The submission of the lowest tariff for Dubais proposed Hassyan coal independent power project (IPP), the first large-scale coal power plant in the GCC, is set to further strengthen Acwa Powers position in Dubais fledgling IPP market.
After recently signing the agreements to develop Dubais 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 emirates next ambitious private power scheme. The bid also signals the developers aim to continue its portfolio expansion across the GCC and beyond.
Acwa Power has dominated its home market in Saudi Arabia since the companys 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 groups 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 Acwas bidding in Dubais 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 developers 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.