Saudi Arabia cancels IPP plans for Duba 1

14 April 2014

Project will be tendered as a standard engineering, procurement and construction contract

Saudi Electricity Company (SEC) has dropped plans to develop the 550MW Duba 1 integrated solar combined-cycle (ISCC) plant as an independent power project (IPP), and is instead preparing to tender the scheme as a standard engineering, procurement and construction (EPC) contract.

The state utility company had invited developers to submit expressions of interest (EOIs) to develop the project as the country’s next IPP in January, but has now decided to instead appoint a contractor to build the facility.

According to sources in the kingdom, SEC was expected to issue tender documents for the EPC contract on 9 April, but this deadline has been missed and the client is currently working to tender the scheme as soon as possible. SEC has not publicly announced the switch in procurement for the project, and it is not yet clear why the client has decided to change the procurement model.

The Duba 1 ISCC is planned to run on a mix of natural gas and solar energy, and will have a total development cost of $600m. The planned commissioning date of the plant is 2017. SEC had previously appointed Germany’s Fichtner as technical consultant, and had awarded a contract to the local law office of Mohanned al-Rasheed, in partnership with the US’ Baker Botts, to provide legal consultancy services for the plant when it was planned as an IPP.

SEC is also planning to develop a second phase of the Duba scheme, Duba 2, which was also proposed as an IPP. It is currently unclear whether the second phase will remain an IPP, or will also be switched to an EPC deal. The proposed Dhuba 2 IPP will have a larger capacity of 1,800MW and an estimated budget of $2.7bn. The planned commissioning date for the Duba 2 IPP is 2018.

The scrapping of plans to develop Duba 1 as an IPP follows the signing of the final project agreements on the Rabigh 2 IPP in December 2013. On 25 December, the local Acwa Power completed the signing of the power purchase agreement (PPA) and project finance agreements for the $1.6bn Rabigh 2 scheme.

The power projects are part of the kingdom’s efforts to boost generating capacity in the coming years to cope with the expected rise in demand. In its 2012 annual report, SEC forecasts that peak demand will grow from the 51,900MW recorded in 2012 to 85,000MW in 2020 and 120,000MW by 2030.

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