Despite experiencing some of the highest demand growth rates for power over the past five years, effective planning and significant investment by Qatar’s utility providers has enabled the country to build up one of the GCC’s widest power reserve margins.
Qatar had a reserve margin of 29 per cent in 2012. Its installed capacity was 8,671MW, while peak demand that year totalled 6,255MW. This cushion between supply and demand has resulted in a slowdown in contract awards in the power sector, reaching $794m in 2012, 74 per cent less than the $3bn-worth of contracts awarded in 2008.
While there is no immediate need for further generation capacity, Qatar’s transmission sector will be the focus for investment over the next five years. Qatar General Electricity & Water Corporation (Kahramaa) plans to spend $10bn on transmission projects by 2018, double the $5bn it has set aside for generation schemes. Doha is also planning to start work on the initial phases of developing a renewable energy sector over the next eight years.
Power generation plans
Due to the current surplus, Qatar will not require additional power capacity until 2016/17. The only generation scheme currently in the pipeline is the Mesaieed independent water and power project (IWPP), which will be the country’s first combined electricity and reverse osmosis plant, with a power capacity of 2,100MW and a desalination capacity of 40 million gallons a day. Scheduled for tender in 2014, the plant will be located in the economic zone near Mesaieed, south of Doha.
The selection of the IWPP procurement model for the plant is not surprising as Kahramaa has successfully delivered several major power projects using the private sector over the past decade. The IWPP model was first used in Qatar in 2001 to develop the Ras Laffan A plant. Since then, Kahramaa has awarded three more private projects – the Ras Laffan B IWPP, the Mesaieed independent power project (IPP) and the Ras Laffan C IWPP. In total, it has contracted 6,518MW of power from the developer market and attracted total investment of $7.8bn.
Qatar’s private power programme is based on the single buyer model, with Kahramaa purchasing all the power and water output of the plants for a period of 25 years on a take or pay basis, with state oil company Qatar Petroleum supplying the fuel.
“It is a model that has worked well in the past, so there is no need to change,” says a Dubai-based regional power consultant. “The government can afford to pay for these schemes outright, but using the IWPP and IPP model ensures private sector expertise is utilised.”
With no generation projects scheduled to be tendered in 2013, local and regional firms will be looking to Qatar’s power transmission programme to win work.
Unusually for a Gulf state, the majority of activity in the power sector in recent years has been from transmission and distribution projects. From 2005-13, some $8.3bn was invested in upgrading and expanding infrastructure, and this is set to continue over the next five years, with Kahramaa pledging to spend 44 per cent of its budget on the transmission sector.
Improved power distribution
While Qatar has plenty of spare capacity, the networks for distributing power to residential, commercial and industrial schemes need improving, particularly as the country develops projects worth billions of dollars in preparation for hosting the 2022 football World Cup.
“The capacity is available, but lots of areas in Doha and outside require better networks,” says a local contractor. “This will become more important as the new projects are completed.”
Kahramaa is planning to invest $10bn to increase the number of high-voltage substations to 362 by 2018, from the current 233 either completed or under construction. This will include the completion of phase 10 of its transmission system expansion and implementation of the planned phase 11. In 2012, the utility provider signed three deals worth an estimated $360m for further contracts on phase 10. The biggest of these was a $190m package awarded to Germany’s Siemens for substations 3,4, 9 and 10.
Phase 11 of Kahramaa’s transmission programme will be implemented in two phases. The first phase will involve the construction of 30 substations and associated cables of 66-220kV. For the larger second phase, about 40 substations, with cables ranging in size from 66-400kV, will be tendered to the market.
In addition to lucrative transmission schemes, 2013 is expected to see the initial phases of Qatar’s renewable energy programme.
Qatar is the only GCC state that does not face a major gas feedstock issue, as it owns the world’s largest non-associated gas reservoir, the North Field. This has meant that Doha’s efforts to make greater use of alternative energy sources have fallen behind other GCC states.
However, while hosting the UN Climate Change Conference in November last year, government representatives stressed that Qatar was committed to reducing greenhouse emissions and would be stepping up attempts to develop renewable energy sources. At the conference, government officials said Doha would invite bids for a multibillion-dollar, 1,800MW solar energy plant in 2014.
In February, Ahmed al-Naser, Kahramaa’s technical affairs director, told MEED’s Qatar Projects 2013 conference that Kahramaa was aiming to generate 200MW of solar power by 2020, which equate to about 2 per cent of total capacity. The company’s first planned solar project will involve building 5-10MW of capacity in an area north of Doha. The project is set to be tendered before the end of 2013.
In July last year, Kahramaa signed a memorandum of understanding (MOU) with Qatar Solar Technologies (QSTec) to distribute solar power in the future. QSTec is a joint venture of the state-run Qatar Solar, Germany’s SolarWorld and Qatar Development Bank.
QSTec’s first project will be a polysilicon plant at Ras Laffan that will produce the key ingredient for photovoltaic solar power projects. The $1bn plant will produce 8,000 tonnes a year (t/y) of polysilicon. There are plans to eventually boost this to more than 45,000 t/y.
In 2012, Kahramaa also signed a MOU with QSTec to jointly study potential solar power projects both in Qatar and abroad.
While Qatar’s power sector will be shadowed by Saudi Arabia, Kuwait and the UAE in terms of tendered power generation schemes in the next five years, Doha’s vast planned infrastructure programme will provide plenty of opportunities for local contractors and international power firms. If Qatar is to succeed in implementing its ambitious World Cup infrastructure programme, providing adequate transmission networks is vital.
While Qatar’s renewables programme is much smaller than the schemes planned in Saudi Arabia and the UAE, Doha’s efforts to become an internationally recognised force in world diplomacy should ensure that the schemes go ahead.
Kahramaa plans to increase the number of high-voltage substations to 362 by 2018