The Gulf Co-operation Council (GCC) states – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) – represent Black & Veatch’s current focus in the Middle East. This is a fast-growing region. The demographic changes the GCC is going through – population growth, industrialisation and urban migration – are all stimulating demand for power. In Saudi Arabia, for example, it is forecast that power generation capacity needs to expand by an average of 9 percent until 2015.
It is important to recognise that the region is not homogenous – different states within the GCC have different needs. Some general trends exist, however. A major challenge is meeting businesses’ and peoples’ need for power in a manner that will not impede the generation of revenues through oil and gas exports. The need to reduce consumption of domestically sourced oil and gas has led to what Saeed Khorry, CEO of Emirates National Oil Company described as, “an era of responsibility.” A number of measures are being used to try and achieve this.
One such measure is the move to diversify feedstock portfolios for power generation. While oil and gas will be the primary feedstock for the foreseeable future, the role of others is growing significantly. Nuclear power is one of the options. Of the GCC states, UAE and Saudi Arabia have the most developed nuclear programmes. The UAE hopes to generate up to 25 percent of its electricity needs, 5.6GW, using nuclear power by 2020. Saudi Arabia has plans to build 16 nuclear power plants that will generate 17.6GW of power progressively to 2032.
There is also a substantial move toward renewable energy. The total value of renewables projects and master plans, either completed or under execution, in the GCC states is US$4.5 billion, split between $1 billion for hydro projects (all of which are in Saudi Arabia) and $3.5 billion for solar, according to figures from Meed Projects.
Dubai forecasts that solar photovoltaic or luminescent solar concentrator generation will account for 12 percent of its generation by 2030; Saudi Arabia has expressed a desire to achieve 30 percent of its energy needs through solar generation by 2032. Wind energy is also starting to receive serious attention.
Masdar, Abu Dhabi’s leading renewable energy company, has completed wind-mapping of the emirate and is now looking for suitable wind array locations. Dubai, which currently relies on imported liquid natural gas (LNG) as a feedstock, is also looking to coal. The emirate recently announced its first coal Independent Power Producer (IPP) project. Dubai’s Integrated Energy Strategy 2030 envisages coal accounting for 12 per cent of feedstock.
As well as diversifying feedstock, increasing generation efficiency is another way in which GCC states are looking to conserve oil reserves for export. Across the GCC there is increased interest in more efficient power generation technology. For example, Saudi Arabia’s average thermal efficiency in generation is around 30 to 35 percent. Converting the kingdom’s single-cycle plants to combined-cycle is estimated to increase thermal efficiency to 40 to 45 percent.
With energy demand in the GCC among the highest in the world, reducing consumption – while meeting consumers’ expectations and not affecting growth – is another way in which pressures upon fossil fuel reserves can be managed. We are seeing many initiatives aimed at cutting energy consumption. Air conditioning (AC), which accounts for about half of the GCC’s summer energy consumption, provides a good example of the approaches being taken to reduce energy use. Measures include legislation to improve buildings’ heat insulation, asking people to set the thermostat a degree lower, and a greater focus on AC units’ energy efficiency ratios.
In a further step to manage demand, January 2014 saw the GCC’s Electricity Cooperation Committee announced it was beginning to explore the possibility of implementing joint legal and legislative rules to strengthen rationalizing the consumption of water and electricity.
In an arid region such as the GCC, recognising that power and water are inextricably linked is crucial for reducing demands for both. Energy generation is water intensive and water services are energy intensive; cutting consumer demand for one will reduce consumption of the other.
This is important when customers in the GCC have some of the world’s highest per-capita demands for water as well as energy. This interdependency, or nexus, of energy and water is another driver for the use of more efficient generation technology. Combined cycle plants generate nearly 66 percent more energy per unit of water used compared to traditional gas-fired plants. So, by understanding the technology and the nexus of water and energy, you begin to see a virtuous circle with more efficient power generation coupled to a reduction in demand for water.
To ensure the sustainable provision of both precious resources, the integrated planning and delivery of energy and water infrastructure provides among the most efficient means to meet and manage demand. As a result, meeting governments’ objectives will increasingly require companies that have expertise in delivering both water and energy projects, and successfully combining insights from both.
In terms of infrastructure delivery, the independent sector is playing an increasing role in meeting many GCC states’ energy needs. The participation of IPPs and IWPPs is ushering in more alternative delivery approaches for infrastructure projects – various engineering, procurement, construction (EPC) models; and build, operate, transfer (BOT); and build-own-operate-transfer (BOOT) schemes – for example. Varying perspectives regarding lump sum, shared risk, cost reimbursable contract structures will also continue to evolve.
On projects in the GCC, we have served in multiple roles: from technology and contracting strategy selection to Owner’s Engineer and Lender’s Engineer to detailed design and project integrator to EPC. The main trend we see is the need for flexibility to help clients develop and deliver projects using the execution method best suited to meet their overall goals.
Across all client types and delivery models, we are seeing an increasing recognition in the GCC that the ability to meet demand in a sustainable manner requires technological innovation. As greater efficiency is sought in the delivery and operation of energy infrastructure, factors other than the least cost solution should be considered.
To reliably meet the region’s goals utilities, IPPs and IWPPs need partners with a world-class understanding of the energy technologies available. Such partners should be evaluated on their ability to deliver value – a combination of their expertise and solutions delivered at the most competitive price possible. To be effective, this expertise has to be coupled with the ability to identify the solution most suited to meeting local needs.
GCC states have made major investments in energy infrastructure during the last decade, and high levels of spending are forecast in order to meet growing demand. Asset creation, however, is only half the story. To deliver the levels of customer service and environmental performance that end-users and governments seek, GCC states’ infrastructure asset base needs to be managed effectively. We see this as a growth area.
PAS 55 is recognised around the world as the benchmark for asset management quality. Use of the specification in the GCC is growing. Abu Dhabi Distribution Company (ADDC) announced last year the appointment of Black & Veatch to help it achieve PAS 55 certification.
In a recent advance in the discipline of asset management, the International Organisation for Standardisation – commonly called the ISO – published ISO 5500X, the world’s first international suite of standards for asset management. We have commenced work on an asset management project to support ISO 55001 certification for Abu Dhabi Transmission & Despatch Company TRANSCO. We anticipate a growing demand for services which deliver effective asset management regimes, so utilities can ensure their investments deliver the performance desired in the long-term.
In addition to developing infrastructure, the GCC needs to develop people. Reliance on expatriate expertise to deliver and manage utility infrastructure is unsustainable. Knowledge transfer is now essential to a project’s success. For example, Black & Veatch’s PAS 55 work with ADDC includes the development of training and structures for the adoption of industry best practices. Knowledge transfer is an essential component of the overall programme.
Published originally on Black & Veatch Solutions.
