GCC POWER MARKET

REPORT 2017
WRITTEN BY VENTURES ONSITE FOR
MIDDLE EAST ELECTRICITY

Produced by
 GCC POWER MARKET 2017

OVERVIEW OF THE GCC POWER MARKET

According to Arab Petroleum Investments Corporation (Apicorp), the GCC represents 47% or 148 GW of the current MENA power-generating capacity.
Factors such as population growth, urbanisation, improvements in income levels, industrialisation, and low electricity prices have led to a rise in the
GCC’s demand for energy. The region would require US$ 85 billion for the addition of 69 GW of generating capacity and another US$ 52 billion for
T&D over the next five years. The GCC power capacity needs to expand at an average annual pace of 8% between 2016 and 2020. Saudi Arabia (KSA)
leads the drive to make the necessary capacity additions by 2020 as the kingdom will need to invest US$ 71 billion to increase capacity to 114GW
(refer Table 1).
TABLE 1: REPRESENTS THE REQUIRED GCC INVESTMENT IN POWER FROM 2016 TO 2020

REQUIRED GCC INVESTMENT (2016-2020) GENERATION (US$ BN) T&D (US$ BN) TOTAL (US$ BN)
KSA 43 28 71
UAE 20 14 34
Kuwait 8 4 12
Qatar 6 3 9
Oman 6 2 8
Bahrain 2 1 3

Source: Apicorp Research

The structure of the electricity market has witnessed few changes over the past few years, but reforms are gradually picking up throughout the GCC.
Governments have increased water, electricity and fuel prices to ease the burden on state budgets, which are part of a broader programme that aims
to liberalise domestic energy prices over the medium-term.

The GCC governments are currently looking towards in¬dependent power producers (IPPs) to play an increasing role in power generation due to
plummeting oil prices (refer Figure 1 for IPP projects). The private sector will be responsible for adding more than 20 GW of generating capacity in
the GCC over the next five years. Dependency on IPPs is set to increase as governments have decreasing oil revenues. However, while private sector
involvement eases financial burden on the states, governments need to ensure that IPPs are not just a short-term solution to rising demand. According
to industry experts, the GCC countries are reforming their power sectors in order to allow competition at the generation level through the introduction
of IPPs, and to establish separation in their current single-buyer market to introduce more competition.

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FIGURE 1: REPRESENTS THE MAJOR IPP PROJECTS IN THE GCC

PROJECT NAME COUNTRY CLIENT EST VALUE (US$ MILLION)

Nuwaiseeb IPP Kuwait Ministry of Electricity & Water (MEW), Kuwait 2,500
Sohar 3 - Ibri Independent Power Plant (IPP) Oman Oman Power and Water Procurement Company 2,300
Shuqaiq IPP KSA Saudi Electricity Company (SEC) 2,000
Independent Power Project (IPP) at Addur - Phase 2 Bahrain Bahrain Ministry of Finance 2,000
Coal Fired Power Plant at Hassyan - Phase 1 UAE Dubai Electricity and Water Authority (DEWA) 1,800
Rabigh IPP Phase - 2 KSA Saudi Electricity Company (SEC) 1,559
Dubai Power Plant KSA Saudi Electricity Company (SEC) 1,150
Mohammed Bin Rashid Al Maktoum Solar Park - Phase 3 UAE Dubai Electricity and Water Authority (DEWA) 1,000
Salalah 2 IPP Oman Oman Power and Water Procurement Company 620
Sweihan IPP (PV) UAE Abu Dhabi Water and Electricity Authority (ADWEA) 550
Source: www.venturesonsite.com

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OVERVIEW OF THE GCC POWER MARKET

The members of the GCC are facing challenges to meet the growing
electricity demand and reduce the associated hydrocarbon emissions.
Recently, there has been a pressing need for a shift towards smart
power grids, as smart grids can reduce the stress on the grid, defer the
investments for upgrades, improve the power system efficiency, and
reduce emissions. The GCC countries are linked by a 1,200 km electrical
grid, built to help provide backup power in case of a blackout in one
part of the system. Expanded to other countries, that electricity highway
could be the backbone of future power trading. The existence of the GCC
grid, commonly known as the ‘back-bone’, will also provide opportunities
for the establishment of power plants close to resources thus giving
freedom for IPPs to select a strategic location, realising the potential in
dealing with a large size market, while facing minimal risks. DEWA has
adopted a comprehensive smart grid strategy, in adherence with the
Smart Dubai initiative.
development is for solar energy. UAE, KSA, and Kuwait are the biggest
solar markets in the MENA region.
The total GCC power construction contractor awards are forecast
to increase from US$ 22, 381 million in 2016 to US$ 25,523 million in
2017. The GCC countries are also set to invest US$ 252 billion over the
next five years on projects for setting up new power production plants,
distribution systems, and supply grids. KSA is expected to register
the highest contractor awards in 2016 and 2017 followed by the UAE
(refer Figure 2).
FIGURE 2: REPRESENTS THE GCC POWER CONSTRUCTION CONTRACTOR
AWARDS FROM 2016 TO 2017
14,000
12,000

Value in US$ Million

10,000
Currently, GCC government organisations and businesses are also
8,000
witnessing the benefits of renewables as a cost-effective and reliable
power source. The GCC countries have all targeted that 10% of the 6,000
power production comes from renewable sources of energy by 2020 4,000
and are rapidly moving towards realising this target. The key to 2,000
renewable energy development in the GCC region is solar power, as
it is the single most abundant renewable source of energy available. BAHRAIN KUWAIT OMAN KSA UAE QATAR
The topography of the region gives it immense solar energy potential 2016 1,485 2,044 3,186 8,089 5,577 2,000
throughout the year and benefits the space to develop large solar power 2017 2,102 2,902 3,653 12,349 4,049 450
plants. Almost 85 to 90% of the money spent on renewable energy
Source: www.venturesonsite.com

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INNOVATION IN
GCC POWER MARKET

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INNOVATION IN THE GCC POWER MARKET

A surge in electricity demand leads to innovation. The GCC

countries have been playing a critical role in the global shift
towards renewable energy. They have done so as investors
in major solar and wind power projects worldwide and also
by adopting innovative and increasingly cost-competitive
technologies in their own domestic markets. Accelerating
the growth of solar is the continued development of
innovative technologies and services that are further driving
down the cost of solar systems, offering the GCC countries a
more valuable and economically viable energy alternative to
conventional fossil fuels.

Among the GCC countries, the UAE’s Vision 2021 focuses on

fostering innovation in its power sector (renewable energy). As
a clear example, the recently announced Dubai Clean Energy
Strategy 2050 aims to provide 7% of Dubai’s energy from
clean energy sources by 2020, 25% by 2030, and ultimately
75% by 2050. This drive toward clean energy is complimented by Dubai’s
intent to become the world’s smartest city by 2017. The convergence of
clean energy and intelligent system demand will make Dubai an important
global location for deploying a number of energy system innovation.
Particularly interesting is the opportunity for distributed clean energy
generation. In Dubai and throughout the UAE, electricity price reforms
are underway that are supportive of distributed generation and Dubai
Clean Energy Strategy has a target for all rooftops in the city to produce
solar energy by 2030. One other very important example of UAE’s clean
energy project is Dubai’s Mohammed Bin Rashid Al Maktoum Solar Park.
Currently, space technology is used to support the renewable projects in
the UAE.
One of the most important steps towards improving electricity diversification
and conservation in the GCC is to develop smart grid and smart metering
roll-out under the overall umbrella of demand side management. It is
estimated that GCC countries can save up to US$ 10 billion in infrastructural
investment by 2020 through the use of smart grid, which optimises supply
and demand by using information technology to provide a two-way flow

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of real time information between power generation, grid operators and
consumers. DEWA is fully-prepared to turn this vision into reality through
new smart initiatives and services. DEWA invests heavily in innovation in
the field of renewable and clean energy technology. These are Shams
Dubai to connect solar power in homes and buildings to DEWA’s grid,
Smart Applications via Smart Meters and Grids, and the Green Charger to
build the infrastructure and electric-vehicle charging stations. The project
will include the construction of a model of a smart grid model at DEWA’s
headquarters, which will include solar panels, an energy storing system
(ESS) and integrated operating system. Korea Electric Power Corporation
(Kepco) and DEWA have additionally been cooperating in areas such
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as advanced metering infrastructure, ESS and automated
distribution systems.
Rapid developments have resulted in the availability of new
technologies in generation, transmission and distribution
of power. Additionally, the rising demand and high
dependence on reliable electricity supply has resulted in the
need for network configuration that supports the increase
of high voltage direct current (HVDC) technology, thereby
guaranteeing smart, reliable and flexible power transmission.
The Gulf Cooperation Council
Interconnection Authority (GCCIA) has commissioned the first
ever 400-kV super grid that connects the power network of
the GCC countries. In a bid to combat the risk of blackouts on
each national grid and share energy resources, GCCIA linked
the electrical power network of all its member states. GCCIA
promotes reliable, competitive and sustainable electrical
transmission services and the successful implementation of the GCC
smart grid project has brought to the foray suggestions focusing on the
interconnection of GCCIA to other regional and global grids. Implementing
a large interconnection across different continents will play a pivotal role in
enhancing the capabilities of the HVDC network and mitigating the power
outage issues. Enabling real-time decision-making, greater control and
remote monitoring, the switch to smart grid technology also facilitates the
growth and use of renewable power generation sources.
Apart from establishing a high voltage direct current (HVDC) network that
has the capability to transport and harness large amounts of electricity
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over long distances, is also looking at Building

Qatar General Electricity Integrated Photovoltaic
and Water Corporation (BIPV) technologies for
(Kahramaa) has forayed the FIFA World Cup 2022.
into multiple other
ventures simultaneously A major initiative of GE in
to strengthen its 2016 is the opening of the
transmission system, GE Kuwait Technology
including the installation Center, the first GE facility
of solar (PV) systems in of its kind to be located
the distribution grid and outside the United States.
introduction of smart Focused on the power
meters. generation sector, the
center will offer service
Qatar has set a benchmark and maintenance, and a
with its implementation platform for collaborative
of massive innovative research and innovation to
programmes in deploying address local challenges.
large solar power plants. The GCC has seen rapid growth in renewable During an event organised in partnership with the US embassy in Kuwait
energy generation and consumption, with Qatar leading the region, in June 2016, GE presented a number of cutting-edge technologies,
supported by innovative research and infrastructure development plans. including the GE Digital Power Plant, and high-efficiency combined cycle
Deployment of new renewable energy initiatives has ensured that the small power plant and clean and high-efficiency steam plant technologies from
Gulf country has become a primary producer of solar energy, enhancing its GE that can be used to help address Kuwait’s power needs. As Kuwait
sustainability drive. The Solar-Smart Grid project – an initiative of the Qatar focuses on expanding its power capacity, the introduction of digital
Foundation (QF) – is also the first commercial photovoltaic (PV) project industrial and advanced technology solutions — including opportunities
to be granted approval for grid connection from Kahramaa. According for fuel diversification — will serve as strong opportunity to meet the
to industry approximations, QF’s solar energy smart-grid-enabled growing demand for power in the country. GE provides technology that
systems generate up to 85% of Qatar’s total solar energy output. Qatar delivers nearly 37% of Kuwait’s power generation.

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SMART CITIES

Technological innovation throughout the ages

has continued to transform cities and way of life,
culminating in human feats like the industrial
revolution. Currently there is an emergence of
another potential revolution- the emergence of
smart cities. It is a revolution that the renewable
energy sector and GCC countries such as the
UAE, Qatar and KSA, stand as the front runners.

Currently, the ‘Smart City’ phenomenon

is a key focus area in GCC countries as
national governments and municipalities
look for new opportunities to reduce energy
consumption and improve the citizen
experience. By definition, Smart Cities focus
on enabling improved economic development,
sustainability, innovation, citizen engagement,
and the development of an ecosystem of
partners that work together to fundamentally change and improve the urban development. By adopting a more comprehensive approach,
quality of life for the city’s residents. According to industry experts, any smart cities allow city planners and managers to improve efficiency at the
push for smart city development needs to include citizen participation intersection of different infrastructure sectors, such as electricity.
and empowerment. With open innovation and ecosystems in the cities
increasingly coming to the forefront, strategies must be developed with As the GCC economies are under stress these days due to the oil prices,
an eye on understanding newer concepts of innovation and collaboration, which are a major source of revenue for the whole region, this gives a good
global innovation chains, transformative and reactive governance models, opportunity for providers solutions. In a period of economic slowdown,
and the crucial role of the citizen in shaping the direction of participatory the public sector and the private sector are looking for solutions that will

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impact positively the bottom line. In the GCC, the

trend of linking smart cities to the agenda of economic
diversification is fast gaining ground. Initiatives have
been taken in the GCC region, with three countries
announcing projects for future Smart Cities: six greenfield
economic cities in KSA (complemented by efforts to
uplift cities such as Mecca toward Smart City status);
three projects in Qatar (Lusail’s Smart and Sustainable
City, Pearl-Qatar Island, and Energy City Qatar); and
two projects in the UAE (Masdar City in Abu Dhabi and
Smart City Dubai). Dubai’s smart city strategy plans to
transform a thousand government services into smart
services. The project aims to encourage collaboration
between the public and private sectors to achieve
targets in six particular focus areas: Smart Life, Smart
Transportation, Smart Society, Smart Economy, Smart
Governance and Smart Environment.
The strategy will rely on three
basic principles – communication,
integration and cooperation. grids, particularly with DEWA. All their devices that are
Another important aspect of smart guiding, cutting and connecting electricity are connected to
cities is transportation, an area in the cloud. A number of initiatives including the development
which technology has advanced of ‘smart electrical grid’ to encourage owners of houses and
dramatically. The UAE is encouraging buildings in Dubai to use solar energy and sell the surplus to
the use of electric cars and building the government through the network itself , as well as “smart
the necessary infrastructure to meters” that contribute to rationalising the consumption of
support them. Schneider Electric electricity and water are being developed. The Dubai Plan
provides smart utilities and smart 2021 which plans to develop Dubai into a “smart, integrated

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and connected city” has a strong focus on energy sustainability and using
renewable energy sources. Adopting the Smart Cities plan within the new
housing projects in the GCC countries is aimed to rationalise energy usage
at large. The plans will be considered within the framework of the regional
structural plan, as well as each country’s vision for sustainable electricity
use. Various ministries in each of the GCC countries have been involved
in driving Smart City initiatives, whether as owners or active contributors
to national initiatives. In KSA, for example, the Ministry of Municipalities
and Rural Affairs (MoMRA) has initiated a national study to assess the
readiness of Saudi cities for Smart City deployment and developed a
national maturity model.
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There have been heavy investments across the GCC countries towards
smart city projects. Consulting firms such as IDC are heavily involved
in advising relevant authorities that are aiming to create Smart City
frameworks for various governmental and private organisations. Smart
Cities are expected to spark the energy revolution in the GCC. Therefore
with the rapid advancements in technology and the commitment of GCC
governments towards, we may soon be seeing several smart cities in the
GCC creating benchmarks for the cities worldwide. KSA, the UAE, and Qatar
are expected to witness a raft of successful Smart City implementations
emerge over the next couple of years.
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ANALYSIS OF THE
POWER MARKET FOR
EACH GCC COUNTRY
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UAE become economically attractive in the UAE. Increasing renewables to 10%

of the country’s total energy mix, and 25% of total power generation, could
The UAE boasts of one of the most advanced power generate annual savings of US$ 1.9 billion by 2030 by reducing fossil-fuel
sectors in the region - with the seven emirates given consumption and could lower energy costs.
control over their programmes
and strategies. UAE’s Vision 2021 Strengthening the drive to promote
was developed by the government renewable energy, the Dubai
to diversify the economy with a Electricity and Water Authority
focus on initiatives and projects (DEWA) had announced that it will
in renewable energy sector. The launch Concentrated Solar Power
UAE has the right regulatory (CSP) projects that will generate
environment to foster solar energy 1,000 megawatts by 2030. The
investments, which will help UAE has been financing over 30
achieve net zero energy buildings renewable energy projects worth
to support the nation’s sustainable US$ 840 million in 28 emerging
development goals. Both emirates countries under an ambitious
have ambitious initial targets: Abu funding programme launched six
Dhabi wants solar to account for years ago. DEWA is building three
7% of its output by 2020, while 132/11 kilovolt (kV) substations
Dubai is aiming for 5% by 2030. The with 45 km of high-voltage (132kV)
UAE firmly believes that meeting cables in support of the Expo 2020
the world’s growing energy expected to be ready by 2017. The
demand requires a mix of energy total cost of the electricity projects
sources, where they build on their existing assets of conventional energy, will be US$ 114.318 million. To emphasise its commitment to sustainability,
complementing them with alternative sources. By using multiple sources one of the main pillars of the Expo 2020, DEWA has also assigned a large
of energy such as natural gas, nuclear and solar, UAE is delivering both part of the budget to clean-energy-related projects in support of the Dubai
base-load generating capacity and the ability to meet peak power demand Clean Energy Strategy 2050, launched by His Highness Sheikh Mohammed,
efficiently and cost effectively. According to IRENA, renewable energy has to provide 75% of Dubai’s total power output from clean energy by 2050.

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Most prominent of these one of Dewa’s most important

projects is the Mohammed bin projects, to help meet the
Rashid Al Maktoum solar park growing electricity demand.
and the Shams Dubai project
to encourage building owners As represented by DEWA, the
to install photovoltaic, panels UAE has been ranked first in
to generate electricity from MENA for getting electricity
solar energy and connect it to for the third consecutive year
DEWA’s grid. The Mohammed in a row and fourth globally,
bin Rashid Al Maktoum according to the World Bank’s
Solar Park will provide a Doing Business 2016 report.
dedicated supply of 100 MW DEWA has also allocated
of electricity to the Expo US$ 1.905 billion worth of
2020 to manage its energy investments for smart grids
requirements. DEWA has also development. The UAE relies
budgeted for research and on natural gas for 97% of its
development, and research power generation. However,
and innovation in renewable government-led initiatives will
energy. All these will promote have clean energy from solar
sustainable development in the UAE. DEWA has announced plans to build to nuclear and also less-polluting coal, making up just under a quarter of
64 new power stations over the next three years at an investment of US$ the power mix in five years. In addition, smart applications, from meters
1.82 billion. These projects reflect UAE’s position as a global leader for to grids, are currently being installed throughout Dubai to monitor and
competitiveness in electricity. In August 2016, DEWA awarded a contract rationalise consumption. DEWA installed 200,000 smart meters in January
for the advisory services to develop the fourth phase of the Aweer Power 2016 with the goal to have over 1 million by 2020. Nakheel has recently
Station ‘H’, worth US$ 6 million. The project aims to test, supply, and floated a tender for the construction of substations at Deira Islands and
install three gas turbines with a total capacity of 700 megawatts (MW). The Jumeirah Village Triangle in Dubai. The scope of work at Deira Islands
first turbine will be operational by January 1, 2020, the second on March includes the complete design, construction, supply and installation of a
1, 2020, and the third on April 30, 2020.The power station is deemed as new 132/11kV substation in addition to supplying and erecting equipment

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as well as testing, commissioning and handover to DEWA. The deadline
for tender submissions is 14th November, 2016.
According to the Emirates Nuclear Energy Corporation (Enec), work is
progressing well on the Barakah nuclear power project in Abu Dhabi, UAE,
with about 70% of the construction completed at all the four units of the
plant. The UAE’s nuclear energy programme will provide approximately
25% of the UAE’s electricity needs and save up to 12 million tons of
greenhouse gas emissions each year. By 2020, the UAE hopes to have
four of the 1400 MWe nuclear units running and producing electricity at
a quarter the cost of that from gas. It plans to export electricity to Gulf
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neighbours via the regional power grid.
According to reports, Dubai World Trade Centre (DWTC) is eyeing
programmes to power its assets through renewable sources. DWTC has
conducted a feasibility study to develop a programme for the deployment
of renewable energy across its real estate assets across Trade Centre and
Jebel Ali. Within the DWTC complex, the Dubai International Convention
and Exhibition Centre (DICEC) is planned to be the flagship asset that
will incorporate technologies to optimise solar power, as well as the
energy conservation methods that leverage the facility’s rooftops and
facades of the halls that are part of development’s long-term plans. The
solar panel is expected to generate 1,800MWh/year for
the requirements of 60 one-bedroom residential units.
The planned photovoltaic system is being designed
as a noiseless and environment-friendly platform. The
integral convention and exhibition assets in particular will
spearhead Dubai’s efforts to drive innovation and be the
future global benchmark for sustainability, as it is aligned
with Dubai’s master plan for a green future. Solar energy
is likely to assist the UAE in meeting its 2030 renewable
energy targets. Dubai Municipality has completed the
new US$ 5.7 million Pond Park project in Khawaneej-1.
Opening its doors to the public soon, the park is classified
as a sustainable development as it uses the solar energy to
provide all of its electricity needs.
The power construction contractor awards in the UAE are
expected to decrease from US$ 5,577 million in 2016 to
US$ 4,049 million in 2017.
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SAUDI ARABIA (KSA)

KSA will need investments worth US$ 133.3 billion in

electricity projects over the next 10 years to cope
with the rising power demand and wherein the private
sector is expected to take part. The country expects peak electricity to hit
90,000 megawatts (MW) in 2022. Currently, installed capacity is around
70,000 MW. SEC has agreed to invite private investors to participate in
creating an additional 5,400 MW of generating capacity. The projects may
be executed in phases. KSA’s economic reform plans for 2016 focus on
saving the government money by introducing public-private partnerships,
in which private firms would provide much of the financing for projects and
then operate them to earn profits. In June 2016, Saudi Electricity invited
expressions of interest from companies or consortiums around the world
in building two solar power plants at Al-Jouf and Rafha in the north of the
country.

An electricity grid to connecting KSA and Egypt are likely to operate at

full capacity before mid-2019. KSA plans to construct 16 nuclear power
reactors over the next 20 years at a cost of more than US$ 80 billion, with
the first reactor on line in 2022. However, there have been differences
over KSA’s solar ambitions, as there are concerns about the scale of the
project, its ownership, and the technology. Regulations governing the
development of the sector, long awaited by foreign investors who set up
offices in KSA in anticipation of huge, lucrative solar projects have still not
been approved. According to BMI research, a sustained period of lower
oil prices and the resultant fiscal pressures will curb KSA’s ambitious plans
to build nuclear and solar capacity and lead to a bigger focus on a smaller
number of strategically important power projects.
KSA’s energy consumption was expected to grow by 4% to 5% annually in
the next few years, reaching double its current level by 2030 if no efficiency
measures are taken. The government’s plans to meet the country’s growing
demand for power and increase focus on developing renewable energy
sources will be the major drivers behind the expansion in the market.
The kingdom is the biggest power market of all the GCC countries and
analysts forecast increased investment in utilities over the next ten years
and beyond, to meet rising demand from a growing population. Demand

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for electricity alone is KSA plans to generate 9.5

projected to double by GW of electricity from
2030, according to Business renewable energy by 2030.
Monitor Intelligence (BMI). The forthcoming launch of
KSA has to invest at least US$ King Salman’s Renewable
140 billion by 2020 to uplift Energy Initiative will allow
generating capacity from the private sector to buy
51.5 GW to 71 GW at Saudi and invest in the renewables
Electricity Company (SEC) energy sector. If the country
power stations, according deploys new power plants at
to the Electricity and a constant rate until 2023, an
Cogeneration Regulatory average of about 1,600 MW
Authority (ECRA). of new renewable energy
capacity per year would need
Renewable energy has to be built. With the rapid
gained momentum in KSA growth in Saudi electricity
following the announcement consumption, the target
of a three-year feasibility would only translate to a
study to construct nuclear renewable-energy share of
reactors at a cost of US$ 7.5 billion in partnership with South Korea. roughly 5% of the country’s total electricity consumption. With its abundant
This initiative is part of wider plans by the King Abdullah City for Atomic solar resource and regions with high wind speeds, KSA should in principle
and Renewable Energy (KACARE) to invest deeply in nuclear energy have no difficulty reaching and exceeding its target, if the political will
and renewables by 2032 in a bid to scale down heavy dependence on exists and a renewable-energy program is rigorously executed, according
hydrocarbons. Although KACARE announced last year that it was delaying to industry experts For the renewable energy sector, Saudi Vision 2030
its planned implementation of the kingdom’s energy mix by eight years to offers encouragement to potential power developers and other renewable
2040, it is still committed to building up to 41 GW of solar power plants energy industry participants.
and investing in an additional 21 GW of wind and geothermal power in
the next 25 years. This is expected to present unprecedented business KSA’s power construction contractor awards are expected to increase from
prospects for regional providers of specialised products and services. US$ 8,089 million in 2016 to US$ 12,349 million in 2017.

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OMAN

Subsidy provided by
the Omani government
towards the supply of
electricity to consumers
across the Sultanate is estimated to total
US$ 1,283 million during 2016. Based on
the government-owned Oman Power &
Water Procurement Company (OPWP),
the demand for power and water is
foreseen to grow by almost 9.5% until
2019. The rising demand for electricity
will require Oman’s power generation
capacity to grow at an annual rate of 9.6%
over the next five years and the country
will need to add 4.8GW capacity by 2020
(Apicorp estimates). The country needs
to add 4.8GW capacity by 2020 i.e., the power generation capacity in the capacity in rural areas in 2016 as a part of a countrywide-initiative aimed
country needs to grow at a year-on-year growth of 9.6% during 2015-2020 at addressing growing power demand in Oman.
in order to cater the growing need of electricity. The Oman Power and
Water Procurement Company (OPWP) had signed an agreement in 2016 There is no doubt Oman faces major energy challenges in the coming
to build two independent power plants in Ibri and Sohar which is expected decades as conventional fossil fuel resources dwindle and its young
to have a combined capacity of 3,219 MW. Currently, power firms in Oman population continues to grow rapidly. Oman will have to devise a long-
plan to invest around US$ 1,036 million for expanding and upgrading term strategy that considers adding alternative power generation sources
transmission and distribution networks in 2016 to expand and improve such as renewable energies, while also enhancing energy efficiency and
services by delivering more than 90% of its annual project budget for the improving demand-side management both on an individual and industrial
first time in the group’s history. Oman’s Rural Areas Electricity Company level. Oman has a nascent renewable energy sector, with several projects
will invest an estimated US$ 326 million to improve power generation making progress. However, increasing consumption of natural gas for new

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power projects has led the government to embrace renewable energy
projects, in line with the sultanate’s Vision 2020 economic diversification
plan. For example, Oman’s Rural Areas Electricity Company (RAECO) plans
to install 90 MW of renewable capacity by 2020. Oman is developing an
energy strategy that entails the production of 10% of its electricity needs
from renewable energy resources. In line with this target, there are now
several large-scale solar projects entering the pipeline, with more likely to
follow, according to BMI.
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Gulf Renewable Energy (GRE) Mena has joined hands with Oman
government-owned RAECO to develop a wind-based power project on
Masirah Island off the sultanate’s eastern seaboard. The proposed 1.7
MW capacity project is expected to be sultanate’s first commercial wind-
powered plant with an implementation timeframe that is set to precede
the much-anticipated 50 MW wind farm project planned at Thamrait in
Dhofar Governorate. The latter scheme, originally planned for launch
by 2017, is being jointly implemented by Raeco, a subsidiary of The
Electricity Holding Company (Nama Group)
and Masdar (an investment vehicle of the
Abu Dhabi government) at a cost of US$
125 million. Tenders will soon be floated
for a pair of hybrid photovoltaic and diesel-
based power plants at two locations within
Raeco’s sprawling jurisdiction.
According to industry experts, Oman
has been among the first in the region to
introduce Independent Power Plants (IPP)
with private involvement and across the
GCC such initiatives are set to be imperative.
With more projects on cards, more than 70%
of power generation in the country comes
from IPPs.
Oman plans to develop two major
power plants by 2022 within the main
interconnected system (MIS), which
GCC POWER MARKET 2017
 GCC POWER MARKET 2017

accounts for 90% of the nation’s total electricity

supply power plant. The Sultanate is expected
to issue a request for qualifications (RfQ) for the
new 800 MW IPP in Q3 2016. While an 800 MW
independent power plant (IPP) is expected to
come on stream in 2021, a mega project with a
capacity of 2,700 MW is planned to be operational
in 2022. Oman also plans to integrate renewables
in the power mix, contracts have already been
awarded for the 50MW Harweel wind farm. Like
the rest of the GCC, in the Sultanate OPWP
holds majority equity stakes in all IPPs and usually
offers 15-year power purchase agreements. The
2,700 MW power project will be tendered out
under a new procurement methodology, which
will come into play for the first time in 2017.
According to OPWP, this new methodology will
allow existing, out-of-contract plants to compete
for power generation licenses alongside bidders
for new power plants. Currently, the OPWP is
seeking bids from major consultants to conduct
a technical and economic study for setting up for the sultanate’s first commercial-scale solar energy-based power plant.
the first large-scale solar project in the sultanate. The winning consultancy Two locations in Dakhiliyah governorate - Adam and Manah - have been
will also help the company in the tendering process for the 200 MW identified as prospective sites for the establishment of a grid-connected
independent power project (IPP) project. The tendering process will be large-scale renewable energy scheme.
overseen by the OPWP in line with its mandate as the procurer of all
new power generation and related water desalination capacity. OPWP Oman’s power construction contractor awards are expected to increase
is now working on the first stages of tendering for consultancy services from US$ 3,186 million in 2016 to US$ 3,653 million in 2017.

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 GCC POWER MARKET 2017

KUWAIT

Significant changes are on the cards in the

Kuwaiti power sector as the government
attempts to spur investment into the country’s
ageing infrastructure. The government has earmarked US$
9.9 billion for infrastructure projects including power, and
progress is being made on greenfield thermal and renewable
projects. The energy ministry is aiming to double generating
and desalination capacity by 2017.

According to Apicorp, Kuwait’s electricity market has long

been closed to the private sector. The Ministry of Electricity
and Water (MEW) is responsible for generation, transmission
and distribution. Although the country has been slow to
reform its sector, progress is taking place as the country
looks to attract foreign investors. Kuwait is set to rely heavily
on IPPs in the medium term and already has big plans for
the next two years. Three projects are expected to be
awarded in 2017: the 1.5 GW Al-Zour North 2 IWPP, the Kuwait had abandoned its plans to build a nuclear plant. In August 2016,
1.5 GW Al-Khiran IWPP and the 280 MW Al-Abdaliya ISCC. Kuwait hopes Kuwait’s Ministry of Electricity and Water’s decision to not apply for a
to partner with international companies in a three-phase process, with United Nations license for the nuclear plant was based on studies showing
the goal of generating a total of 2,000 MW of renewable energy (15% of that the project is unfeasible and too costly. The ministry is likely to spend
its total energy needs) by 2030. The first phase will be a 70 MW energy money on solar energy and wind. Kuwait plans to build more power
park scheduled to be completed by 2016. This facility will be built on a stations between 2020 and 2030.
100-square-kilometre (39-square-mile) area in Shagaya, a desert zone 100
km (62 miles) west of Kuwait City, near the borders with Iraq and KSA. The According to RCREEE, Kuwait’s electricity consumption relies almost
second and third phases are projected to produce 930 MW and 1,000 MW, entirely on oil products and natural gas for power generation. Currently,
respectively. the country is facing important grid and capacity issues as well as rapidly

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 GCC POWER MARKET 2017

are eyeing 9,000 MW in

additional new capacity by
2020 to meet demand. Kuwait
is an emerging market and
serious about solar power.
Kuwait is planning to boost
production of electricity on
house roofs through model
pilot projects in 150 homes,
to be increased to 1,500 in a
later stage after 2018. Kuwait
offers attractive opportunities
for investment in renewable
energy. Promoting and
developing renewable
energy projects in Kuwait can
complement conventional
power and assist with power
generation especially during
peak demand periods. There
growing energy demand. As a response to these shortages, the Kuwaiti are three key benefits from
government is planning to increase generation capacity in the next fostering renewable energy in Kuwait. Independent Power Producers (IPP)
decades. Renewable energy is set to meet up to 15% of Kuwait’s electricity by-laws and Feed-in-Tariff schemes are being studied by the Ministry of
consumption needs by 2030. According to Oxford Business Group, Kuwait Electricity and Water. According to industry experts, one nuclear power
is working on facilitating the transfer of renewable energy techniques as plant could supply more than 60% of Kuwait’s power needs while the
well as providing applications and policies to tackle current challenges, largest solar station would supply just 3%.
mainly pollution and global warming. The government has earmarked US$
9.9 billion for infrastructure projects including power and progress is being Kuwait’s power construction contractor awards are expected to increase
made on greenfield thermal and renewable projects. Kuwaiti authorities from US$ 2,044 million in 2016 to US$ 2,920 million in 2017.

22 www.middleeastelectricity.com GCC POWER MARKET 2017

 GCC POWER MARKET 2017

BAHRAIN

Power-generation capacity in Bahrain

needs to be increased at the rate
of 6% a year to match the rising
demand, according Apicorp. Bahrain
has embarked on a new era of
modernisation and development of
the existing power infrastructure to meet the growing
demand due to rising population and upcoming
industrial projects. The government had announced
multi-billion dollar investments in the power sector
by 2020 and the private sector role remains crucial
in implementing the strategy especially at a time
when the public sector spending is squeezing due
to the persistent low oil prices. The private sector
is responsible for around 80% of the total electricity
generation capacity and has been in the form of
Independent Power Production (IPP). The official
studies indicate that the involvement of the private
sector will reduce the public exchequer bill, in form of
salaries of the staff, low expenditures on maintenance
side while bringing more efficiency through an open
competition. Station was inaugurated by His Royal Highness Prime Minister Prince
Khalifa bin Salman Al Khalifa on 11th May 2016. This was one of the vital
Bahrain launched a major 400 kV electricity transmission line aimed projects implemented by the Electricity and Water Authority. The next
at reducing short circuits and ensuring transfer of electricity from the few years will see three major electricity transfer stations also being built.
production plants to load centres across the kingdom. The US$ 474 million The project aims to meet all the needs of development and facilitate the
project, implemented by the German company Siemens at the Hidd Power exchange of electric power with the GCC network.

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 GCC POWER MARKET 2017

Bahrain, the smallest of the six GCC countries, aims to produce 5% of its generation plants potentially reduces the appeal of new solar projects for
energy from renewables by 2030. The country’s energy resources are limited, private investors.
and its domestic oil production is estimated at only 30,000 barrels per day.
According to IRENA, Bahrain plans to build a 500 MW concentrated-solar- Bahrain will force owners of homes and buildings to use renewable energy
power plant, in addition sources in a bid to ensure
to small-scale hybrid all properties are 100%
power plants using solar dependent on renewable –
and wind. Bahrain is also particularly solar – energy.
developing renewable Owners will be introduced
energy sources to reduce to the alternative sources
its carbon emissions and of energy in stages starting
fuel input costs, with with the use of power from
hopes that the cost of the national electricity
solar infrastructure will grid generated through
eventually lower, making affordable solar panels set
it more cost-effective in homes and buildings.
in comparison to Traffic lights across Bahrain
subsidised conventional will also run on solar energy
utilities. Under the as part of a five-year plan
Kingdom’s blueprint for to incorporate alternative
social and economic energies into electricity
development, named and water production. The
Vision 2030, up to 7% of plan, which is scheduled to
its energy needs are to start in December 2020, will
be met by renewable sources within 15 years. The construction of the pilot include the building of the first government solar centre.
projects is expected to lay the groundwork for the renewable strategy. An
extended period of low hydrocarbon prices may, however, put pressure Bahrain’s power construction contractor awards are expected to increase
on renewable energy investments as cheap input costs for conventional from US$ 1,485 million in 2016 to US$ 2,102 million in 2017.

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 GCC POWER MARKET 2017

MAJOR GCC POWER

PROJECTS

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 GCC POWER MARKET 2017

MAJOR GCC ON-GOING AND PLANNED POWER PROJECTS

PROJECT NAME COUNTRY CLIENT EST VALUE (US$ MILLION)

Nuclear Power Plant in Abu Dhabi United Arab Emirates Emirates Nuclear Energy Corporation (ENEC) 28500
Mohammed Bin Rashid Al Maktoum Solar Park United Arab Emirates Dubai Electricity and Water Authority (DEWA) 14760
Al Zour North IWPP Kuwait Kuwait Authority for Partnership Projects (KAPP), Shamal Az 8387
Zour Al Oula KSC, Ministry of Electricity & Water (MEW), Kuwait
Shagaya Renewable Energy Complex Kuwait Ministry of Electricity & Water (MEW), Kuwait,Kuwait Institute 5610
for Scientific Research (KISR)
Facility D - IWPP (Umm Al Houl Power Plant) Qatar Qatar General Electricity & Water Corporation (Kahramaa), 3150
Tokyo Electric Power Company, Incorporated (TEPCO),
Mitsubishi Corporation, Qatar
Yanbu Power and Desalination Plant - Phase 3 Saudi Arabia The Power & Water Utilities Company for Jubail & Yanbu 3000
(Marafiq), Saline Water Conversion Corporation (SWCC)
Facility E - IWPP Qatar Qatar General Electricity & Water Corporation (Kahramaa) 3000
Coal-Fired Power Plant for Northern Emirates United Arab Emirates Federal Electricity & Water Authority (FEWA) 3000
Nuwaiseeb IPP Kuwait Ministry of Electricity & Water (MEW), Kuwait 2500
2200 MW Power Plant in Northern Emirates United Arab Emirates Federal Electricity & Water Authority (FEWA) 2500
Sohar 3 - Ibri Independent Power Plant (IPP) Oman Oman Power and Water Procurement Company 2300
Qatar Power Transmission System Expansion - Phase 13 Qatar Qatar General Electricity & Water Corporation (Kahramaa) 2274
Shuqaiq IPP Saudi Arabia Saudi Electricity Company (SEC) 2000
Independent Power and Water Project (IWPP) Bahrain Bahrain Ministry of Finance,Ministry of Electricity & Water, 2000
at Al Dur - Phase 2 Bahrain
PP15-Combined Cycle Power Plant Saudi Arabia Saudi Electricity Company (SEC) 2000
Source: www.venturesonsite.com

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 GCC POWER MARKET 2017

FUTURE OUTLOOK

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 GCC POWER MARKET 2017
GCC POWER - WHAT NEXT?
The GCC will require as much as US$ 316 billion by 2020 to meet its
growing power needs (The Arab Petroleum Investment Corporation
estimates). According to industry experts, realising the financial burden the
GCC countries are currently and potentially experiencing to meet power
demands, the GCC countries (with the exception of Kuwait) have embarked
on unbundling their power sectors into separate generation, transmission
and distribution segments – thus providing opportunity for these business
segments to focus on their core business, and also encouraging capital
investments from the private sector. Reform efforts in most of the GCC
countries are limited to opening up the power sector for private investment
in generation, transmission and distribution, however, much consideration
is being given by the GCC governments, with Oman leading the way, by
implementing laws to facilitate reform. The introduction of IPPs in the GCC
has been instrumental in meeting rapidly rising electricity demand. Oman
was the first country to open up its power-generating sector. Currently,
IPPs represent the majority of new capacity and continue to replace
government power plants. Therefore, IPPs will continue to be at the
forefront of GCC governments’ strategies to add generating capacities.
With an increasingly demanding population and spiraling rates of power
consumption, the need for sustainable and renewable sources of energy
is expected to garner more importance in the coming years. The solar
technology is approaching towards grid parity. With further advancement
in technology, reduction of prices, clean technology, solar power is going to
experience phenomenal growth and could be most likely preferred source
of energy in the future. A latest trend catching up in the GCC countries
is the ‘Smart Cities’ plan that are being considered in each country’s
vision for sustainable electricity use. Also, smart grids will form key to
28 www.middleeastelectricity.com
boosting power efficiency in the GCC as peak demand
increases in the coming years. New construction projects are likely to
incorporate new “smart” dimensions. Among the GCC, the UAE, KSA
and Qatar are leading in the forefront in the development of smart cities
projects, which is also likely to continue in the coming years.
According to Apicorp, the GCC governments will continue to cope well
with rising demand and energy-price reform will help temper demand
rises. Although GCC governments have announced budget deficits and
indicated that government expenditures will be tightened in response to
lower oil prices, investments in the power sector should not be affected
and will be given priority. 2016 will also see the rise of coal fired power
plants, but technologies are being developed in order to mitigate the
negative environmental impact from power generated by coal. This has
seen ACWA Power in KSA commit to exploring the power generating
market by building a coal fired power plant in Dubai to supply to the Expo
2020.
Therefore, the GCC power construction industry is expected to register
robust growth over the coming years with UAE, KSA and Kuwait being
attractive markets for opportunities for power plants in the future.
GCC POWER MARKET 2017
 GCC POWER MARKET 2017

ABOUT VENTURES ONSITE

A product by Ventures Middle East, Ventures ONSITE has been a market leader in tracking construction projects for more than 15 years.
The subscription-based service provides in-depth and up-to-date coverage of key Middle East and North African (MENA) construction
projects and information of companies and decision makers involved. In addition, Ventures ONSITE allows its users to convert the data
into statistical charts and graphs, making it a critical decision-support tool for individuals, companies and organisations that directly
or indirectly target the region’s construction industry.

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29 www.middleeastelectricity.com GCC POWER MARKET 2017