Bahrain maintains reserve margin

28 March 2010

Through effective forward planning, Manama has been able to build up a larger generation reserve margin than that seen in other Gulf states

The rate at which demand for electricity is rising in Bahrain has slowed since the global economic recession began in mid 2008. The growth rate of power consumption peaked at 11 per cent in 2007, before dropping to 8 per cent the following year and slowing further to 5 per cent in 2009, when demand peaked at 2,438MW in the summer months.

During last year’s peak in demand, 2,912MW of generation capacity was available, leaving a reserve of 474MW, or about 16 per cent of capacity, which is in line with industry recommendations and far higher than the margins seen in some other Gulf states.

Forward planning

Bahrain has been able to build up this reserve margin through forward planning, bringing new capacity on line as required. It has done this in partnership with the private sector, awarding the Al-Ezzel and Al-Hidd power projects in 2004 and 2006. The last time the kingdom had a major blackout was in 2004, when a power surge caused a turbine to fail.

Electricity demand is forecast to continue rising, reaching 4,365MW by 2019. By comparison, in 1999 peak power consumption was just 1,216MW.

During the 2009 peak in demand, Bahrain’s reserve capacity was 16 per cent, far higher than that seen in some other Gulf states

To meet these additional requirements, the Electricity & Water Authority in 2008 awarded a contract for the development of an independent power and water plant to be built at Addur, in the southeast of the country, to a consortium of France’s GDF Suez and Kuwait’s Gulf Investment Corporation.

The financing for the $2.1bn project was successfully completed in 2009, despite the unfavourable economic climate at the time. A total of 18 international and regional banks provided $1.7bn worth of debt for the scheme. The loans are priced at 250 basis points above the London interbank offered rate (Libor) during the first two-and-a-half years while the plant is being built, rising to 300 basis points above Libor after a further two-and-a-half years, then 350 basis points for the final three years. Banks involved in the deal include Germany’s Bayern LB, Jordan’s Arab Bank, the UK’s HSBC and France’s Societe Generale. France’s Calyon, the UK’s Standard Chartered and the UAE’s Mashreqbank arranged the financing.

The plant will begin generating with a capacity of 600MW by June 2010, before reaching its full capacity of 1,200MW in June 2011. The facility will also produce 48 million gallons a day of desalinated water. Bahrain Petroleum Company will supply gas to fuel it.

Following the start-up of the Addur plant, the total installed generating capacity in Bahrain will be around 4,100MW, meaning a further 262MW of capacity will need to be commissioned by 2019. It is expected that any additional power plants will also be located at the Addur site over the next 20 years.

Network expansion

At the same time as expanding its power generating capacity, the Electricity & Water Authority has also been improving its transmission and distribution networks under its 2007-2011 network expansion programme.

As part of the programme, it brought in Dutch consultancy Kema to carry out a comprehensive inventory audit and assessment of the maintenance and operating processes of its power networks. Bahrain’s network includes 5,000 distribution stations, 80 high-voltage stations, 8,000 kilometres of underground cables and 450-kilo-metres of high-voltage overhead lines.

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