Saudi Arabia is considering reinstating the independent water and power producer (IWPP) model for its planned Jubail 3 cogeneration plant, having previously abandoned the model in 2007.

According to sources in the kingdom’s desalination sector, state utility Saline Water Conversion Corporation (SWCC) is considering reverting back to the model for its planned Jubail 3 project, which is planned to have desalination capacity of 1,500,000 cubic metres a day (cm/d) and a power generation capacity of 3,000MW.

According to sources within the kingdom, the government and SWCC are discussing plans to bring back the IWPP model, which would reduce pressure on government balance sheets as the oil price remains subdued.

The Jubail 3 project will have a significant capital expenditure (capex) cost due to its size. If implemented as planned, it would be the largest desalination facility in the kingdom, ahead of the 1,250,000 cm/d Ras al-Khair plant, which is currently under construction.

The Jubail plant would use a mix of thermal desalination and reverse osmosis (RO), with the technologies accounting for 70 per cent and 30 per cent of the total respectively. The project is currently under study, with SWCC having set a planned start date of 1 January 2017 for the project. The facility would take 4 years to complete, and would serve the capital Riyadh and cities in the Eastern Province.

Reverting back to the IWPP model would signal a significant shift in the kingdom’s policy for implementing desalination projects. Between 2000 and 2008, the majority of large scale desalination capacity was contracted from private firms under the IWPP model .

In this period, the Saudi Water & Electricity Company (WEC), in which SWCC holds a 50 per cent stake, concluded two IWPPs plus an expansion of the Shouaibah plant, while Marafiq delivered the Jubail IWPP. Including the captive plant on the PetroRabigh industrial complex, some 2.2 million cm/d of capacity has been contracted from the developer market, almost all in 20-year build-own-operate (BOO) contracts.

No new IWPPs have been awarded since 2007, with the kingdom’s desalination company moving back to the standard engineering, procurement and construction (EPC) model as a result of the 2009 collapse in the project finance. The shift led to the restructuring of the 1,250,00 cm/d Ras al-Khair scheme as an EPC project.

As with power, the kingdom faces considerable challenges on the desalination front. Demand is rising by about 6 per cent a year, as a result of annual population growth of 2-3 per cent and an expanding economy. Pressure on the sector is increased by the fact that water tariffs are among the lowest in the world, meaning that there is little incentive to curb consumption.

With most of the kingdom having average rainfall of just 60-100 millimetres a year, Saudi Arabia is heavily reliant on desalination, which accounts for more than 60 per cent of water supplies. The remainder comes from groundwater resources, which have been under increasing strain in recent years due to over-exploitation and declining quality. As a result, the government is intent on reducing the contribution of groundwater significantly through increased desalination, use of treated sewage effluent (TSE) and more efficient agricultural practices.

SWCC is planning to develop nine new desalination projects, including the Jubail 3 project, by 2021 to meet demand. These would add an additional 3 million cm/d of capacity to the kingdom’s desalination sector.