Saudi Arabia issuing request for proposals (RFPs) for the Fadhili independent power project (IPP) is the latest sign that the kingdoms power market is set to offer a much more lucrative year than 2014.
After a busy period of awarding contracts for major power generation facilities between 2010 and 2013, Saudi Arabias power sector projects market recorded a significant slowdown in 2014 as tenders and decisions on new projects were delayed.
But the tendering of the Fadhili project following on the back of progress with Waad al-Shamal, Duba 1 and PP9 generation projects, has provided a welcome boost for the regions power sector. With peak power demand set to increase by more than 50 per cent by 2030, Riyadh knows that it cannot delay with major generation schemes. With no sign of progress with the countrys ambitious renewable energy programme anytime soon, conventional power plants will be required meet much of the future demand, and gas will play a significant part of this.
Progress with the delayed Fadhili power plant, which is being developed jointly by state oil major Saudi Aramco and state utility Saudi Electricity Company (SEC), shows the kingdoms commitment to gas. While Saudi Arabia has some of the largest oil reserves in the world, it is facing an increasing gas crunch for feedstock for power plants and industrial schemes, and Aramcos commitment to the Fadhili gas processing facility is testament to the priority Riyadh has placed on developing their own gas resources.
The fact the Fadhili power plant is being developed as an IPP shows that Saudi Arabias largest state companies are keeping an increasingly close eye on the balance sheet and managing costs.