Generation game

With huge swathes of the Arabian Peninsula still off-grid at a time when industrialisation and commercial development continues at a rampant pace, meeting electricity demand is critical to achieving the bold goals the Gulf nations have set for themselves.

Large scale power plants generating several hundred MW output have traditionally been favoured by state utility providers, with gas turbine and combined cycle power plants dominating orders.

However, a more pragmatic and fragmented solution looks set to take the region by storm in the coming years.

As new developments continue to spring up across the Gulf, the need to transmit electricity to service these master plan communities, often over many miles, is growing.

This also adds cost to the end-user as capex is required not only for the transmission lines but also substation upgrades, and there are technical and efficiency losses on both.

Added to this, space for such mega power plants is beginning to look better utilised for residential or commercial space.

With land at a premium and demand growing apace, choosing more creative and scalable power plants may prove the right move for countries in the Middle East.

Turbine focus

Gas turbines can operate on either gaseous or liquid fuels. Pipeline natural gas is the fuel of choice because of historically low and relatively stable prices, deliverability and low air emissions.

Distillate fuel oil can be used as a backup fuel, however, its use for this purpose has become less common in recent years because of additional emissions of sulfur oxides and increased turbine maintenance associated with fuel oil operation.

Because of high thermal efficiency, low initial cost, high reliability, relatively low gas prices and low air emissions, combined-cycle gas turbines have been the new resource of choice for bulk power generation in the west for well over a decade.

Gas turbine power plants are an increasingly important element of the regional power system here in the Middle East too. Proximity to natural gas resources is the key factor behind the explosion in popularity of these plants.

However, the security of supply of natural gas is already being thrown into question. In September, Oman Oil and Gas Minister Mohammad Al-Rumhy said that, despite the delayed arrival of gas from the Dolphin Energy’s pipeline, the sultanate is still short of gas supplies to meet rapidly growing demand.

Abu-Dhabi-based Dolphin Energy will begin supplying 200 million cubic feet per day of gas from Qatar to Oman in November, but the flow will be insufficient to meet the “huge demand” from the market and Oman’s industrial complexes, said the minister.

In recent weeks a gas deal between Iran and the UAE’s Crescent Petroleum looked set to falter after Iran demanded a price hike in line with energy prices rises this year.

Issues associated with the development of combined-cycle capacity have tended to focus around uncertainties regarding the availability and price of natural gas, and it seems that the hydrocarbon rich Arabian Gulf states may not immune to supply issues after all.

Market watch

In spite of gas supply concerns, GE Energy has signed contracts totaling more than US $500 million to supply gas turbines and generators for power plant projects owned by Saudi Electricity Company (SEC). Demand for power is growing at an estimated 8 per cent per annum in Saudi Arabia.

In an agreement this year, GE Energy received a contract to supply gas turbine-generators for the 960 MW expansion of the Rabigh power plant in Rabigh City, on the west coast of Saudi Arabia. The project is part of SEC’s master plan initiative to provide additional power to support Saudi Arabia’s economic and population growth.

In addition to this mega-project, GE will supply Frame 7EA gas turbines for a 260 MW power plant in Jizan City, southern KSA, a 120 MW power plant in Qunfutha City, western KSA and for a 183 MW power project in Tabuk City, northwestern KSA.

“These projects are part of SEC’s on-going efforts to meet the region’s soaring power demand,” said Joseph Anis, GE Energy’s region executive for the Middle East. “Our capability to provide gas turbine technology with a short delivery cycle, plus the proven reliability of our gas turbine technology, were key factors in winning these contracts.”

In September Iraq confirmed that it had signed preliminary deals worth billions of dollars with GE and Siemens for gas turbine power plant equipment, which will almost double the embattled nation’s electricity generation capacity.

The deals are estimated to be worth a total of $7 billion to $8 billion, Iraq’s Electricity Minister Karim Waheed said.

Years of war, sanctions and neglect have battered Iraq’s power grid and the country suffers chronic power shortages. Baghdad receives only a few hours of electricity a day. The deals would mark a big step in the country’s reconstruction, Waheed said.

“These deals will help us to end the electricity supply problem by 2012,” the optimistic Waheed said.

Alternative route

Most of the electricity used in Dubai is generated by the Jebel Ali power plant complex, and at present the total output of this complex already exceeds 3500 MW.

In addition, the H Station power plant complex at Al-Awir will cover Dubai’s rising demand for electrical power in the future. The peak load power plants in H Station at Al-Awir will have a total capacity of about 2000 MW after the present expansion is complete. The power plants are situated on the outskirts of the city, about 20 km from Dubai Airport.

“The centralised state agencies in the UAE have so far preferred the very large, industrial frame gas turbine power plants. When DEWA adds power it tends to go for several thousand MW capacity at time,” explains Nomi Ahmad, regional director for Wärtsilä Gulf FZE.

“However, we think that decentralised power is an interesting alternative to consider, not just for the UAE, but for much of the Middle East region. If we look to Dubai as a case study, the shortfall of electricity supply meeting demand, combined with the scale of the mega real estate projects that have been announced will consume a huge amount of power, makes this a very important market sector to get right.”

With the question of how much available natural gas there will be in the years ahead, the fact that Wärtsilä’s power plant engines are capable of running on gas, light fuel oil or diesel, as well as heavy fuel oil offers a pragmatic solution says Ahmad.

“When your planning for a lifecycle of several decades, it could be a scenario of oil today, gas tomorrow, or vice versa, we are very much at ease in that kind of a situation with our dual fuel engines.”

Wärtsilä’s offering is a scalable power solution up to 350 MW comprised of either 9 MW or 16 MW units. “DEWA today does everything centralised through very big plants, and we’re hoping to convince them that they would be well served by having flexible generation closer to the load centre, so you don’t have to build transmission lines, which ultimately dampen efficiency.

New master plan developments and industrial areas are a perfect example of where this technology would be cost-effective and quick to install. For free zones too these engines offer a practical solution. “When a free zone opens on day one, it isn’t going to have all of its tenants in, so a 150 MW chunk could be installed, and six months later another 50 MW can be added, as and when demand dictates that necessary.

Large scale turbine electricity generation requires a huge capital outlay, and whilst the amount of power generated is substantial, it may not all be necessary when it comes on line.

“The problem with a 300 MW gas turbine in new development areas would be that it would be like driving a car in sixth gear away from the lights. Gas turbines like to run at full load. If they are cycled down or throttled back, the fuel efficiency and emissions both drop horribly,” says Ahmad.

The advantage of a scalable solution is that a 200MW plant may be comprised of ten engines, so when demand is low, several can just be turned off with the flick of a switch, and the remaining engines still run at full efficiency.

In addition, the Wärtsilä units are ideally suited to provide ancillary services which ensure the quality of power on the grid. “High part-load efficiency, under 10 minutes to full load, unlimited starts and stops, load following and zero water requirement for cooling all add to Wärtsilä’s operational flexibility.”

One application of reciprocating engines is district cooling combined with localised power generation, a useful tool in the Middle East. “What we have done in Europe is provide combined heat and power plants for district heating, where we can hit efficiencies over 90%.

We are promoting our solutions for combined decentralized power and district cooling and can clearly demonstrate that our solutions can be more efficient than the model currently being used by the likes of Tabreed and Palm Utilities.”

Ahmad says that by combining power generation with cooling, greater efficiencies can be realised. “For example, we could install a power plant in the parking garage of the Mall of the Emirates, out of sight, which could supply power for the entire shopping mall and the whole Barsha area, whilst providing the chilling for the mall.

That’s the concept that we will be launching in January at the World Future Energy Summit in Abu Dhabi, and it’s a solution that’s applicable for the entire region, and a timely one, given the pace of development.”

Being this close to the load centre means that power generation is much more efficient and that helps to dramatically reduce the carbon footprint. New master developments such as Dubai Sport City would be well served by this solution.

Developments tend to grow, and demand for power is likely to expand over time, so having a localised, scalable solution that can grow with demand ensures that costly project delays can be avoided.

Ongoing confusion over utilities provision for the landmark Nakheel development at Discovery Gardens in Dubai has already led to homeowners being stranded while developer blames utility provider, and utility provider blames developer.

Many investors have had their apartment held back several months after project completion and an embarrassing bout of mud-slinging has tarnished the hand over of the residential development. With scalable, localised power and cooling such debacles are far less likely.

Demand for the dual fuel engines is soaring, and Wärtsilä have had notable success this year. “We are looking at over half a billion dollars worth of orders in 2008 in the Middle East and we’re hoping to exceed that next year.” says Ahmad.

Wärtsilä is currently tendering for a project for rural electrification in Oman, meeting off grid needs with its duel-fuel engines solutions. “In Saudi Arabia we have around a 65% market share of self generation for the cement industry, which are all remote industrial locations, and typically off-grid.”

Hot market

At the moment the only thing curtailing more business for most power generation companies in the Middle East is the availability of finished products. The boom in demand is global, but the issue is accentuated in the Middle East because of the scale and pace of development.

Indeed, the entire scope of the power generation industry is bottlenecked by sub-suppliers and component manufacturers working flat-out to get goods to market.

“Across the entire region there is more demand than what we can supply. What we’re seeing in the market right now is that production of these engines is limited by the fact that manufacturers worldwide are working at full capacity with bulging order books. It’s a hot market so engines may not be available for up to year, or even more with some of our competitors.”

Which path?

Meeting power and district cooling needs is vital to the success of the region’s master plans. Meeting that demand in a more pragmatic and decentralised manner seems to offer a practical solution. World energy markets have proved unpredictable and highly volatile in 2008, and with demand world-wide for both natural gas and oil set to continue rising in the years ahead, a flexible solution does seem a safer bet.

With power plant lifecycles typically hitting 30 years, having a choice of feedstock offers both protection from market shocks and an adaptability.

Fast forward

If the huge power needs of the Gulf region are to be met, it is likely a combination, best-of-both-worlds, reciprocating engines plus turbine solution needs to be struck.

From Kuwait to Yemen, Saudi Arabia to Iran, the practical application of the best-fit solution is critical to continuing economic growth. Lights-out in the Middle East is not an option, so expect to see more reciprocating engine-based localised power plants springing up in a development near you.