Middle East VOL . 13 ISSUE 08 AUGUST 2019 Download the free Utilities Middle East app and be the fi rst to read the latest issue on your mobile devices. Do th Ut M Ea and fi rst the iss you de INDUSTRY UPDATE P5 | ANALYSIS P09 | CONTRACTS P14 | SPECIAL REPORT P25 | PRODUCTS P40 UME talks with Jeremy Crane, CEO, Yellow Door Energy, about his company’s recent successes, and its place in the future of the Middle East’s solar industry DOOR TO SOLAR NUCLEAR PROMISE The case for investing in advanced nuclear reactors p09 MENA POWER MENA Power sector needs $209bn investments until 2023 p16 TESTING POWER A look at new trends in the electrical testing and certifi cation sector p25Learn more at new.abb.com Being able to automatically control your building not only adds flexibility to building management, it has a positive effect on efficiency, security and productivity too. With products and services such as movement detectors, harmonious lighting, door communication, automated heating, air-conditioning, ventilation and shutter management, ABB offers a range of possibilities to put building control firmly into your hands. ...in every situation. The right reaction comes automatically... — Smarter Building Inspiring automated environmentsCONTENTS www.utilities-me.com August 2019 / Utilities Middle East 3 August 2019 Volume 13 | Issue 08 Contents How Yellow Door Energy is driving solar uptake in the region with its leasing model Why has fi nancing for distributed power generation been such a disappointment? One explanation is that investors simply do not understand how scalable or economically viable distrib- uted power generation is. Industry actors have long argued that fi nancial systems are skewed, with the amount of fi nance directed towards distributed energy resources (DER), like mini-grids and stand-alone systems, remaining tiny in com- parison to investments in national grids. This is despite distributed energy technologies being the most economical solution to meet the needs of the majority of unconnected people by 2030, according to research. Early this year, Yellow Door Energy, a leading player in the Middle East’s distributed energy market, received a $65mn Series A round of funding from a group of international inves- tors. The funds will support the Dubai headquartered compa- ny’s planned expansion into new markets following its success in the past four years since its inception. It takes a lot of convincing for such a start-up to raise this kind of funding. But for Jeremy Crane, CEO of Yellow Door Energy, the fi rm’s consistency in successfully executing big projects was enough to convince fi nanciers. Crane attributes the lack of fi nancing for distributed power generation to the fact that few companies in this sector deliver large returns or have scaled beyond a certain extent. In other words, when investors do their due diligence and negotiate contracts, small projects present a challenge because their transaction costs per project are very high. Most distributed power generation do not invest billions of dollars at the time, but instead implement small projects in diffi cult conditions. For a fi nancier, small projects mean lots of work for at most limited returns and a much higher perceived per capita credit risk. Crane advises start-ups and other smaller players to aggre- gate multiple projects together in bundles of 20MW or 50MW, which would make a stronger case for long-term fi nancing. In this issue, UME speaks to Jeremy Crane on a broad-range of issues concerning the Middle East’s distributed energy sector and Yellow Door Energy’s success. Closing gaps in DER fi nancing Baset Asaba, Editor Email: baset.asaba@itp.com View point DOOR TO SOLARCONTENTS 4 Utilities Middle East / August 2019 www.utilities-me.com 01 Electricity demand in Oman to surpass 9.4GW by 2025 The total consumption of power is expected to reach 9,400MW by 2025 under normal circumstances 02 Veolia wins Kuwait wastewater treatment plant work As per the contract, Veolia will treat and recycle wastewater at the rate of 1,500 cu m/h, and will also be responsible for the sludge incineration unit 03 Makkah desalination plant owned by ACWA power starts commercial operation The Shuaibah Expansion II scheme, which has the capacity to generate 250,000m3 of water per day, began commercial operations in May 05 36 25 05 UPDATES 09 ANALYSIS 14 CONTRACTS 18 COVER FEATURE 41 PRODUCTS 42 FINAL WORD 08 09 14 Dubai Electricity and Water Authority (DEWA) has invited consultancy com- panies to submit their feasibility study bids for the wind power generation project in Hatta, in the United Arab Emirates (UAE) SPECIAL EDITION ALSO THIS MONTH 08 AIRPORT SOLAR Solar energy system comprising 15,000 photovoltaic (PV) panels and a capacity of 5MWp installed at Dubai Inter- national’s Terminal 2 - the largest at any airport in the Middle East 25 ELECTRICAL TESTING TRENDS The industry today realises that building a test system requires evaluation of expanding test requirements and an architecture that can last over time 14 SHUAIBAH DESAL Abengoa has inaugurated together with its partner Fisia Italiampianti a re- verse osmosis desalination plant in Saudi’s Shuaibah complex with a capacity of 250,000 m3/day 36 UTILITIES EMBRACE IPPS The introduction of IPPs in the GCC could be instrumental in meeting rapidly rising electricity demand through increased effi ciencies and broader project fi nancing channels 18 DOOR TO SOLAR UME speaks to Yellow Door Energy, a leading dis- tributed energy company in the Middle East about its expansion plans fol- lowing a $65mn funding it received early this year 09 NUCLEAR PROMISE Saudi Arabia will be one of a handful of countries expected to receive state-of-the-art advanced nuclear reactors from China and Russia, accord- ing to a new report by the Global Nexus Initiative Most popular news stories on www. Utilities-me.comittttiiiiieeeeeess-News Dubai Electricity and Water Authority (DEWA) has invited consultancy com- panies to submit their feasibility study bids for the wind power generation project in Hatta. This is part of DEWA’s eff orts to contribute to the ambitious development goals of Dubai, and to support the directives of HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to develop Hatta with a comprehensive plan, while balanc- ing economic, social and environmental develop- ment. The deadline to apply for the project was 23 July 2019. “The Hatta power generation project aligns with DEWA’s eff orts to contribute eff ectively in achieving the Dubai Clean Energy Strategy 2050, launched by HH Sheikh Mohammed bin Rashid Al Maktoum to make Dubai a global hub for clean energy and green economy, and increase the pro- duction of clean energy to 75% by 2050. This is most relevant in the fi eld of wind power, which has witnessed new developments in recent years, becoming a key source in renewable and clean energy worldwide,” said Saeed Mohammed Al Tayer, MD & CEO of DEWA. Al Tayer stressed that DEWA is keen to trans- form Dubai into a global hub for clean energy and green economy, and to have the lowest carbon footprint in the world, affi rming that achieving these ambitious strategic objectives requires a production capacity of more than 42,000 mega- watts of clean and renewable energy by 2050. “To achieve our vision of becoming a globally leading, sustainable, innovative corporation, we are working to establish sustainability as a road map to ensure a brighter and happier future in Dubai by launching world-class initiatives and lead- ing projects in green development,” said Al Tayer. Al Tayer explained that the benefi ts of the wind power generation project extend to include sev- eral other advantages, since the electricity gener- ated from wind power is clean and does not pro- duce any pollution or gases. Also, electricity gen- erated is produced locally, does not require fuel and will create jobs for the residents of Hatta. DEWA, through its continued eff orts to keep pace with the latest developments in the fi eld of renewable energy, carried out reviews with experts and revealed advancements in wind power. REGIONAL UPDATE // ESSENTIAL INSIGHTS FOR MIDDLE EAST WATER, GAS AND ELECTRICITY PROFESSIONALS Wind Power Dubai moves to add wind power to its energy mix DEWA invites applications for consultancies for feasibility study bids on Hatta wind power generation projects, potentially the first wind power station in the UAE www.utilities-me.com August 2019 / Utilities Middle East 5Survey shows 85% of UAE residents support the country’s nuclear energy programme A new national poll on nuclear energy has shown that UAE residents are in favour of, and have a strong understanding of the UAE’s peaceful nuclear energy programme, with 85 per cent of residents in favour. The poll revealed some of the highest ‘favourability’ rates for nuclear energy in the world — higher than any other nuclear energy producing nations. The survey was commissioned by the Emirates Nuclear Energy Corporation (Enec) and was conducted in 2018 by the independent global market research company Nielsen. The purpose of the survey was to support the development of effective educational ini- tiatives about both the UAE’s nuclear energy programme and Enec. The poll has shown a slight increase in favorability rate which was 83 per cent in 2017. In addition, the poll revealed that 78 per cent of UAE resi- dents believe that the bene- fi ts of nuclear energy outweigh its risks. For the Al Dhafra region — where the Barakah Nuclear Energy Plant plant will be located — the poll revealed a signifi cant increase in favour- ability of the UAE programme. going concern and also to grow the business, along with further commitment to Perpetual Secu- rities and Preference (PNP) shareholders. Hyfl ux will remain as a sepa- rate listed company with Utico owning 88 per cent. The deal is subject to regulatory and other approvals. The landmark deal would also place Utico and Hyfl ux with their Utico to own 88 per cent of Singapore’s Hyfl ux Total deal value seen at S$535 million; Hyflux will remain a separate listed entity Utico is picking up a stake of 88 per cent in Hyfl ux, setting the way for the restructuring of the Singaporean company, a joint statement by both companies fi led on the Singapore Stock Exchange has said. Utico said the deal, subject to completion of approvals of the creditors, the Singapore Stock Exchange, investors and the court, will lead to giving a new lease of life to Hyfl ux. The equity valuation of the company is set at S$340 million though the total deal value could be S$535 million, higher than an earlier failed deal of S$530 million of SM Investments. The deal includes a S$400 million commitment to Hyfl ux by Utico, to ensure it remains a Utico Thermal CSP Oman mulls thermal concentrated solar power project The concentrated solar power plant will only proceed if a clean coal Inde- pendent Power Project (IPP) proposed at Duqm does not get the government’s green-light before the end of this year The Oman Power and Water Pro- curement Company (OPWP) — the sole procurer of new electricity and water capacity under the Sector Law — is mulling plans to set up the fi rst- ever solar thermal project to sup- port the future energy requirements of the Special Economic Zone (SEZ) at Duqm. The concentrated solar power plant will only proceed if a clean coal Independent Power Project (IPP) proposed at Duqm does not get the government’s green-light before the end of this year. Envisaged in lieu of the clean coal power plant is a 600 MW solar ther- mal project — also known as a Con- centrated Solar Power (CSP) project, OPWP said in its newly published 7-Year Outlook Statement spanning the 2019-2025 timeframe. Concentrated solar power plants use thousands of parabolic trough mirrors to convert the sun’s energy into high-temperature heat which is then channelled through a conven- tional generator to produce elec- tricity. The proposed venture will also include thermal storage to keep operating after sundown. Electricity demand is projected to grow at a blistering 23 per cent per annum over the next fi ve years joint capabilities and abilities in a stronger position and also create synergies for cost sav- ings and new offerings. Utico’s unique development, techni- cal and fi nancing abilities would also further enable Hyfl ux to exploit the opportunities in the Middle East, Asia and Africa as well as other global markets where water demand is increas- ing requiring innovative and bespoke solutions. “The aim is to save time and move expeditiously as both Utico and Hyfl ux, investors and creditors are aware of the fact that time is of essence in pre- serving the value of the Singa- porean company and arrest further slide,” said Mr. Richard Menezes, MD of Utico. in line with expectations of strong investment infl ows into the SEZ — the largest of its kind in the Middle East. The SEZ and its environs are currently served by a 67 MW die- sel-powered plant operated by the Rural Areas Electricity Company (RAECO). NEWS 6 Utilities Middle East / August 2019 www.utilities-me.com2,150mw of Egypt’s wind power to come from IPPs Sources at the Egyptian Min- istry of Electricity and Renew- able Energy reveal ongoing dis- cussions with several indepen- dent power producers (IPPs). They propose to build wind farms capable of producing up to 2,150 MW. The Egyptian government has set itself the goal of consuming 20% of electricity produced from clean sources by 2022. The country has also given itself the means to achieve its ambitions by creating condi- tions for private investment in the renewable energy sub- sector. Several independent power producers (IPPs) are interested in this North African country. Much of the east coast of the country is swept by winds that allow wind turbines to pro- duce electricity. These IPPs that want to build wind farms are based in Germany, China, Saudi Arabia or the United States of America. According to the same source, the American company Gen- eral Electric, which invests more in hydroelectricity in Africa, is also interested in wind power in Egypt. It has decided to join forces with the Danish company Vestas Wind Systems for a 4,000 MW wind power project. slashing annual CO2 emissions by 3,243 metric tonnes, which is equivalent to 53,617 tree seed- lings grown for 10 years or 688 passenger vehicles driven for one year, according to a press release. The project is part of Shams Dubai, Dewa’s fi rst smart initia- tive that aims to promote the use of clean renewable energy sources. The programme Dubai airport installs largest solar system in ME The solar system will generate 7,483,500 kWh energy annually for Dubai Airports Dubai Airports, the world’s bus- iest international airport, and Etihad Energy Services Com- pany (Etihad ESCO), a lead- ing energy service company and a wholly-owned subsid- iary of Dubai Electricity and Water Authority (Dewa), have announced the successful installation of a solar energy system comprising 15,000 pho- tovoltaic panels at Dubai Inter- national’s Terminal 2 - the larg- est at any airport in the region. With a capacity of 5MWp, the solar project will generate 7,483,500 kWh energy annually for Dubai Airports, resulting in savings worth Dh3.3 million. The project will reduce exist- ing Terminal 2 load by approx- imately 29 per cent, while also Rooftop Solar Alfanar Alfanar in £1bn renewable energy investment The £1bn investment into six waste-to-energy projects will create hundreds of new jobs in Europe The Alfanar Group, one of Saudi Ara- bia’s largest industrial conglomer- ates, has announced that it will set up a renewable energy offi ce in the UK, through its subsidiary ‘Alfanar Energy UK Ltd.’ The new subsidiary will be headquartered in London, tapping into the UK’s highly skilled workforce and creating up to 30 jobs. The offi ce will oversee Alfanar’s investments in the UK, including a £1bn investment into six waste-to- energy projects which will create hundreds of new jobs. The waste- to-energy projects will contribute to the UK Government’s recent com- mitment to “net zero” greenhouse gas emissions by 2050. The proj- ects will also divert more than a mil- lion tons of waste away from land- fi ll, supporting the UK Government’s Industrial Strategy Grand Challenge around Clean Growth. During his visit to Riyadh, Minis- ter for Investment Graham Stuart said: “I am very pleased that Alfanar has decided to extend their invest- ment in the UK into the renewable energy sector. Alfanar has been working in the UK market since 2006, and today’s announcement demonstrates their confi dence in the UK economy and our world lead- ing renewable energy sector. Their investment will create new jobs and help support the government’s ambition to hit ‘net zero’ greenhouse gas emissions by 2050. ” encourages installation of solar panels on rooftops to generate electricity from solar power and connecting it to Dewa’s grid to transfer surplus generation. Etihad ESCO will provide maintenance services for Dubai Airports for a period of seven years from completion. Michael Ibbitson, Execu- tive Vice President, Infrastruc- ture and Technology, Dubai Air- ports, said: “Dubai Airports has undertaken a variety of green initiatives over the past several years to limit our carbon foot- print and support Dubai’s goal for a 30% reduction in the city’s energy consumption by 2030. These include the use of energy effi cient fi ttings and the optimi- sation of cooling systems. Speaking about the invest- ment, Mr Jamal Wadi, CEO of Alfa- nar Global Development said: “Our investment into the UK underlines our commitment to the renewable energy sector. We see clear benefi ts in partnering with UK-based sup- pliers. Alfanar Group has a global renewable development portfo- lio in PV, CSP, Wind and Waste-to- Energy projects of 1.5 GW.” NEWS 8 Utilities Middle East / August 2019 www.utilities-me.comThe case for investing in advanced nuclear reactors as an alternative energy source is compelling. Russia and China have an advantage in the development of advanced reactors, thanks to state financial backing ADVANCED NUCLEAR REACTORS HOLD PROMISE OF CLEAN ENERGY FOR GULF COUNTRIES www.utilities-me.com August 2019 / Utilities Middle East 9 NEWS ANALYSISNext >