Saudi Arabia Expects Annual Power Demand Growth to Fall to 4-5% in Coming Decade

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Researched by Industrial Info Resources (Sugar Land, Texas)--Saudi Electricity Company (SAU:5110) (SEC) (Riyadh, Saudi Arabia) President and CEO Ali Saleh al-Barrak said that as the power generation capacity of the country is enhanced by about 60% in the next 10 years, the growth in power demand would not remain at the current 8%. Al-Barrak said SEC expects demand growth to fall to between 7% and 8% in the next five years, and drop to between 4% and 5% between 2015 and 2020. Speaking at the sidelines of an industry event, al-Barak said that SEC plans to invest $80 billion to increase its installed power generation capacity from the existing 44,000 megawatts (MW) to at least 70,000 MW by 2020. Saudi Arabia's power demands are on the rise, as the country attempts to diversify from an oil-based economy and focus on building its infrastructure and heavy-industry sectors.

About 50% of SEC's installed capacity is fueled by crude oil, heavy fuel oil and diesel. The remaining 50% is gas-fired. Al-Barak said that if sufficient gas is available, SEC would use gas at all of the company's power plants. SEC projects currently in development include the combined-cycle 1,730-MW Riyadh Power Plant 11 (PP11), which is scheduled to be completed in 2013, and the 2,700-MW Ras Azzour integrated water and power project, which is expected to be completed by 2014. The conversion of the Al-Qurayyah simple-cycle power plant into a combined-cycle plant is under way and is scheduled to be completed by 2013.

Saudi Arabia's Minister of Water and Power, Abdullah al-Hussayen, said, "To meet demand at its current rates, which we hope would drop, we need about $133 billion for water and power by 2020. We expect this is what we need to meet demand, which rose more than 8% this year." He said that the private sector is contributing about $24 billion, or 30%, of SEC's $80 billion investment program.

Earlier this year, Chief Executive Khalid al-Falih of state-owned Saudi Arabian Oil Company (Saudi Aramco) (Dhahran, Saudi Arabia) said that oil available for export would drop by about 3 million barrels per day to less than 7 million barrels per day by 2028 if the kingdom's growth in power demand did not decline.

Among recent developments in Saudi Arabia's power sector, global conglomerate General Electric Company (NYSE:GE) (Fairfield, Connecticut) secured $700 million worth of contracts to supply power generation equipment and long-term services for the natural gas-fired Riyadh PP11. When fully completed in 2013, the power project is expected to account for 15% of the installed power generation capacity in the nation's central region. The 788-MW first phase of the project is scheduled to be operational from 2012. Riyadh PP11 is being set up at Dhuruma, about 80 kilometers west of Riyadh, and is expected to help the government meet the nation's growing industrial and residential power demand.

Al-Barrak said, "As the first gas turbine independent power plant for SEC, the Riyadh PP11 project reflects our strategy to engage the private sector in the development of new power plants and to adopt innovative energy technology to increase the efficiency of our power production."

The contract involves the supply of seven of GE's high-efficiency Frame 7FA gas turbines and two D11 steam turbines. The gas turbines feature advanced emissions-control technology in combination with dry low-NOx technology, which will help the nation meet its environmental goals. Equipment delivery is scheduled to begin in 2011. GE and SEC also signed a 20-year contractual services agreement, under which GE will supply spare parts and maintenance services for the gas turbines. GE also supplied equipment to Riyadh PP10 and the Al-Qurayyah projects.

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