Hydrocarbons-poor Syria will need to invest up to $8bn in increasing power generation capacity and a further $4bn in transmission and distribution projects over the next decade
With its state-dominated economy, Syria would not be an obvious candidate to pursue IPPs. However, 2010 has seen the government invite private investors to develop new generating capacity for the first time in a move aimed at averting electricity shortages over the next 10 years. Like other countries in the region, Damascus sees the benefits in allowing the private sector to contribute to the growing demand for electricity.
Increasing investment and capacity in the power sector is a top priority for the government
Increasing investment and capacity in the power sector is a top priority for the government. Average peak demand growth is forecast at 4.5 per cent a year over the coming decade and the government estimates that annual production will have to rise by more than 50 per cent to 77,715 GWh in 2020 from 50,026 GWh in 2011. At the same time, some 2,500MW of existing capacity will have to be retired on account of age.
To meet the demand and replace the old capacity, Damascus will need to install about 7,000MW of new capacity over the next decade, according to its own forecasts. Of this, some 5,300MW is planned to be installed as base load capacity, 1,700MW as peaking plants and 120MW in the form of wind power.
|Syria power factfile, 2009|
|Installed generating capacity (MW)||8,359|
|Peak power demand (MW)||7,223|
|Growth in peak power demand (%)||6|
|Reserve power margin (%)||3|
|Number of power customers||4.6 million|
|Number of IPPs/IWPPs concluded||0|
|Additional capacity requirement by 2019 (MW)||7,120|
|Estimated cost of required capacity ($bn)||8.5|
|IPP=Independent power project; IWPP=Independent water and power project. Source: MEED Insight|
The country has managed to boost installed capacity in recent years, increasing it by 400MW to 8,359MW in 2009. However, available capacity is about 10 per cent below installed capacity at 7,500MW, meaning that Syria still remains prone to frequent power outages, compounded by high summer temperatures which decrease efficiency and increase the likelihood of network faults.
One reason for the discrepancy between installed and available capacity is age of existing infrastructure. Another is the fact that almost 20 per cent of installed capacity is hydroelectric, which has operated below capacity in recent years due to sporadic rainfall. At the same time, in recent years there have been extensive delays in awarding new power station contracts due to bureaucracy and a lack of finance.
To meet the capacity target over the coming decade, Damascus will need to invest an estimated $7-8bn in increasing power generation capacity and a further $3-4bn in transmission and distribution projects. With the government unable to bankroll such levels of investment, especially as its main source of revenue, oil production, is declining, it has turned to the private sector.
The government has established a PPP Unit, which is setting up separate ministerial teams to oversee projects in specific sectors, including power. However, for the first planned IPP in the programme, at Nassiriyeh, the Public Establishment for Electricity Generation & Transmission (PEEGT), which is part of the Electricity Ministry, is overseeing the project with the assistance of the World Bank’s International Financial Corporation.
Syria has already attracted some developer interest in IPP schemes. In 2009, PEEGT shortlisted two groups, Greece’s Terna GEK and a consortium of Kuwait-based Marafeq with Finland’s Wartsila, for the Nassiriyeh IPP.
More recently, in April 2010, Qatar Electricity & Water Company (QEWC) signed an agreement with state-owned Syrian Qatari Holdings (SQH), to jointly develop, build, finance and operate two 450MW IPPs, which are due to be commissioned in 2013.
The revised Nassiriyeh project will be competitively tendered. PEEGT intends to select a developer to design, finance, construct, operate and maintain the heavy fuel oil and/or gas-fired power plant with a planned capacity of 180-250MW at an existing site, some 60 kilometres from Damascus.
The IPP is part of a much wider restructuring of the electricity sector, which is aimed at improving efficiency, reducing large technical and non-technical losses, and delivering wind and solar projects for the first time. Renewables are a key facet of Syria’s energy strategy going forward given that its oil and gas output is declining and the prohibitive cost of imported fuel feedstocks.
A key element of the planned restructuring is the unbundling of existing generation and transmission assets into separate units under the Electricity Ministry and the establishment of a regulator. However, before any of this can be formalised, a new sector law, which is under preparation, will have to be enacted.
PEEGT also oversees the transmission system, which consists of 5,420km of 230kV overhead lines and 1,188km of 400kV lines, plus associated substations and transformers.
There are internal constraints within the 230kV transmission network, primarily due to limited transformer capacity in substations that are feeding major load centres. Some parts of the network are also unreliable due to the age of equipment. PEEGT is planning to expand the transmission network to reinforce the capacity. Major investments to rehabilitate the distribution networks will also be needed to reduce technical losses.