Bahrain risks depleting power reserve margin

01 August 2012

Two power plants will reach end of planned life by 2015 as demand continues to rise

With nearly 1,000MW of spare power production capacity, Bahrain may look like it is in a good position to put off developing new power plants. But with demand rising at 4-12 per cent a year over the past decade, and two power stations set to be decommissioned by 2015, Manama will have to start focusing on this issue soon.

Faced with a domestic uprising against the government that has been ongoing since February 2011, long-term concerns about the availability of power have been relegated in the government’s list of priorities.

Partly, this is because capacity currently far exceeds demand. Bahrain brought the Addur 1 independent water and power project (IWPP) online in early 2012, adding 1,200MW of power and 218,000 cubic metres a day (cm/d) of water capacity to the networks. As a result, Bahrain now has excess power. It has 3,807MW of installed capacity while summer power demand in 2012 is unlikely to top 2,900MW.

However, ensuring power availability in the future is a long-term pursuit. Failure to develop new power plants now will lead to difficulties several years down the line.

Power demand is expected to continue to rise despite overall growth in the economy slowing as a result of the political unrest. Added to this uncertainty, Bahrain is a small market with a budget deficit, even with oil at more than $100 a barrel, and power plants are typically large and expensive. A project such as the Addur 1 IWPP could provide about a third of the Island’s power, but juggling the multi-year timeline of a new project with demand is fraught with difficulties.

To add to the complexity of the situation, two of the country’s earliest large-scale power plants are approaching the end of their planned working lives. A 600MW project at Riffa and the 100MW Sitra 1 power plant will need to be decommissioned in 2015.

Multiple phases were planned originally for the Addur site in 2007. While the first phase has been successfully completed, no action has been taken towards developing the other three phases. If demand continues to rise and Bahrain does nothing to build new capacity, it will become more dependent on power imports through the GCC grid or face blackouts.

At the same time, Bahrain has few options available for developing new power. Without the budget to fund new projects, Manama would need to bring in private-sector funding. It has a strong track-record of doing so.

It successfully developed three independent projects that currently provide 80 per cent of the country’s power. However, trying to tender an independent power project (IWP) contract while anti-government protests continue would be tricky as private developers are unlikely to be forthcoming under such conditions.

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