SEC to invest $100 billion in power projects

Saudi IPP Power Projects drive SEC investment in power generation, combined-cycle capacity, transmission and distribution, targeting 20,000 MW by 2018 and 70,000 MW by 2020 to meet industrial demand and grid reliability.

State-owned Saudi Electricity Company (SEC) has announced plans to invest $20 billion to generate more than 10,000 megawatts (MW) of power through six independent power producing (IPP) projects.

From 2002 to 2008, the growth of the oil sector provided a huge boost to the economy of Saudi Arabia. Today, however, the nation is facing a growing demand for power as it invests in heavy industry and infrastructure projects in an effort to move away from an economy that is largely based on oil revenues.

SEC's plans include an addition of 20,000 MW of power through 2018, and the company intends to invest an additional $80 billion to achieve this target. Of the total planned investment of $100 billion, about $46 billion will be used to generate power, $30 billion will be used for transmission upgrades across the kingdom, and $20 billion will be used for distribution.

The IPP projects that are scheduled for completion between 2013 and 2021 include the 1,000-MW plant at Dheba, the 2,000-MW Qurayyah plant, the 1,200-MW Rabigh plant, the 2,520-MW plant at Ras Azzour, the 2,000-MW plant at Riyadh, and the 800-MW plant at Shuqaiq.

Contracts for all the projects are expected to be awarded between 2010 and 2017.

According to Amer al-Swaha, head of the IPP program, five consortiums are gearing up to bid for the 2,000-MW Riyadh combined-cycle power project as bid analysis continues. These are:

• International Power plc with Korea Electric Power Corporation and Saudi Oger Limited.

• Al Jomaih and GDF Suez consortium.

• Acwa Power Projects with Mitsubishi Corporation and The Tokyo Electric Power Company.

• The Saudi Binladin Group with Sumitomo Corporation and Tenaga Nasional Berhad.

• Kansai Electric Power Company with Marubeni Corporation and The Saudi Masader Company.

The Riyadh IPP project is expected to cost $2 billion to $2.5 billion, and is set for commercial operations starting in 2012. Among the other projects, tenders for the 2,000-MW Qurayyah plant are to be issued in early 2010 as SEC invites bids for a 2,000 MW plant under its program, and the project is set to be operational starting in 2014. The project cost of the Qurayyah plant has been estimated to cost $3 billion to $3.5 billion.

SEC currently generates 37,000 MW of power from 45 plants and plans to double generation by 2020 through capacity expansions. A few older plants are likely to be retired between 2009 and 2015. Gas is used to fire about 40% of the existing plants, while heavy fuel oil is used to fire about 60%. According to Swaha, the country is also considering the feasibility of setting up a 20- to 30-MW solar power plant.

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