under construction
Power Transmission Power and Desalination Plant Water Treatment
KUWAIT
11kV Overhead Transmission Line for Subiya Road New Substations in Kuwait Water Storage Tanks in West Funaitees
Ministry of Electricity & Water (MEW), Kuwait Ministry of Electricity & Water (MEW), Kuwait Ministry of Electricity & Water (MEW), Kuwait
Shuwaikh Desalination Plant
Ministry of Energy (Electricity & Water)
Al Zour Desalination Plant Phase 2
Ministry of Electricity & Water (MEW), Kuwait
Parsons Brinckerhoff International, Kuwait
QATAR
Solar Power Plant Qatar Power Transmission System Expansion - Phase 9
Qatar General Electricity & Water Corporation (Kahramaa) Qatar General Electricity & Water Corporation (Kahramaa)
Energoprojekt Entel, Qatar
Note : The above information is the sole property of Ventures Middle East LLC and cannot be published without the expressed permission of Ventures Middle East LLC, Abu Dhabi, UAE 42 Utilities Middle East
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TENDERS
Tender activity To add a tender to our listing, email details to lutfi.qaraman@itp.com
Visit constructionweekonline.com for the latest tender information
UME provides free access to the latest publicly available tender listings from across the GCC countries. The tenders included are aggregated from a wide variety of public and private sector sources from across the region. When possible, tenders include the issuer, name and category of the tender, opening and closing dates, narratives, fees, bonds and contracts.
INSTALLATION OF TELECOMMUNICATION SYSTEMS FOR OMAN DRYDOCK COMPANY Issuer: Oman Drydock Company Tender no: 209/2010 Title: Installation of Telecommunication Systems for Oman Drydock Company S.A.O.C Description: The scope of work includes design , installation and commissioning of telecommunication systems for Oman Drydock Company S.A.O.C. Bond: N/A Tender fee: 150.00 OMR Closes: Aug 2, 2010 Contact: www.tenderboard.gov.om
Description: The scope of work includes supply, installation, testing & commissioning of FC/GRE Water Transmission Pipelines and associated works at various locations in the Emirate of Dubai. Bond: Applicable Tender fee: 3000.00 AED Closes: Aug 16, 2010 Contact: www.dewa.gov.ae ELECTRICAL NETWORK DATA COLLECTION AND FIELD SURVEY Issuer: Muscat Electricity Distribution Co. (SAOC) Tender no: 212/2010
KEY CONTRACT SUPPLY OF MANHOLE COVERS Issuer: Central Storage Tender no: TC/AJ/PT-2745/07/10 Title: Supply of Manhole Covers Description: The scope of work includes supply of manhole covers. Bond: Applicable Tender fee: 15.00 BHD Closes: Aug 4, 2010 Contact: Central Storage - Tender Board of Bahrain. EXPANSION OF WATER DISTRIBUTION NETWORKS IN AL AMERAT WILAYAT Issuer: Public Authority for Electricity and Water Tender no: 202/2010 Title: Expansion of Water Distribution Networks in Al Amerat Wilayat Description: The scope of work includes expansion of water distribution networks in Wilayat Al-Amerat. Bond: N/A Tender fee: 1500.00 OMR Closes: Aug 9, 2010 Contact: www.tenderboard.gov.om INSTALLATION OF FC/GRE WATER TRANSMISSION PIPELINES AND ASSOCIATED WORKS Issuer: Dubai Electricity & Water Authority (DEWA) Tender no: CW/0593/2009 Title: Installation of FC/GRE Water Transmission Pipelines and Associated works www.utilities-me.com
CONSTRUCTION OF YANBU POWER AND DESALINATION PLANT PHASE 3 Saudi Arabia’s Saline Water Conversion Corporation (SWCC) has issued a tender for the Phase 3 of the Yanbu power and desalination plant. The project involves the design, engineering, construction, commissioning and testing of a new dual purpose power and desalination plant and associated facilities with capacities of oil-fired 1,700 MW net power output and 550, 000 cubic meter water production. The Project will be located within SWCC’s boundary in the south of the existing power and desalination plants in Yanbu area on the western coast of Saudi Arabia. The deadline for submissions is September 22, and the tender fee is 200000.00 SAR. Further details can be found on the corporation’s website: www.swcc.gov.sa
Title: Electrical Network Data Collection and Field Survey Description: The scope of work includes providing electrical network data collection and field survey for the purpose of undergrounding and overhead lines in Bausher area, Zone 2. Bond: N/A Tender fee: 200.00 OMR Closes: Aug 16, 2010 Contact: www.tenderboard.gov.om UPGRADING OF MUDHAIBI, RUSTAQ AND IZKI GRID STATIONS Issuer: Oman Electricity Transmission Company Tender no: 211/2010 Title: Upgrading of Mudhaibi, Rustaq and Izki Grid Stations Description: The scope of work includes upgrading of Mudhaibi , Rustaq and Izki Grid Stations. Bond: N/A Tender fee: 1500.00 OMR Closes: Aug 16, 2010 Contact: www.tenderboard.gov.om CONSTRUCTION OF PROPOSED CENTRAL CONTROL BUILDING AT BAWSHER Issuer: Public Authority for Electricity and Water Tender no: 210/2010 Title: Construction of Proposed Central Control Building at Bawsher Description: The scope of work includes construction of proposed central control building at Bawsher. Bond: N/A Tender fee:1500.00 OMR Closes: Aug 16, 2010 Contact: www.tenderboard.gov.om UPGRADING OF EXISTING PRIMARY SUBSTATIONS AT SHAHBARI Issuer: Muscat Electricity Distribution Co. (SAOC) Tender no: 207/2010 Title: Upgrading of Existing Primary Substations at Shahbari Description: The scope of work includes upgrading existing primary substations at Shahbari & Mobela August 2010
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Utilities Middle East 43
TENDERS
KEY CONTRACT CONSTRUCTION OF 380-KV RAS AL-ZOUR SUBSTATION The Saline Water Conversion Corporation (SWCC) has issued a tender for a turnkey substation to be built in Ras Al Zour. The scope of the work includes the design, supply and construction of the 380 kV substation. The project is linked to the 2,400MW Ras Al Zour IWPP that the SWCC has committed to building. The deadline for submissions is August 21, and the tender fee is 50000.00 SAR. The SWCC can be contacted via their website: www. swcc.gov.sa
South and construction of new primary substation at Azaiba North. Bond: N/A Tender fee: 1500.00 OMR Closes: Aug 16, 2010 Contact: www.tenderboard.gov.om EXTENSION OF EXISTING HIJJ REVERSE OSMOSIS DESALINATION PLANT Issuer: Public Authority for Electricity and Water Tender no: 223/2010 Title: Extension of Existing Hijj Reverse Osmosis Desalination Plant Description: The scope of work includes extension of existing Hijj reverse osmosis desalination plant from 400m3/day to 1800m3/day. Bond: N/A Tender fee: 500.00 OMR Closes: Aug 16, 2010 Contact: www.tenderboard.gov.om
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UPGRADING OF MUTRAH STORE 33/11-KV PRIMARY SUBSTATION Issuer: Muscat Electricity Distribution Co. (SAOC) Tender no: 203/2010 Title: Upgrading of Mutrah Store 33/11-kV Primary Substation Description: The scope of work includes upgrading of Mutrah store 33/11-kV primary substation from 2X16 MVA to 2X20 MVA. Bond: N/A Tender fee: 505.00 OMR Closes: Aug 16, 2010 Contact: www.tenderboard.gov.om CONSTRUCTION OF WATER DISTRIBUTION NETWORKS IN BAHLA Issuer: Public Authority for Electricity and Water Tender no: 215/2010 Title: Construction of Water Distribution Networks in Bahla Description: The scope of work includes construction of water distribution networks in Bahla. Bond: N/A Tender fee:1500.00 OMR Closes: Aug 23, 2010 Contact: www.tenderboard.gov.om
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INDIA SNAPSHOT
Lighting up India Faced with the need to massively expand its power generation capacity, India is pursuing all the options at its disposal, disposal finds a report from Business Monitor International
I
ndia’s electricity sector is struggling to cope with current demand, which has been mushrooming as a consequence of high population growth levels and continued economic expansion. This presents a major obstacle to the country's business environment and economic development, and cements existing regional wealth discrepancies. In response to the problem, utlities all over the country are busy growing their generation capacities.
GROWING, BUT SLOWING Power plants and transmission grids are estimated to account for the majority of energy and utilities infrastructure industry value in 2009/10 at 59 percent, or US$17.58 billion. The sector is forecast to increase its share in line with government announcements for heavy investment in to clean energy, including solar, wind and nuclear, all of which are capital intensive. Water infrastructure industry value, on the other hand, will rise only moderately from an estimated $1.48 billion in 2009/10 to $3.27 billion in 2014/15. This represents approximately 2.5 percent of the total infrastructure industry value in India. Though there is great
demand for water infrastructure in India, projects are scare and tend to be small in scale. In 2009/10 energy and utilities infrastructure will account for around 59 percent of total infrastructure industry value, equal to $29.4 billion. The sector’s share is expected to decline; however, Business Monitor International (BMI) believes there is upside potential. Investment is being piled into the sector, with a large number of power plants being built and associated pipelines to supply fuel. Energy and utilities industry value is anticipated to grow substantially over the midterm, reaching $73.49 billion by the end of 2014/15.
FEEDSTOCK MIX FOR THE ENERGY FIX Nuclear, solar, coal and gas are all set to be important elements
7.28 percent Increase in water consumption in 2009.
US$23.5 billion
Estimated 2010/11 power plant and transmission grid value
PRIVATE INVESTMENT ENTERS THE ENERGY SECTOR In March, a consortium of global investors acquired a 44 percent stake in Asian Genco Pte Ltd (AGPL), an infrastructure company with a focus on the Indian power generation sector. The deal is the largest equity transaction to date in the country's power sector and highlighted the profit potential for private companies. APGL is domiciled in Singapore, but its entire power generation portfolio is located in India. The consortium of global investors is led by Morgan Stanley Infrastructure Partners and also includes General Atlantic, Goldman Sachs Investment Management, Norwest Venture Partners, Everstone Capital and PTC India Financial Services. Together the investors have committed $425mn to AGPL in order to boost its presence and market share in the Indian power sector. The company aims to put 1,350MW of capacity in operation, and wants to develop a project pipeline exceeding 10,000MW by 2012.
of India’s future power mix as the country increases investment into energy and utilities infrastructure to meet demand and facilitate economic growth.
KING COAL This article is based on information compiled in the ‘India Infrastructure Report Q3 2010’ published by Business Monitor International. For more information, go to www.businessmonitor.com
46 Utilities Middle East
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August 2010
Coal is the undisputed leader in the power game. Coal-fuelled currently power plants generate more than half of India’s power. The fuel is indigenous to the country and,
according to the BP Statistical Review, India had 58,600 million tonnes of proven coal reserves at the end of 2008. In 2009, it is estimated to account for 55 percent of power generation. Coal-fired power generation is expected to show a substantial increase in absolute terms due to India's significant coal reserves and because coal projects tend to be much cheaper www.utilities-me.com
INDIA SNAPSHOT
POWERED BY COAL
SOLAR RISING In August 2009, India announced it would push forward with an ambitious plan for bringing solar power to the fore in the country's electricity mix. The Solar Mission envisages increasing India's solar power generating capacity to 20GW by 2020, from the current 14GW. By 2030, this is planned to reach 200GW,
and 300GW by 2050. The draft plan included the allocation of $20 billion by the government over a 30-year period to assist with manufacturing and installation of solar power plants. However, according to media reports, a new version of the plan envisages that other countries will help foot the bill.
NUCLEAR CAPACITY BUILD UP 2007-2018
e=estimate, Source: BP Statistical Review of World Energy, June 2008, BMI
than power plants running on gas or other sources.
NUCLEAR EXPLOSION India’s nuclear power sector is continuing to attract the attention of major international players, as it promises to unlock investments worth hundreds of billions of dollars. The Indian government is keen to pursue nuclear as an answer to rapidly growing demand for electricity. Currently, only 3.7 percent of India’s electricity is generated from nuclear power. By 2050, India hopes to supply 25 percent of power from nuclear sources. The freeing of India’s nuclear power sector is thought to potentially open up $150 billion of investments, according to India’s Economic Times. In late September 2009, India's Prime Minister Manmohan Singh, announced plans for the largest expansion of nuclear power capacity in the world, predicting that by 2050 India could generate up to 470 gigawatt (GW) of nuclear power if the country executes its strategy effectively. India currently has a nuclear power capacity of 4.12GW from 17 reactors. This strategy would see an increase in capacity of more than 11,000% by 2050.
HYDROPOWER Hydropower accounts for a significant proportion of India’s electricity-generating capacity. In 2009, it accounted for 17.8 percent with a www.utilities-me.com
generating capacity of 162TWh. The country is currently ranked around sixth in the world in terms of hydropower production, with more than 3.5 percent of global total capacity. There is a large amount of hydroelectric capacity in the construction and planning stages, according to the Indian government. The average size of future projects is expected to be 500MW.
POWER PLANS
Source: Nuclear Power Corporation of India Ltd
India is big. So is its pipeline for power generation projects.
In January, the Rajasthan state government signed a memorandum of understanding (MoU) with the US-based William J Clinton Foundation for the establishment of solar
parks. Each solar park will have a generation capacity of 3,000-5,000MW. The government is hoping to attract investment of $10.85 billion over the next five years.
Nuclear Power Corporation of India Limited (NPCIL) is looking to raise $3 billion to build four 700MW reactors, which will likely comprise two nuclear plants planned in Rawatbha-
ta and Kakrapar. The company is also looking to raise $3.5bn for the two 1,000MW reactors that it is building in Kundakalum with the help of Russia's Atomstroyexport.
In April, the UAE-based ETA Power Generation announced plans to establish a thermal power plant in Tamil Nadu in India. The development of the 1,320 MW power plant is estimated to
cost $1.1 billion. The first unit of the plant is expected to be completed by March 2014 and the second unit is likely to be completed in the following six to nine months.
In November, a joint venture of Indian utility Tata Power and Norwegian utility SN Power announced plans to invest $3.2 billion in the construction of hydropower projects in India
and Nepal. The two utilities are expecting to have 2,000MW of hydropower under construction or in operation by 2015 and a further 4,000MW by 2020.
August 2010
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Utilities Middle East 47
THE BIG PICTURE
Big business GAC share some insight into transporting heavyweight power equipment
A 210 tonne electrical transformer on its way to work.
In March 2010, the Hyundai Engineering and Construction Company tasked logistics company GAC with transporting four transformers from Kuwait’s Shuweikh port to the Jaber Al Ahmed “W” substation. No job to take lightly, as the transformers weighed 210 tonnes each. “A lot of preplanning is required to carry out such an operation,” says Ronald Lichtenecker, GAC Kuwait’s managing director. The transformers’ immense weight and special requirements meant that the unloading process as a time consuming exercise, says Lichtenecker.”The jacking and skidding operations, for example, had to be carried out very slowly and with military precision.” When the four transformers had been carefully unloaded from the vessel onto heavy-lift trailers, they were driven throughout the night - the safest time to transport such over-sized cargo – to arrive at the Jaber Al Ahmed W substation before daybreak. Police and other local ministry permission as well as a special escort were required for the twenty kilometres journey to the transformers' final destination.
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Unloading heavy equipment requires military precision, says GAC's Lichtenecker.
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