Kuwaiti power network shows signs of strain

24 October 2008

Despite additional supply coming on line this year, soaring demand is increasing pressure on the government to resolve the delays that are hampering its power projects.

The sudden power cut that knocked out Kuwait National Petroleum Corporation’s three refineries in early October was the latest in a series of faults that have also disrupted operations at Kuwaiti hospitals and border posts over the past few months.

Technical problems, rather than a lack of capacity, are responsible for the spate of blackouts. After three years of repeated overloading, Kuwait's electricity network is showing signs of strain. Transformer breakdowns and cable failures are increasingly common, and turbines have malfunctioned.

The stressed system is undermining the recent achievements of Kuwait’s Electricity & Water Ministry, which, after much delay, succeeded in bringing new generating capacity on line in the summer under the emergency power programme it launched in early 2007.

In August, additional gas turbines were started up at the Al-Zour South power plant, and the project to boost output at the Subiya facility was also completed.

This extra capacity, together with an ongoing conservation awareness programme, helped to avert a repeat of the load shedding that was needed in the summer peak of 2006. Kuwait’s total installed capacity now stands at almost 10,300MW, with peak demand of about 9,520MW.

Rising demand

The country’s power problems stem from chronic under-investment in new capacity from 2000 to 2006.

At the turn of the century, the state had a total generating capacity of 9,189MW, some 3,000MW more than peak demand.

But since then, electricity consumption has risen steadily, eating away at the reserve margin, fuelled by the changing lifestyles of a population that has been growing by an average of 4.6 per cent a year since 1996.

By 2007, capacity had risen to just 9,800MW, and in the summer, peak load crept within 93 per cent of that figure.

A full-scale energy crisis was narrowly avoided thanks to the awareness campaign, which included sending text messages to residents urging them to save electricity. Their actions ultimately led to a 10 per cent drop in consumption.

Although Kuwait has managed to buy some breathing space through these small emergency capacity additions, the Electricity & Water Ministry needs to continue expanding and building power plants to ensure a healthy reserve cushion is maintained.

Kuwait has several large-scale real estate projects in the planning stages and their power requirements need to be catered for.

The schemes include the $3.3bn Failaka island development and the $58bn Madinat al-Hareer (City of Silk), which will be constructed on the Subiya peninsula and is expected to be home to 700,000 residents when completed in 2030.

In the summer, local media reported that electricity connections to new residential and commercial developments were being delayed to avoid coinciding with the summer peak.

However the construction delays in Kuwait’s major real estate projects, caused by a skilled labour shortage and parliamentary gridlock over land reforms, could mean the predicted power crunch does not happen until several years later than originally predicted.

Increasing capacity

According to estimates, Kuwait needs to raise its total generating capacity to 16,000MW by 2010, with a further 4,000MW to be added by 2025, to meet projected demand growth of 7 per cent a year.

The government has been working on a 6,000MW capacity expansion programme for several years, but projects have been held back by political upheavals, financial difficulties and corruption scandals.

The slow pace of progress has also led the state to struggle to attract international bidders for the schemes that have been tendered.

The new Subiya power plant is one project that has suffered delays. Subiya was first tendered in 2006 when the US’ GE Energy and South Korea’s Hyundai Heavy Industries were selected as the preferred bidders to take on the engineering, procurement and construction contract.

But the two firms later pulled out of negotiations and the deal was never signed. Subsequent restructured versions of the project also failed to progress.

The project was finally retendered in February 2008, but the Electricity & Water Ministry has repeatedly pushed back the deadline for bid submissions.

A new date has been set for November. Six companies have been prequalified to build the 2,000MW gas-fired combined-cycle plant: GE Energy, Spain’s Iberdrola Ingenieria y Construccion, Japan’s Mitsui and Marubeni, SNC-Lavalin of Canada and Germany’s Siemens. Start-up has been pencilled in for the second quarter of 2010.

A second project, Al-Zour North, is due to be tendered in early 2009, and the 4,700MW power station is expected to come on line in 2011.

The project to rebuild the Shuaiba North power and desalination plant, which has been out of action since being badly damaged during the Iraqi occupation in 1990, is making headway. In August, the turbines for the new power plant were delivered.

The KD360m project was awarded in 2007 to a consortium headed by Mitsui. The gas-fired, combined-cycle power facility will have a capacity of 828MW and the desalination plant will produce about 45 million gallons a day (g/d) of drinking water. The project is set to be completed in the first quarter of 2010.

The same year, the extension to the Al-Zour South power plant being carried out by Siemens is scheduled to become operational, boosting the facility’s capacity by 560MW.

The Subiya and Al-Zour North projects are the largest schemes on the table in terms of capacity, and their successful completion is critical.

Any further delays to the Subiya tender process would lead to Kuwait suffering once another power crisis.

Kuwait relies on crude and heavy oil to fuel its power plants because of the lack of available gas feedstock in the country.

The extra 10,000MW of power needed to meet demand growth will result in even more barrels of oil being burned unless new supplies of feedstock are arranged.

The government has been seeking to boost gas supplies for many years, but progress is at last being made .

The country has declared the discovery of more than 30 trillion cubic feet of liberated gas, although it will be several years before it can be developed.

Initially, 175 million cubic feet will be produced, rising to 1 billion cubic feet in 2015. Yet even then it will be insufficient to meet the feedstock requirements.

A new 615,000-barrel-a-day (b/d) grassroots refinery being built by Kuwait National Petroleum Corporation in Al-Zour should help plug the gap.

The $14bn facility will produce about 225,000 b/d of low-sulphur fuel for power generation, which is less harmful to the environment than oil-fuelled generation.

Kuwait is also continuing to pursue opportunities to import gas and recently signed an agreement with Iran.

Initially, the deal will involve the delivery of 1 billion cubic feet a day (cf/d) from 2011, but this could rise to 1.5 billion cf/d in the medium term.

The gas will come from the South Pars fields. Infrastructure is already in place on the Iranian side of the border, but a trunk pipeline will have to be built by Kuwait to receive the gas.

Although significant new power generation capacity is due to come on stream in 2010 and 2011, and additional feedstock supplies are being sourced, the Electricity & Water Ministry is not finished yet.

Next year is set to be a critical period for the ministry and, once again, much will depend on the willingness of residents to curb usage.

Preventative measures

With the network regularly being stretched to its limits, the ministry urgently needs to improve its preventative maintenance oper-ations to avoid further equipment failures.

In a clear indi-cation of the government’s lack of optimism for reliable power supplies months ahead, back-up generators are being installed in airports, hospitals and other critical infrastructure.

However, some improvements in reliability and efficiency may come with the completion of phase one of the GCC interconnected grid in early 2009, as by then Kuwait’s power network will be connected to the grids in Bahrain, Qatar and Saudi Arabia.

The project to link up all the GCC states is set to be finished by the end of 2010, but the interconnections will not provide the access to spare capacity that was envisaged when the preliminary feasibility study for the scheme was carried out in 1990.

Since then, electricity demand throughout the region has soared, and with peak demand coinciding in each of the states, the countries are all in the same predicament, battling to keep pace with domestic consumption growth and to withstand the summer highs.

The pressure remains on the Electricity & Water Ministry to solve the country’s power problems, and its success will hinge on the awarding of contracts to build the Subiya and Al-Zour North power stations.

If these projects hit further setbacks, Kuwait’s development plans will be in serious jeopardy.

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