ACWA Power gains further ground in GCC developer rankings

Dominant position

Engie established its dominant position in the GCC private power market following the merger of the non-European assets of the UK’s International Power and France’s GDF Suez in early 2011. Its recent successes in Abu Dhabi and Kuwait have maintained its healthy margin at the top of the ranking.However, despite Engie currently enjoying double the total equity capacity of its closest competitor, Acwa is set to continue its rapid growth in the region’s power sector when the final project agreements are signed for the 1,200MW Hassyan Coal IPP in Dubai. The Dubai Electricity & Water Authority (Dewa) selected the consortium of ACWA Power and China’s Harbin as the preferred bidder for the GCC’s first major coal-fired plant in October.

The Saudi developer is also rumoured to be frontrunner to win the contract to develop Oman’s largest private power project, the split-site Ibri/Sohar 3 IPP, which will have a total capacity of 3,200MW.They key to Acwa Power’s rapid rise up the rankings is its dominance in its home market. The developer has been involved in seven out of the last 10 grassroots private projects with a power component in the kingdom.

While its domestic market has proved a fertile hunting ground for ACWA Pover the past decade, opportunities for further growth may be limited unless state utility Saudi Electricity Company (SEC) reignites its IPP programme. The only power project tendered as an IPP since 2013 is the Fadhili cogeneration IPP, which SEC is developing in partnership with state oil major Saudi Aramco.

Japanese success
An interesting facet of the GCC’s power sector in 2015 has been the success of Japanese firms in two of the three IPPs awarded. Mitsui, as Acwa Power’s partner, was successful in the Salalah 2 IPP and Mitsubishi emerged as the winner for the largest IPP awarded in the year to date, the Facility D IWPP in Qatar.

Mitsubishi, with fellow Japanese power firm Tepco as a minor shareholder, will develop the 2,500MW Facility D project for commissioning in 2018. Heralding Mitsubishi’s first private power project in the GCC, its 712.5MW equity stake has parachuted the developer to ninth position in the table, pushing Saudi Arabia’s Saudi Oger out of the top table.

Marubeni, along with ACWA Power and Engie, was one of the three bidders for the 3,200MW Sohar 3/Ibri IPP. However, as mentioned, Acwa Power has emerged as frontrunner to secure the contract so the Japanese are unlikely to boost their equity capacity with this one.

The other major private power project currently under bid evaluation is the Fadhili IPP in Saudi Arabia, which will have a generating capacity of between 1,200MW and 1,600MW. The jointventure client of Aramco and SEC received bids from four groups on 1 November. Along with ACWA Power, Engie and Mitsubushi, a consortium led by Japan’s JGC finalised the bidding list.

Kuwait opportunity
The next major opportunity for the developer market to boost their order books is the Al-Zour North 2 IWPP in Kuwait. Kuwait struggled to get moving with its next major public-private partnership (PPP) project following the award of the Al-Zour North 1 scheme in late 2013. Amendments to the IWPP law and a restructuring of the country’s PPP body, now called the Kuwait Authority for Partnership Projects (KAPP), however, promise to offer several lucrative opportunities for developers in 2016 and beyond.

KAPP has invited prequalified consortiums to submit bids for the 1,500MW Al-Zour North 2 IWPP by 16 January next year. Interestingly, Engie has not been prequalified to participate due to it working on Al-Zour North 1 IWPP. This may provide an opportunity for Acwa Power and the Japanese groups to reduce the gap at the top of the ranking. Following progress with the tender for Al-Zour North 2, KAPP will issue tender documents for the next planned major IWPP, Al-Khiran 1, which will have a generation capacity of 1,800MW.

KAPP has also invited seven prequalified developers, including Engie, to bid for the Abdaliyah integrated solar combined-cycle (ISCC) power project, with a submission date of 17 March. The plant will have a conventional gas-fired capacity of 220MW and a solar component of 60MW.Dubai will offer the other major opportunities for developers in 2016. Dewa is planning to issue tender documents for the 800MW third phase of its Sheikh Mohammed bin Rashid al -Maktoum solar park before the end of 2015. It is not yet clear whether Dewa will award the 800MW photovoltaic (PV) contract to one developer, or split it into a number of packages.
As the region’s private developer market shifts its attention to the opportunities in 2016, it is clear that opportunities exist for all the major players to boost their capacity portfolios. While ACWA Power will attempt to further chip away at Engie’s dominant position, the numerous Japanese developers will be keen to share the spoils.