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 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.

SECTOR PLAYERS: Generation and production have been separated from transmission and distribution within the sector. Responsible for the latter is the Qatar General Electricity and Water Corporation, known as Kahramaa, founded in 2000 as the sole transmission and distribution system owner, purchaser and operator for electricity and water.

On the generation and production side, a range of private sector independent water and power projects (IWPPs) and IPPs are selling to Kahramaa, with the largest being the Qatar Electricity and Water Company (QEWC). Others include Ras Laffan Power Company (RLPC), Mesaieed Power Company (MP ower), Ras Girtas Power Company (RGPC) and Qatar Power Company (QP ower). These others are largely under the QEWC umbrella, however, as QEWC maintains majority or major stakes in all of them.

The IWPPs must then sell their electricity or water solely to Kahramaa, as a result of several exclusive power and water purchase agreements (PWPAs). These have 25-year lifespans – though are renewable for a possible further five years – and are designed on a take-or-pay basis. The construction, management and operation of wastewater and drainage systems is undertaken by Ashghal (the Public Works Authority), and under the country’s National Development Strategy 2011-16 there is provision for the establishment of an independent regulator for power and water. As of early 2015 efforts to establish a regulator were ongoing.

MERGING OVERSIGHT: A further body of importance is the Ministry of Environment, which regulates acceptable levels of emissions from power and water generating facilities, as well as assesses the other environmental impacts of utilities projects, such as sea disposal. While Kahramaa operates as an independent, commercial corporation, it is also financed by funds from the state budget, as well as from fees, revenues and returns from its investments. Its present structure has evolved from the privatisation and reorganisation of the electricity and water sector undertaken through Emiri Law No. 10. Previously, both utilities had come under the Ministry of Energy and Water and then the Ministry of Energy and Industry (MEI), first as separate departments and then as a unified section. This unification was largely in recognition that water production in Qatar is primarily the result of desalination projects, with these requiring large amounts of power.

In 2000 the MEI handed over its utilities to the newly incorporated Kahramaa. Two years later, Kahramaa outsourced the electricity generation and water desalination plants in its portfolio to QEWC, which had been established in 1990 as the region’s first private sector power and water company, although the government of Qatar and its affiliates still own around 51% of its share capital, according to the company’s 2013 annual report. The first IWPP was the Ras Laffan A project, run by RLPC. Since then, other IWPPs have come in as the need for extra capacity has arisen. QEWC is granted an automatic stake in new sector projects and entities. For example, the firm owns a 60% stake in the $1bn-capital Nebras Power, which was launched in 2013 in partnership with the country’s foreign investment arm, Qatar Holding. The aim was to expand Qatar’s share of power and water projects abroad. Qatar Petroleum (QP), as the supplier of the main feedstock, natural gas, also ordinarily gets granted a stake in each IWPP. In early 2015 QEWC announced the possibility of further cooperation with QP for the construction of solar power plants in Qatar.

NEED FOR SPEED: The need for new capacity at home can be seen clearly in the 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, according to the World Bank. In 2013 the total was higher again, at $203.2bn. Meanwhile, the population has surged from 593,693 in total in 2000 (nationals and expatriates combined) to 1.75m in 2010, according to the World Bank. A second wave of short-term immigration then began, with population jumping to 2.27m 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 electricity generated grew by over a third between 2008 and 2012 alone, from 21,616 GWh to 34,788 GWh. Maximum demand also nearly doubled over the same period, from 3990 MW to 6255 MW. The number of customers billed averaged 6.2% annual growth over this period. In water, the rate of expansion was similar, with production up from 312m cu 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 KWh/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 in achieving 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.

ELECTRICITY: The second-largest utility company in the MENA region, QEWC had a 62% share in the country’s electricity market in 2013 – the last year for which full figures were available. This was on the basis of a 5432-MW generating capacity, out of a national generating capacity of around 8750 MW. According to reports from QEWC, the expected peak load on the grid – which occurs during the April-October period amidst skyrocketing demand for air conditioning – was approximately 6800 MW for the summer of 2014, meaning that Qatar had a surplus capacity of around 1950 MW.

The company’s generating facilities include the wholly owned and operated Ras Abu Fontas (A) plant, on the coast southeast of Doha, which produces 497 MW of power; Ras Abu Fontas (B), with 609 MW of capacity; Ras Abu Fontas (B1), with 376.5 MW; and Ras Abu Fontas (B2), with 567 MW. QEWC also has an 80% share in the RLPC, with a 750-MW capacity; a 55% share in QP ower (1025 MW); a 40% stake in MP ower (2007 MW); and a 45% share in RGPC (2730 MW). QEWC also wholly owns and operates two electricity sub-stations: Al Saliyah, with a 121-MW capacity, and Doha South Station, with 62 MW.

In addition, QEWC is also active internationally, holding 38.89% of the shares in AES Oasis, which indirectly controls 60% of the shares in AES Jordan, East Amman. The firm also has approximately 370 MW of generating capacity, in addition to a 15% stake in Oman’s Sur Power Project, a 2000-MW 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 Haul that will have a generating capacity of 2400 MW. Project implementation is due to begin in 2015 and finish in 2017. The tendering process received four expressions of interest, according to press reports at the time of the announcement, with a decision made – but not publicly announced – as of March 2015.

Also in early 2015 QEWC reported that it had reached QR1.53bn ($419.4m) 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, 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).

INDEPENDENT PRODUCERS: MP ower’s ownership is divided between QEWC, Japan’s Marubeni Corporation and Chubu Electric Power, and QP. The company was established in 2007, and has its plant at Mesaieed Industrial City, south of Doha. The combined-cycle gas turbine plant – the third IWPP to be launched in Qatar – was a $2.3bn project that was financed, in part, through the support of the Japan Bank for International Cooperation.

RGPC’s plant is the largest in Qatar and was established at a cost of around QR14bn ($3.84bn), according to QEWC press releases. Like RLPC’s plant, it is located in Ras Laffan Industrial City. In addition to the 45% stake held in the company by QEWC, QP has a 15% stake, GDF Suez 20%, Japan’s Mitsui 10%, and Chubu Electric Power and the Shikoku Corporation each have 5% stakes. QP ower, which also runs a plant at Ras Laffan Industrial City, started commercial production of power in May 2006, and followed with water output four months later, with full capacity reached in 2008. In addition to QEWC, shareholders include GDF Suez, with 40%, and Chubu, with 5%.

The IWPPs sell their power to Kahramaa, which owns and operates the transmission network. This has been growing fast under the Qatar Power Transmission System Expansion Programme (QPTSEP), which implemented Stage 2 of its 11th phase in 2014. According to the company’s website, by the fourth quarter of 2013, Kahramaa had some 240 substations in operation, up from 139 in 2008 and just 87 in 2000. In addition there were more than 10,000 distribution substations, with this total set to reach 12,000 by 2017. The Kahramaa figures also show 2670 km of transmission lines operational in the fourth quarter of 2013 – 1990 km of these being overhead lines (OHLs) – with the cable system consisting of 400/220/132/66/11-KV capacity.

TRANSMISSION: Some $6bn was invested in the transmission network between 2000 and 2008, with $9bn more from 2009-12, when Phase 10 of the QPTSEP began. In May 2014, Kahramaa reported that it had spent over QR60bn ($16.4bn) on the QPTSEP in the previous five years. Some QR7.7bn ($2.11bn) 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. It is expected that the roll-out of the upcoming phases will continue through 2015.

“The tenders for Kahramaa’s Phase 12 have recently been accepted,” Mostafa Al Guezeri, CEO of ABB, told OBG. “These include a number of substations, with each package containing two or three of these. Phase 13 is expected to be tendered in January 2015. Substations and automation technology present huge opportunities as Kahramaa continues to build upon the electricity network in the country.”

SUBSTATION CONSTRUCTION: Indeed, much of the expansion so far has also 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 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, 948.6 km of main and framework cable laying was commissioned, along with the dismantling of 43 km of OHLs, while a further 82.1 km of cable-laying was commissioned and 54.5 km of OHLs were dismantled in Stage 2.

Since 2009 Qatar has been hooked up to the GCC Interconnection Grid. This 220-KV line was upgraded to 400-KV 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.

TARIFF LAWS: 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 QR0.08-0.1 ($0.02-0.027)/KWh, while commercial rates were QR0.09-0.14 ($0.023-0.038)/KWh. The industrial rate was QR0.07 ($0.019)/KWh, while hotels paid from QR0.09-0.12 ($0.0247-0.033)/KWh.

These low rates are often cited as one of the main reasons why 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.

WATER: As a desert nation, Qatar has few naturally occurring water resources, with the rainfall averaging an annual peak in February of around 12.6 mm, 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 2256 ha in 1980 to 8312 by 1994, according to Global Water Intelligence, while a February 2013 article in The Edge, a business magazine, stated that there were some 45,000 ha of cultivated land in Qatar at the time of writing, including 1400 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 (see analysis). For now, however, desalination of seawater is the main process by which Qatar meets demand. With population and economic growth on the rise, demand has been surging. QEWC figures show that demand for water rising from 160m imperial gallons per day (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. The facility was nearing completion in early 2015 and will produce a further 36 MIGD when it comes on-line later in the years. The Dukhan desalination plant, another wholly QEWC facility, produces a further 2 MIGD. The RLPC facility, meanwhile, produces 40 MIGD, while QP ower’s plant produces 60 MIGD. RGPC’s facility also has the capacity to produce 63 MIGD. The giant new Facility D project should also see a major addition to Qatar’s desalinated water production, with the plant capable of producing some 130 MIGD. Alongside this, Kahramaa also signed contracts with Hyder Consulting back in 2012 for the design and construction of 31 reservoirs, which will be spread over 5-sq-km sites and each will be larger than the largest reservoirs ever built, with a combined capacity of approximately 3500 MIG. The project aims to provide Qatar with enough water for a population projected to reach about 3.4m by 2036. The storage in the reservoirs is designed to supply such a population for seven days, with each of the reservoirs linked via a 200-km system of continuous, large-diameter ring main pipelines, stretching from the north of the country to the south.

Tendering for several construction packages was held in mid-2014, with a series of financing deals announced later in the year for pipelines involving banks such as HSBC and Al Khaliji Commercial Bank, and construction giants, like Boom Construction Company, CAT International Qatar and Al Jaber Engineering. As with electricity, the desalination facilities supply their water to Kahramaa, which then takes over the transport and distribution process. The corporation had some 2226 km of water pipelines at its disposal in 2000, with this grid expanding to 6789 km of primary and secondary distribution mains by 2012, according to Kahramaa reports.

RECYCLING: In addition to hydrocarbons-fuelled desalination plants, Qatar has also been looking into wastewater treatment facilities to boost output. Indeed, December 2014 saw the state tender for the third phase of its industrial wastewater scheme, with bids due at time of press. In this segment, Ashghal (the Public Works Authority) is the main institution, as it rolls out its master plan for Industrial Waste-water Management (MPIWM). The plan integrates wastewater from industrial sources with that from commercial operations. As of July 2014, Ashghal reported that Doha’s main industrial area at that time was sending its wastewater to septic tanks and then to the local Industrial Area Sewerage Treatment Plant (IASTW), or to the Al Karaana lagoons. The authority aimed to construct a 10,000-cu-meterper-day (cmd) plant next to the IASTW, a 12, 000-cmd facility now being expanded to a 30,000-cmd capacity. The second part of the plan’s second phase is due for completion in 2016 and should boost the total capacity at IASTW to 60,000 cmd. These developments address the current oversupply to the IASTW: Ashghal reported having to deal with some 14,500 cmd of sewerage flow in July 2014.

Another major Ashghal project in wastewater is the Doha North Sewage Treatment Works, located 22 km northwest of the capital. This giant facility – the first phase of which will have a 245,000-cmd average flow capacity, with future extensions up to 439,000 cmd by 2020 – is valued by Ashghal at some QR3.6bn ($987m). The facility was complete and undergoing tests as of early 2015.

The treated water will mainly be used for irrigation and other non-potable tasks, while the slurry will be used as an agricultural soil conditioner. The whole project, which is designed to serve Doha and neighbouring suburbs such as Lusail, will be completed in four phases, with each phase contracted to a different company under a design, build and operate model. Keppel Seghers has phase 1, which involves the design, construction and operation of the plant for 10 years; Vinci Construction Grands is in charge of phase 2, the construction of a pumping station with capacity to process 900,000 cu metres per day, among ancillary works; Ultra Construction and Engineering has phase 3, the development of the main sewage line complex, with some 32 km of pipe being laid; and Marubeni Corporation has phase 4, which will involve the building of a sewage pumping station for treating sewer effluent. Outside Doha too, at Mesaieed Industrial City and at Ras Laffan, there is a need for expansion of the existing wastewater treatment facilities as the oil and gas and petrochemicals sectors expand, with these also having to cope with hazardous and complex liquids. This expansion is being managed by QP, however, and lies outside Ashghal’s remit.

POWERING DOWN: At the same time as it expands capacity, Qatar has embarked on a campaign to try and reduce its per capita consumption rates. The Tarsheed programme has achieved some success in this regard. Launched in 2012, Kahramaa has announced that this initiative to boost public awareness has achieved some results, with per capita water consumption declining 10% alongside a drop in per capita electricity consumption to 6% by April 2014. The programme has a target of reducing electricity consumption by 20% by 2018. Yet with water also free to nationals and sold at low rates to non-nationals and businesses – a recent Global Water Market report claimed Qatar’s power and water tariffs averaged around 35% of the actual cost – there is some debate over whether such campaigns can be the only strand in a conservation strategy.

OUTLOOK: 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 doing so for some time to come. The state has so far 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 surefooted implementation.