As population expansion in Qatar becomes more muted and economic growth decelerates, the urgency surrounding additional power and water demand has eased slightly. GDP growth, none the less, continues, and government bodies are working hard to ensure there is sufficient generation capacity and transmission infrastructure to support the smooth running of the 2022 FIFA World Cup, and the expansion and diversification of the country’s industrial sector. Recent developments in the power generation segment include the commissioning of the 2.5-GW Umm Al Houl plant and the launch of an 800-MW solar power plant at Al Karshaah.
Structure & Oversight
Until 1999 electricity generation and water production, as well as their distribution and transmission, were controlled by a single government body, the Ministry of Electricity and Water. As of that date, the faculties of the ministry were divided into the Qatar General Electricity and Water Corporation (Kahramaa) and the Qatar Electricity and Water Company (QEWC).
Kahramaa is a government corporation that is the sole purchaser of water and power from Qatar’s independent water and power producers (IWPPs), and is the body responsible for ownership and maintenance of the country’s water and electricity transmission and distribution systems. The corporation is self-regulated and manages the power sector based on directives from the minister of state for energy affairs, Saad Sheriba Al Kaabi. Al Kaabi is also the president and CEO of Qatar Petroleum, which is the sole provider of natural gas to the country’s power generation segment.
QEWC, meanwhile, is a publicly listed private company formed as part of the sector’s move towards privatisation in 1999, and is the largest player in Qatar’s power generation and water production segment. Approximately 60% of the company’s shares are owned by the government of Qatar and its affiliates, with the remaining 40% in the hands of private individuals and companies. As of 2019 the country’s electricity generation capacity totalled 10,590 MW and its water desalination capacity was 481.5m imperial gallons per day (MIGD).
QEWC is the sole owner and operator of seven facilities: Ras Abu Fontas A1, A2, A3 and Dukhan Plant are desalination facilities with a combined capacity of 119 MIGD; Ras Abu Fontas B1 is an open-cycle gas turbine plant with an electricity production capacity of 387 MW; and Ras Abu Fontas B and Ras Abu Fontas B2 are IWPPs with a combined capacity of 1176 MW and 63 MIGD. Additionally, the company holds majority shares in Ras Laffan Power, Qatar Power, Nebras Power, Umm Al Houl Power and Siraj Power; and minority shares in Mesaieed Power and Ras Girtas Power. Ras Girtas Power is the largest power generation project in the region, with a capacity of 2730 MW of electricity and 63 MIGD of desalinated water.
Size & Performance
Recent years have seen demand for power and water rise steadily in Qatar, in line with economic growth and population increases. According to Kahramaa, generated electricity grew by an average of 5.64% between 2013 and 2017, rising from 34,778 GWh in 2013 to 45,555 GWh in 2017. The amount of electricity actually transmitted grew by a slightly higher average rate of 5.84%, rising from 32,224 GWh in 2013 to 42,806 in 2017. Maximum or peak demand for electricity grew by an average of 4.8% during the same period, reaching 7855 MW in 2017 compared to 6000 MW in 2013. Water production over the same period grew by an average rate of 6.76% every year to reach 606m cu metres, with growth peaking at 8.21% in 2017. Growth in the number of water customers, meanwhile, averaged 5.67% over the five years.
While the impact of the 2017 blockade and a broader macroeconomic slowdown have decelerated overall economic growth, there are signs that Qatar’s development pipeline for the 2022 FIFA World Cup, as well as industrial diversification and local manufacturing growth are bringing about surges in electricity and water demand. According to data released by the Planning and Statistics Authority for the third quarter of 2019, water consumption in June 2019 was up 49% year-on-year (y-o-y), rising from 38.1m cu metres in June 2018 to 56.9m cu metres the following year. The y-o-y increase in electricity demand was sizeable but not quite as high, up 28% from 3845 GWh to 4907 GWh in June 2019.
Population growth, another key factor in utilities demand, appears to be tracking economic indicators in exiting a period of high growth. According to Qatar’s second National Development Strategy 2018-22 (NDS-2), published by the Ministry of Development, Planning and Statistics, the population grew by 44% in four years, rising from 1.8m in 2012 to 2.6m in 2016. Growth has been stable since 2016, at 2.64m by the end of 2017 and 2.67m by the end of 2018, for an average of 1.3% annually. As of January 2020 the population was 2.77m. This is forecast to grow through to the end of 2020 and then enter a period of decline from 2021 onwards, as World Cup construction projects begin to wrap up and expatriate construction workers leave. The strategy indicates that the population “may reach just over 2m in 2030”, an estimate that would require the population to decrease by an average of 2.8% annually.
Dheya Al Naimi, the head of strategic planning at Kahramaa, believes that, on balance, growth in demand for utilities will be maintained for the foreseeable future. “Qatar has seen extraordinary growth in electricity and water demand over the past 10 years. While I do not expect it to remain as high, projects like the World Cup, Mega Reservoirs and Qatar Rail will ensure demand growth stays robust in the near to-mid term,” Al Naimi told OBG.
IWPP
In order to keep up with growth in demand, a number of new plants across the country have been announced that will considerably increase water and electricity capacity. March 2019 saw the official opening of the Umm Al Houl gas power and desalination plant in Al Wakrah, 15 km south of Doha. The plant, which achieved its first fire in 2017, was built with a $3bn investment and has a capacity of 2.5 GW, meeting 30% of the country’s total electricity generation needs and 40% of its water needs. It is owned by Umm Al Houl Power, an IWPP established in 2015 and made up of QEWC, the Qatar Foundation, Qatar Petroleum, and K1 Energy, a joint venture of Japan’s Mitsubishi and JERA. Siemens signed a 25-year long-term service agreement for the plant.
Further capacity expansion is anticipated thanks to the Facility E IWPP, which will comprise a 2000-MW combined cycle power plant and a water desalination unit with a production capacity of 65 MIGD. The new integrated facility will be located at Ras Rakan in the Al Shamal district of Qatar. Since its announcement in July 2016, however, progress on the project has been slow: request-for-qualification documents were not issued until August 2017, while the request for proposals was delayed until August 29, 2019, with France’s Engie, Japan’s Itochu and PowerChina understood to be among the prequalified firms. Power and water from the site will be acquired via a 25-year power and water purchase agreement (PWPA) with Kahramaa.
In response to slow progress on the Facility E project, Kahramaa launched a project to expand Facility D in May 2019. The expansion is set to add 280,000 cu metres of capacity to the facility by expanding its reverse-osmosis component. Financial close of the $486.3m project took place on November 28, 2019, and the project is expected to begin commercial operations by 2021, producing up to 40% of Qatar’s water demand and 30% of its electricity needs. The plant has been envisaged as a short-term solution to bridge the supply gap caused by the delay to the Facility E plant, which is not expected to be operational before 2023. A 25-year PWPA was announced in May 2019, with the water tariff understood to be among the cheapest in the region; one suggestion indicated the price could be in the region of $0.90 per thousand imperial gallons. Just as with the first phase of Facility E, Samsung and Acciona will be responsible for engineering, procurement and construction of the project.
Grid Network
Kahramaa is carrying out a number of projects to improve its electricity transmission network by building electricity substations and implementing smart technology throughout its grid. The Advanced Metering Infrastructure project aims to make all of Qatar’s electricity meters smart meters by the end of 2020; by November 2019 more than 360,000 smart meters had been installed.
The metering project is part of the corporation’s vision to transform the country’s grid into a “secure, sustainable and digitally enabled grid” by 2026. Kahramaa has devised a smart grid roadmap in collaboration with the Texas A&M Engineering Experiment Station (TEES) and other departments of the university. Previous upgrades included a substation condition monitoring project, completed in 2018, which helped reduce faults by over 50% and achieve net savings of approximately $36m.
In May 2018 Texas A&M University signed a collaborative research agreement with Kahramaa to develop the country’s smart grid systems at the TEES Smart Grid Centre (SGC) and its extension in Qatar, known as SGC-Q. The deal aims to leverage computer-based remote control and automation to eventually create a platform for smart infrastructure across multiple sectors including water, telecommunications and transport.
In May 2019 Kahramaa announced it had signed two contracts worth a combined QR157.6m ($43.3m) for upgrades to its internal telecoms networks along with improvements to its national control centre and distribution control centre. Upgrades to the telecoms network will be carried out by Cegelec Qatar at a cost of QR95.6m ($26.3m), while Grid Solutions will carry out expansion and modification projects at the national control centre and distribution control centre at a cost of QR62m ($17m).
Kahramaa has also continued to build and renovate its network of substations, including those that will provide energy to stadia hosting the 2022 FIFA World Cup. In May 2019 the corporation announced the successful commissioning of Ras Abu Abboud 2, the last of five substations constructed specifically for the purpose of transmitting energy to World Cup stadia. The substation reportedly cost QR93m ($25.5m) of the QR800m ($219.7m) required to build all five of the World Cup substations. The previous substation completed was a QR138m ($37.9m) substation to feed the Al Bayt Stadium.
The private sector is also playing a role in supporting the research and development needed to realise a smart grid. In October 2019 US multinational GE launched a Smart Grid Lab in Doha. At a cost of $1m and a capacity of around 500 individuals per year, the lab will provide training in a number of growing tech niches like cybersecurity and smart cities but will have a core focus on energy-related issues, such as the integration of renewable energy, grid-management systems, energy-management systems and substation digitisation.
Renewables
In line with Qatar’s strategic interest in reducing natural gas consumption, and as a reflection of the decreasing cost of solar technology, the country’s first utility-scale solar power project is approaching kick-off. In January 2020 the country inked an agreement with a consortium consisting of France’s Total and Japan’s Marubeni. Built on a 10-sq-km plot in the Al Kharsaah district west of Doha, the 800-MW plant will provide as much as one-10th of Qatar’s peak energy demand when fully operational, and is expected to require investment totalling QR1.7bn ($466.9m).
Siraj Solar Energy, a joint-venture company established by Qatar Petroleum and QEWC in April 2017, will control 60% of the solar plant. Of the remaining 40% stake, Marubeni will control 51% and Total will take 49%. The project will be developed following a build-own-operate-transfer model, with the plant reverting to Kahramaa after 25 years. The first 350-MW tranche of the project is scheduled to come on-line in the first quarter of 2021, with full commercial operations of the 800-MW plant beginning in time for the 2022 FIFA World Cup.
Research and data-gathering on the suitability and performance of solar technology for Qatar’s weather conditions are ongoing, with the Qatar Environment and Energy Research Institute (QEERI) reported to have been testing 26 manufacturers’ models at a 35,000-sq-metre site since 2013. According to QEERI’s senior research director, Veronica Burmudez Benito, the impact of “high-UV, high-temperature, high-humidity, high-salinity and high-soiling” conditions has mostly not been taken into account in photovoltaic (PV) manufacturing thus far, and the research project fills an important gap in that sense. Being home to such harsh conditions, Qatar is looking to become a centre for solar PV research, expanding use of the green technology beyond the more temperate environments of Western Europe and North America where solar panels have been more widely implemented.
QEERI looked to commercialise its research operations with the 2018 establishment of the QEERI Solar Consortium, compromising Kahramaa and private sector players Q Cells, DSM, Total and Nice PV Research. Benito said the consortium’s functions would be two-fold. The first is conducting tests in harsh desert conditions and providing proprietary data for manufacturers and researchers; the second is carrying out research projects sharing the findings. The consortium is also looking to expand by bringing in fellow research groups, manufacturers, tool-makers and materials firms.
In other alternatives to hydrocarbons, the local research branch of Total announced projects investigating and developing clean energy solutions in November 2019, two of which centre on the potential of Qatari microalgae as biofuel and carbon-capture material. Total Research Centre Qatar’s director, Yousef Al Jaber, told local media that the centre would collaborate with Qatar University on the microalgae projects, while Hamad Bin Khalifa University’s Qatar Environment and Energy Research Institute would be its partner on another research project on exploring clean energy solutions.
At the opening of Qatar’s first solar-powered car-charging station in November 2019, the CEO and COO of Marubeni, Yoshiaki Yokota, told press that the company had announced a new strategy to double the ratio of power generated by renewable energy sources in its net power supply by 2023. Marubeni has been a long-term investor in Qatar’s power sector via the Mesaieed Power Company, a 2000-MW independent power project in which Qatar Petroleum is one of its key partners.
Waste Management
The agency responsible for constructing and maintaining the network of sewers and drains, in addition to distributing treated water and groundwater, is the Public Works Authority, also known as Ashghal. As outlined in the NDS-2, the country is seeking to improve the way it disposes of domestic and industrial waste, and has established the goal of recycling 15% of solid waste by 2022. As construction waste accounts for 70% to 80% of total solid waste, the development strategy aims to crush and recycle construction waste – which includes cement, brick and tile waste – to use as gravel. The plan also seeks to increase the recycling of household refuse, such as glass, paper, cardboard, metals, plastics, tyres, textiles and electronics.
In April 2019 Ashghal completed the main trunk sewer element of its Doha South Sewage Infrastructure Project, which is designed to accommodate population growth in Doha South by constructing seven lateral interceptor sewers with 24 km of microtunnels constructed using 170 deep shafts in areas around Doha. Ashghal has also been looking to subcontract works on its drainage system, issuing a tender for the operation, maintenance, rehabilitation, repair and replacement of its drainage assets in three catchment zones in March 2019. The 10-year tender contract is called the Drainage Catchment Zone Framework Contract and pertains to the catchment zones North, South and West.
In February 2019 QEWC’s annual report for the previous year indicated that a memorandum of understanding had been prepared between QEWC and the Ministry of Municipality and Environment to establish a specialised company that would produce electricity from waste. The projected capacity of the proposed project would be between 50 and 200 MW, though no further announcements had been made as of early 2020.
Outlook
The utilities sector is likely to see sustained demand growth and a stable pace for planned infrastructure development, even if GDP growth drips below the initial 2% forecasts for 2020-21 due to Covid-19. The Al Karshaah solar project will likely be the most closely watched project in the power sector, and coupled with potential PV developments at the QEERI facility, Qatar may transform into a world leader in solar technology. The timely progress of the Facility E IWPP and the Facility D expansion project will be key to ensuring the sector’s smooth running. With a focus on recycling outlined in the NDS-2, there is potential for the country to develop its waste-to-energy capacity. The smart metering project is expected to be completed on time by the end of 2020, while the attention drawn by the World Cup in 2022 will give extra momentum to public-facing projects such as the expansion of solar and conventional electric car-charging infrastructure.
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