Country focus: A comprehensive round-up of Qatar’s energy projects
A projected increase in Qatar’s demand for electricity and water is certain to trigger massive investments in the Gulf state’s utility sector, despite a slowdown in public expenditure. Baset Asaba investigates
A rapidly expanding economy and growing population mean that demand for power and water from both industry and households in Qatar has never been greater. This trend is set to continue for some time to come, with an ambitious multibillion-dollar programme of infrastructure building in the lead-up to the 2022 FIFA World Cup, requiring more people, more electricity, and more water.
Thus, the pressure is on Qatar’s utilities sector to deliver by keeping pace with – and even getting ahead of – the rapid growth going on around it. At the same time, new demands for cleaner, more efficient and sustainable systems are making an impact, with implications for design and cost.
However, Qatar has some major advantages when it comes to overcoming these challenges. An abundant supply of natural gas connected to a modern processing system is one, while the country’s financial reserves are another. There is a continuing, planned commitment by the authorities and many international partners to make this dramatic expansion happen as seamlessly as possible.
A projected increase in Qatar’s demand for electricity and water will trigger massive investments in the Gulf state’s utility sector, despite a slowdown in public expenditure resulting from depressed oil prices.
Requirements for water and power in Qatar are expected to rise sharply in the coming years, with water demand forecast to increase by more than 50% by 2022.
The Qatar General Electricity and Water Corporation (Kahramaa) estimates that daily demand will rise to 482 million imperial gallons per day (MIGD) by that year, up from the present level of 308 MIGD. The surge in usage will also fuel demand for electricity, with the increase in water requirements to be met through desalination.
To address potential supply gaps, Kahramaa will roll out a series of projects over the next few years to strengthen the utilities infrastructure. The need for new capacity at home can be seen clearly in the gross domestic product (GDP) and population growth figures. At current prices, GDP was $17.76bn in 2000, more than doubling by 2005 to $44.5bn – a figure that almost tripled to $125.1bn in 2010, and hit $203.2bn in 2013, according to the World Bank.
Meanwhile, the population has surged from 593,693 in total in 2000 (nationals and expatriates combined), to 1.75 million in 2010, according to the World Bank. A second wave of short-term immigration then began, with the population jumping to 2.27 million in 2014.
With economic activity and the population growing at such rapid rates, demand for power and water has also grown exponentially. Figures from Kahramaa show that the electricity generated grew by more than a third between 2008 and 2012 alone, from 21,616 gigawatt hours (GWh) to 34,788GWh.
Maximum demand also nearly doubled over the same period, from 3990 megawatts (MW) to 6255MW. The number of customers billed averaged 6.2% annual growth during this period. In water, the rate of expansion was similar, with production up from 312 million cubic metres (mcm) to 437 mcm, while the number of customers went from 167,540 to 241,204, translating to 9.3% average annual growth.
This growth does not show signs of stopping. In 2013, Kahramaa statistics indicated the number of electricity customers rose to 293,604 from 288,903 in 2012, while between September 2013 and September 2014 maximum electricity load increased 12%, according to statements from the company in the local press. Per capita levels of electricity and water consumption have also set world records, with electricity usage per person at 43 kilowatt-hours (KWh) per day in September 2014 and water usage at 595 litres per day.
This presents Qatar with a major challenge in meeting new demand. Two main methods are being pursued to achieve this goal: an expansion and upgrade of the existing generation and desalination facilities, and a campaign to tackle energy and water consumption levels, bringing the per capita figures down to more sustainable levels.
The second-largest utility company in the Middle East and North Africa (MENA) region, Qatar Electricity and Water Corporation (QEWC), had a 62% share in the country’s electricity market in 2013 – the last year for which full figures are available. This was on the basis of a 5,432MW generating capacity, out of a national generating capacity of around 8750MW.
According to reports from QEWC, the expected peak load on the grid – which occurs during the period from April to October, amid skyrocketing demand for air conditioning – was approximately 6,800MW for the summer of 2014, meaning that Qatar had a surplus capacity of around 1,950MW.
The company’s generating facilities include the wholly owned and operated Ras Abu Fontas (A) plant, on the coast southeast of Doha, which produces 497MW of power; Ras Abu Fontas (B), with 609MW of capacity; Ras Abu Fontas (B1), with 376.5MW; and Ras Abu Fontas (B2), with 567MW. QEWC also has an 80% share in Ras Laffan Power Company (RLPC), with a 750MW capacity; a 55% share in QPower (1,025MW); a 40% stake in MPower (2,007MW); and a 45% share in RGPC (2,730MW). QEWC also wholly owns and operates two electricity sub-stations: Al Saliyah, with a 121MW capacity, and Doha South Station, with 62MW.
In addition, QEWC is also active internationally, holding 38.9% of the shares in AES Oasis, which indirectly controls 60% of the shares in AES Jordan, East Amman. The firm also has approximately 370MW of generating capacity, in addition to a 15% stake in Oman’s Sur Power Project, a 2,000MW initiative.
In July 2014, the company announced plans for the construction of a new power and water facility, known as Facility D, at Umm Al Houl, which will have a generating capacity of 2,500MW. The first phase of the $2.5bn Combined Cycle Power Plant project will commence commercial operations in three phases, the first phase of which was scheduled to be operational in Q1 of 2017.
The plant, with an installed capacity to fulfil around 23% of Qatar’s electricity needs and 26% of its water requirement, equalling 136 million gallons, will become fully operational by July 2018.
Last year, Siemens supplied the plant with six SGT5-4000F gas turbines, out of its scope that includes the supply of four steam turbines and 10 generators. The engineering giant has also signed a 25-year service agreement for the plant’s maintenance and servicing.
The plant will have the capacity to meet the power and water demand of about 2.5 million homes in the area, including Mesaieed, Al Wakra, and neighbouring areas. Also in early 2015, QEWC reported that it had reached $419.4m (QAR1.53bn) in net profits for 2014, up 11% over 2013.
RLPC, meanwhile, has its plant in Ras Laffan Industrial City, on the coast north of Doha, adjacent to the giant offshore North Field natural gas play. The $700m combined-cycle plant began generating power in 2003 and water in 2004.
RLPC was formed as a joint venture between AES Global of the US; QEWC; Qatar Petroleum (QP), which supplies gas and seawater for the attached desalination plant; and the Gulf Investment Corporation of Kuwait, according to a 2013 report from RLPC. QEWC subsequently bought AES’s stake, leaving the other two shareholders with 10% stakes each. The company also has an operations and management contract with Ras Laffan Operating Company (ROC).
Some $6bn was invested in the transmission network between 2000 and 2008, with $9bn more from 2009-12, when Phase 10 of the Qatar Power Transmission System Expansion Programme (QPTSEP) began. In May 2014, Kahramaa reported that it had spent more than $16.4bn (QAR60bn) on the QPTSEP in the previous five years.
Some $2.11bn (QAR7.7bn) of new contracts were then signed by Kahramaa for Phase 11, and additional contracts have been drafted since. These include a $108m high-voltage underground cable contract with Prysmian Group in June 2014, and a $253m gas-insulated switchgears (GIS) project with Siemens, which was inked in March 2014 and formed part of Stage 2 during the 11th phase.
Qatar, as part of its long-term investment plans for revamping and expanding its power sector, has earmarked more than $10bn, which includes projects in all stages, including those on hold but likely to be activated soon. The country’s peak demand in 2015 was around 7,000MW of electricity and 330 million gallons per day of water, which is expected to grow by 6-8%. And Qatar is yet to witness the all-time peak demand of utilities in the run-up to the 2022 FIFA World Cup preparations.
With the completion of ongoing projects, including the Umm Al Houl plant, the estimated installed capacity is expected to exceed around 11,000MW of electricity and 490 MIGD of water by the end of 2018.
Much of the expansion so far has been substation construction and upgrading, with the first stage of Phase 11 seeing 32 new substations commissioned, and 20 more set for development in Stage 2. These use GIS and smart-grid solutions, such as the installation of smart meters. These enable a much more effective monitoring of demand and supply, boosting efficiency in meeting customer needs and in billing. Smart meters are being installed that send GPS coordinates using fibre-optic cables, among other services.
Another area of major new investment is in high-voltage cables, with these being laid underground, often replacing old overhead lines (OHLs) at the sites of new infrastructure projects, including the Doha Metro, projects connected to the 2022 FIFA World Cup, and the new Hamad port. In the first stage, 948.6km of main and framework cable laying was commissioned, along with the dismantling of 43km of OHLs, while a further 82.1km of cable-laying was commissioned and 54.5km of OHLs were dismantled in Stage 2.
Since 2009 Qatar has been hooked up to the GCC Interconnection Grid. This 220 Kilovolt (kV) line was upgraded to 400kV capacity in 2013 and enables cross-border electricity trading among GCC members – an activity that occurred for the first time in 2010. The grid is managed by the GCC Interconnection Authority, headquartered in Saudi Arabia.
Tariffs are divided between residential, industrial, and other sector usage, with the former category further divided between national and foreign residents. Nationals receive their electricity and water for free, though non-locals must follow a different set of rules. According to the Kahramaa website, in January 2015, residential rates ranged from $0.02-0.027 (QAR0.08-0.1)/KWh, while commercial rates were $0.023-0.038 (QAR0.09-0.14)/KWh. The industrial rate was $0.019 (QAR0.07)/KWh, while hotels paid from $0.0247-0.033 (QAR0.09-0.12)/KWh.
These low rates are often cited as one of the main reasons per capita consumption is so high. Tariffs could possibly be increased to reduce overall consumption. Otherwise, incentives could be put into place to reduce individual and industrial consumption of electricity and water.
As a desert nation, Qatar has few naturally occurring water resources, with the rainfall averaging an annual peak in February of around 12.6mm, then falling to zero from June to October. The country’s ground water reservoirs also suffer from depletion and salination as seepage occurs from the peninsula’s surrounding seawater. Indeed, the latter process is accelerated by the former.
The main aquifer is in northern Qatar, with this mainly used for agriculture, which saw major expansion – the amount of cultivated land jumped from 2,256ha in 1980 to 8,312 by 1994, according to Global Water Intelligence, while a February 2013 article in The Edge, a business magazine, stated that there were some 45,000ha of cultivated land in Qatar at the time of writing, including 1,400 farms, as a result of the country’s food security programme.
Irrigation of this land using groundwater has meant a rapid depletion of this scarce resource, accelerating salination. Projects are now being investigated to look at injecting water into the ground to counter this process, with the ConcocoPhillips Global Water Sustainability Centre at the Qatar Science and Technology Park a leading light in this area internationally. For now, however, desalination of seawater is the main process by which Qatar meets water demand for domestic and municipal use.
QEWC figures show demand for water rising from 160 MIGD in 2007 to 338 MIGD in 2013. Total capacity at that time was 327-328 MIGD, indicating the need to boost output.
QEWC’s portfolio includes several water desalination plants, with many of its facilities producing both power and water. Thus, the Ras Abu Fontas (A) plant also produces 55 MIGD of water, while Ras Abu Fontas (B) produces 33 MIGD, and Ras Abu Fontas (B2) yields 30 MIGD. QEWC also has the Ras Abu Fontas (A1) plant, producing 45 MIGD.
In 2013, the company awarded a contract to a Mitsubishi/Toyo Thai Engineering consortium to construct the $500m Ras Abu Fontas (A2) plant, located in the same complex.
Qatar is geographically well-positioned to tap its tremendous solar energy potential and has set a target of 2% renewable energy contribution in the national energy mix by 2022. Qatar’s solar energy future is steadily developing. The state has set a benchmark with its implementation of massive innovative programmes in deploying large solar power plants.
The GCC has seen rapid growth in renewable energy generation and consumption, with Qatar leading the region, supported by innovative research and infrastructure development plans. Deployment of new renewable energy initiatives has ensured that the small Gulf country has become a primary producer of solar energy, enhancing its sustainability drive.
Being the most abundant and viable energy source, solar energy effectively addresses the increasing power requirements in the region. Kahramaa has targeted a generation capacity of 200MW through solar power by 2020.
A joint venture between QEWC and QP will start work on the largest solar power project in Qatar this year. Construction work on the 200MW solar power project will commence in June 2017 and it is expected to be fully operational by 2020. The project may also be expanded to a capacity of 500MW.
The project will be developed by Siraj Power, a joint venture of QEWC and QP. Siraj Power, which has a capital base of $500mn, is owned 60% by QEWC, while Qatar Petroleum owns the 40% balance.
With a string of sizeable infrastructure projects currently being executed or in the pipeline in the lead-up to the 2022 FIFA World Cup, Qatar’s demand for power and water looks set to continue to see dramatic growth in the years ahead. While in the long run, population growth will stabilise, there is clearly a need for major capacity expansion. Environmental challenges also add urgency to the need for the very latest technologies to be used, if power and water production is to be sustainable, in line with the government’s goals.
Qatar’s utilities sector is booming and is expected to continue to do so for some time to come. So far, the state has largely kept pace with developments, and has even secured an electricity generating surplus, with Kahramaa and QEWC, along with the Qatari government, able to take credit for some far-sighted planning and sure-footed implementation.