Acwa strengthens position in Dubai

05 May 2015

Saudi developer has submitted lowest tariff prices for two different fuel platforms

The submission of the lowest tariff for Dubai’s proposed Hassyan coal independent power project (IPP), the first large-scale coal power plant in the GCC, is set to further strengthen Acwa Power’s position in Dubai’s fledgling IPP market.

After recently signing the agreements to develop Dubai’s first IPP, the 200MW second phase of the Sheikh Mohammed bin Rashid al-Maktoum solar park, the Saudi developer is the favourite to win the mandate to develop the emirate’s next ambitious private power scheme. The bid also signals the developer’s aim to continue its portfolio expansion across the GCC and beyond.

Acwa Power has dominated its home market in Saudi Arabia since the company’s inception in 2004, and has been successful in extending its reach throughout the region in the past year, picking up major projects in countries such as Oman and Morocco.

The developer has extended its geographical reach across multiple fuel platforms – a strategy the group’s CEO Paddy Padmanathan identified as a priority in an interview with MEED earlier this year. He also said the group would remain committed to growing in relatively stable markets, rather than taking on markets with sizeable risk. So far, these tactics are paying off, with the developer achieving significant contract wins in Morocco and Turkey in the past six months.

While the developer has adopted a relatively conservative stance to risk, forgoing possible opportunities in troubled zones such as Iraq, its agreement with the Egyptian government in March to develop substantial coal and renewables projects shows it is willing to enter emerging markets with significant potential.

An interesting facet of Acwa’s bidding in Dubai’s nascent IPP market is that it has submitted alternative proposals for larger-capacity projects with cheaper tariffs. This has the dual benefit of providing more power at a cheaper cost, which is difficult to ignore. The developer’s ability to submit innovative proposals with lower prices and margins has been strengthened since it acquired the financial investment from the Saudi government in 2013, with public wealth funds acquiring 20 per cent of the group.

With Acwa submitting an impressive tariff of under 5$cents a kilowatt hour for the Hassyan coal project and a price of under 6$cents a kilowatt hour for the solar scheme, the developer and Dubai Electricity & Water Authority (Dewa) are forming a partnership beneficial to both parties.

Stay informed with the latest in the Middle East
Download the MEED app today, available on Apple and Android devices

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications