Riyadh struggles to keep pace with demand

02 November 2014

Amid rising residential and industrial requirements for power and water, the kingdom is taking steps to boost capacity and curb excessive consumption

Saudi Arabia has emerged as one of the world’s energy-hungriest economies in recent years, with its electricity generating capacity of almost 70GW failing to keep pace with consumption growth, particularly in the sweltering summer months when increased air conditioning usage pushes up demand by as much as 50 per cent. Long-term demand drivers – a rising population, increasing urbanisation and sustained economic growth – suggest a need both to increase generating capacity and, critically, to curb wasteful usage.

Top 10 power and water projects in Saudi Arabia 
ProjectOwnerBudget ($m)Status
Renewable energy programmeKing Abdullah City for Atomic & Renewable Energy150,000Study
Nuclear power reactorsKing Abdullah City for Atomic & Renewable Energy70,000Study
Rabigh power plant expansionSaudi Electricity Company5,798Execution
Al-Uqair South power plantSaudi Electricity Company5,200Study
Ras Abu Qamis power plantSaudi Electricity Company4,500Study
Ras al-Khair power plant: phase 2Saudi Electricity Company4,500Study
Yanbu power and desalination plant: phase 3Saline Water Conversion Corporation/Marafiq4,000Execution
Shuqaiq steam power plantSaudi Electricity Company3,500Execution
Duba IPP expansionSaudi Electricity Company3,300Design
Jeddah South power plantSaudi Electricity Company3,120Execution
IPP=Independent power plant. Source: MEED Projects

King Abdullah City for Atomic & Renewable Energy (KA-Care), the body set up in 2010 to lead the country’s activities in this area, estimates that total demand will reach 121GW by 2032, requiring at least an additional 50GW. According to state utility Saudi Electricity Company (SEC), which manages more than 51GW of installed capacity, peak demand will rise from the current 51.9GW to 85GW in 2020 and 120GW by 2030.

According to the Statistical Review of World Energy 2014, published by the UK’s BP, the kingdom was the 12th-largest consumer of total primary energy in 2013, at 9 quadrillion BTUs, despite a population of just 27 million.

Wasteful usage

The government’s dilemma is that it has expended significant resources in doubling electricity generating capacity over the past decade, but is still struggling to keep pace with demand. Without a sizeable reduction of excessive energy use – which is fuelled by low electricity prices that disincentivise efficient consumption – there will be a continued requirement for additional generation capacity.

Saudi power generation categories
ProducerNumber of plantsCapacity (MW)
Saudi Electricity Company  4651,525
Saline Water Conversion Corporation65,018
Jubail Water & Power Company12,875
Marafiq (Yanbu)11,589
Rabigh Electricity Company11,320
Shuaibah Water & Power Company11,191
Saudi Aramco61,189
Tihamah Power Generation Company41,083
Shuqaiq Water & Electricity Company11,020
Arabian Rabigh Water & Electricity Company1600
Saudi Cement Company2223
Jubail Power Company1250
Aman Modern Energy Company359
Source: ECRA, 2013

On the plus side, there is at least a renewed focus on ensuring that future capacity expansions will leave a lower carbon footprint. Saudi Arabia has the Gulf’s biggest planned renewables programme, with Riyadh setting a target of producing 54GW of power through renewable energy projects by 2032. Nearly half of this this is to be commissioned by 2020.

Renewable energy

There is good reason for the kingdom to think more seriously about renewable energy, given that KA-Care forecasts that without alternative energy and energy conservation measures, overall demand for fossil fuels for power, industry, transport and desalination is estimated to grow from 3.4 million barrels of oil equivalent a day (boe/d) in 2010 to 8.3 million boe/d in 2028. That would exceed Saudi Arabia’s oil exports, transforming the world’s central bank of oil into a net importer; an unthinkable prospect for the kingdom.

However, hydrocarbons will remain a prime element in the likely energy mix through to 2032. KA-Care recommends supporting it with nuclear, solar, wind, waste-to-energy and geothermal. In the proposed mix, hydrocarbons would account for 60GW; nuclear 17.6GW; solar 41GW, of which 16GW will be generated through the use of photovoltaic technology (PV) and 25GW by concentrated solar power (CSP); wind 9GW; waste-to-energy 3GW; and geothermal 1GW. 

Under this scenario, nuclear, geothermal and waste-to-energy will provide the base load up to night-time demand during winter; PV energy will meet total daytime demand year round; CSP, with storage, will meet the maximum demand difference between PV and base load technologies; and hydrocarbons will meet the remaining demand.

Private power

SEC, meanwhile, will plough on with investment in new capacity and expanding transmission and distribution (T&D) networks. Private power is the cornerstone of this activity. Most recently, a consortium led by the local Acwa Power signed a $1.4bn agreement to finance, build and operate the 2,060MW Rabigh 2 independent power plant (IPP) in December 2013. SEC and Saudi Aramco are now planning several additional private power schemes; for example, a cogeneration plant at the Fadhili oil field in the Eastern Province, which will have a 1,300-1,500MW capacity and a steam production capacity of about 2.25 million pounds an hour. Aramco will be the offtaker for the steam, to power its planned 1 billion cubic-feet-a-day Fadhili gas plant, while SEC will be the offtaker for the produced electricity.

Not all IPP plans are rolling out smoothly, however. SEC was forced to drop plans to develop the 550MW Duba 1 integrated solar combined-cycle plant as an IPP this year, and is instead preparing to tender the scheme as a standard engineering, procurement and construction (EPC) contract.  

Nuclear stations

Nuclear power is due onstream via two plants initially to meet 2 per cent of electricity demand, rising to reach 20 per cent in 2030. Saudi Arabia aims to have two nuclear power stations established in 10 years, and two more each year until the total reaches 16. However, there are doubts about KA-Care’s entire programme as the body has fallen quiet over the past year and a half.

T&D opportunities are also in the offing, with SEC proving active in contract awards in 2014. The $3.4bn-worth of T&D contracts awarded in the first half of 2014 is 27 per cent higher than the $2.5bn-worth of T&D deals awarded for the whole of 2013.

Water consumption

Saudi Arabia’s water consumption is also high, with scarce natural supplies. The kingdom is forced to pump more than 1 billion cubic metres of desalinated seawater each year from Saline Water Conversion Corporation’s (SWCC’s) 30 desalination plants. Total water consumption is running at about 24 billion cubic metres a year (cm/y), but total renewable conventional water resources are only about 6 billion cm/y, according to estimates from Prince Mohamed bin Fahd University. Desalinated water consumption, at 1.26 billion cm/y, outpaces groundwater consumption, which is estimated at 1.03 billion cm/y.    

Some progress has been made in reducing water consumption. In 2007, the kingdom took the landmark step of changing its wheat production policy to substantially reduce usage by agriculture. The Grain Silos & Flour Mills Organisation was ordered to reduce domestic wheat purchase by 12.5 per cent a year until domestic production is phased out in 2016.  

Riyadh supply

Mindful that there would be a supply gap before the 1 million-cubic-metre-a-day Ras al-Khair desalination plant came online in 2014, the National Water Company (NWC) implemented the Riyadh Water Supply Enhancement Programme this year, which involved boring 43 deep wells around the city. Groundwater for the project was retrieved from the Al-Manjour aquifer and treated in small-scale plants.

Wastewater reuse, meanwhile, accounts for only 1 per cent of total supply, according to Arabian Gulf University, with 175 million cm/y being used in farming against total agricultural demand of 14.2 billion cm/y. But the kingdom’s major cities all have plans for increasing the use of treated sewage effluent (TSE), which means major investment in wastewater treatment facilities and distribution pipelines.

NWC is looking to expand wastewater provision. By the end of 2014, it aims to begin providing water and wastewater services for Medina, Dammam and Al-Khobar, which will involve servicing a total population of 2.2 million and a drinking water supply of 809,000 cubic metres a day.

PPP programme

The company has this year invited consultants to submit bids for the contract to provide transaction advisory services for its planned public-private partnership programme, which will undertake projects in the water and wastewater sectors. The projects are part of the kingdom’s efforts to boost capacity to meet rising residential and industrial demand for water. Saudi Arabia will account for 40 per cent of the forecast additional 2,233MIGD of desalination capacity required in the GCC by 2020, according to MEED’s specialist research arm MEED Insight.

In April, SWCC invited companies to submit bids for the contract to expand the 85MIGD desalination component of the Shoaiba 2 plant south of Jeddah. The work will involve fitting a multi-effect distillation expansion unit to increase the capacity of the plant by 16MIGD. New desalination plants are planned at Haql 3, Duba 4 and Al-Wajh 4, each of which will have a 2MIGD capacity. Contractor bids were expected to be submitted during November 2014.

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