While much of the debate in the Middle East and North Africa region’s power generation sector has shifted recently to the prospects for alternative energy, state utilities are also concentrating on improving the efficiency of existing infrastructure and building more efficient conventional gas plants.

The region’s power generation sector is still dominated by gas-fired plants, accounting for between 42 per cent of electricity production in Iraq and more than 99 per cent in Dubai. With gas set to remain the primary feedstock for the foreseeable future, raising the efficiency of gas-fired power plants is a pressing issue for state utilities.

Increased efficiency

The main way to increase the efficiency of generation facilities is by using combined-cycle technology, either through installing the technology in new-build plants or converting existing generation facilities from simple open-cycle to combined-cycle.

With many governments already having started programmes to upgrade existing power plants, the implementation of combined-cycle technology is set to remain a key theme of the region’s utility sector in 2015.

The process of generating electricity from conventional power plants can have an efficiency rate of as low as 30 per cent, which means more than two-thirds of the fuel energy is wasted.

According to Finnish power company Wartsila, which has recently signed contracts to develop major power projects in Oman and Jordan, the efficiency of steam power plants, which use boilers to burn fossil fuels, averages 33 per cent, with simple-cycle gas turbine plants averaging less than 30 per cent.

With combined-cycle technology, the energy conversion rate can be increased to as much as 60 per cent, effectively doubling the efficiency of the plant. Combined-cycle plants amalgamate several processes to recover and use the residual heat energy from exhaust gases, using components such as heat recovery steam generators to capture exhaust heat and produce steam. The steam is then supplied to a steam turbine to create additional electricity. The rationale for combined-cycle plants is clear.

“The technology is much more efficient,” says a source at a major international power firm active in the region. “This means less gas is wasted and more power is generated from less fuel. This means you get a third more power for the same fuel cost.”

Saudi push

Saudi Arabia is one country that is pushing ahead with a programme to ensure combined-cycle technology becomes the primary technology. In 2012, while gas accounted for 66 per cent of state utility Saudi Electricity Company’s (SEC’s) available generating capacity, only 5 per cent of this was converted to power using combined-cycle turbines.

With the kingdom, like the majority of its Gulf neighbours, facing potential gas supply issues in the coming years as well as rapidly rising demand, Riyadh is keen to boost the efficiency of its conventional power plants.

In order to maximise electricity generation, SEC is ensuring all its new facilities use combined-cycle gas turbines. The company is also undertaking a programme to convert existing simple-cycle gas plants into combined-cycle. This includes the conversion of its PP10 plant, located in Riyadh. SEC has appointed the local Arabian BemcoConstruction Company to undertake the $1.4bn conversion scheme, which will increase the facility’s capacity from 2,200MW to 3,500MW, making it the largest combined-cycle power plant in the world when it is commissioned later this year.

It is not just SEC that is pushing ahead with schemes to upgrade existing power plants. In early 2014, state oil major Saudi Aramcoawarded China’s Shandong Electrical Power Construction Company (Sepco) a contract to convert the existing power plant at Aramco’s Shaybah oil development into a combined-cycle facility.

Sticking to simple

While the increased efficiency and energy savings from using combined-cycle configurations instead of simple open-cycle turbines are undoubted, several utilities are still installing open-cycle power plants. According to those working in the region’s power sector, there are two main reasons for this.

“The first reason is that simple-cycle plants are cheaper to build,” says a contractor active in the Gulf power market. “And secondly, they are quicker to install and start up, so in countries where power is required urgently, open-cycle gas turbines are often the preferred choice.”

Iraq projects

Iraq provides an example of a country that is aware of the benefits of combined-cycle technology, but, due to the urgent requirement for additional power, it is primarily pushing ahead with open-cycle plants, which are less complex and therefore faster to build and commission.

While the Electricity Ministry’s ultimate goal is for the majority of its power plants to be combined-cycle gas turbine facilities, it is currently building simple-cycle schemes with plans to convert them to combined-cycle in the next five years.

As of mid-2014, 23 simple-cycle power projects with a total capacity of more than 12,000MW were under execution, while the 1,642MW Al-Anbar plant is the only combined-cycle plant under construction. The $1.1bn deal to build the Al-Anbar facility was awarded to Metka of Greece and Sepco 3 of China in 2013. By contrast, the contract to construct the 1,500MW Ramallah open-cycle power plant, awarded in 2011 to South Korea’s Hyundai Engineering & Construction, was worth $308m.

Following 20 years of underinvestment and conflict damage, Iraq’s Electricity Ministry prepared short and long-term plans to plug the shortfall of generation in the aftermath of the US invasion in 2003. While the situation has improved, with new plants opening since 2011, the installed capacity of 11,025MW in 2013 was still far short of the 16,574MW peak demand recorded in the country that year.

As a result of the urgent need for additional electricity, the ministry tendered 40 power generation projects between 2008 and 2012. While the vast majority were simple-cycle, the ministry also announced it was planning a significant programme to convert these plants to combined-cycle facilities to improve efficiency. In the 2013-17 short-term conversion plan, the ministry set a target of converting 4,000MW of simple-cycle plants. In addition to the quicker start-up time, the lower price of simple-cycle plants meant that the ministry could tender more capacity in a shorter period.

Kuwait progress

Kuwait is another country that is continuing to develop simple-cycle power plants due to urgent demand. While it has plans to build several major combined-cycle power projects, such as the 1,500MW Al-Zour independent water and power plant (IWPP), the Ministry of Electricity & Water is also working on schemes to expand existing plants with additional simple-cycle turbines due to delays with the country’s privately developed power and water programme.

The expansions include adding 500MW of capacity to both the Subiya and Al-Zour South plants through installing further simple-cycle gas turbines under engineering, procurement and construction contracts. “These projects have become necessary due to delays with the IWPP programme, which all the major projects fall under,” says a ministry source in Kuwait.

While much of the current focus in the region’s hydrocarbons and power sectors is on the impact that falling oil prices may have on planned conventional and alternative energy projects, Lucas Hautvast, CEO for South Asia, the Middle East and Africa at UK/French developer GDF Suez Energy International, says the gas price is the crucial factor that will determine whether governments will opt for combined-cycle projects or conversion programmes.

Gas price

“It comes down to the gas price,” says Hautvast. “If the gas price is $2 [a million BTUs], then there is no use in an upgrading, because the investment of an upgrade is never earned back if your gas price is $2. So let’s say an upgrade gives you 5 per cent more efficiency, for argument’s sake; any plan where you do a $100m upgrade and you get a 5 per cent increase may not be worth it.

“But if the gas price is $15, which is what they pay in Asia, it’s a two-year earn back - so it makes sense to do it. Once gas is priced at the international market price, then it makes sense.”

Hautvast says that when the issue of subsidies is addressed, there will be a clear incentive for all countries in the region to boost the efficiency of their generation infrastructure.

“I think those discussions [regarding subsidised gas prices] will start in the next few years,” says Hautvast. “This is because in some countries, such as Oman and Bahrain, their gas reserves are definitely finite and short-term finite. So they need to start thinking about economic rationalisation.”

In addition to a new era of lower oil prices and renewables programmes, the issue of efficiency of conventional power plants will add a further interesting dimension to the region’s power sector in 2015 and beyond.