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INVESTMENTS IN POWER SECTOR FOR ECONOMIC GROWTH Saudi Economic Forum 1-2 March 2011 Riyadh

INVESTMENTS IN POWER SECTOR FOR ECONOMIC GROWTH Saudi Economic Forum 1-2 March 2011 Riyadh. GROWTH (2000 – 2009). projects Under Execution. Generation 174 projects US$18 bln . Transmission 290 projects US$14 bln. Distribution 170 projects US$ 2.3bln.

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INVESTMENTS IN POWER SECTOR FOR ECONOMIC GROWTH Saudi Economic Forum 1-2 March 2011 Riyadh

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  1. INVESTMENTS IN POWER SECTOR FOR ECONOMIC GROWTH Saudi Economic Forum 1-2 March 2011 Riyadh

  2. GROWTH (2000 – 2009)

  3. projects Under Execution • Generation 174 projects US$18 bln . • Transmission 290 projects US$14 bln. • Distribution 170 projects US$ 2.3bln. • Total 634 projects US$ 34.3bln. will be in operation 2010-2014

  4. LOAD FORECAST MW

  5. FUTURE CAPITAL INVESTMENT Over the next 10 years: • Generation expansion US$45 billions • Transmission expansion US$ 22 billions • Distribution expansion US$ 13 billions • Total capital investment US$ 80 billions

  6. IPP PROGRAM • SEC will Continue to encourage private investors to build, operate and own power projects . • 30 – 40 % of Future generation will be IPP . • SEC partnership will be 20%-50% in the equity. • Long term power purchase agreements (20years) • With reasonable return on investment .

  7. IPP PLANNED PROJECTS US $ 15bn TO BUILD 12 GW

  8. Conclusion • The growth of electricity demand will continue 7-8%. • Massive investments (80 billion US$). • 30% of generation expansion as IPP . • Private sector have the opportunity . • Private sector have responsibility Infrastructure Technology and Saudi work force

  9. Power Industry in Saudi Arabia • Starts in the 50`s as 100%private utilities . • Late 70`S consolidated into four major power companies (SCECO’s). • Mid 2000 All operating entities merged in one company : Saudi Electricity Company (SEC). • The government involved as shareholder .

  10. SAUDI ELECTRICITY COMPANY • Largest electric utility in the region in terms of capacity ,market capital and shareholder’s equity. • Serving the largest economy in middle east and 6million customers in 12000 cities ,towns and villages. • Owns 85% generation and 100% T&D and retail . • Total assets over 60 bn US$. • Annual revenues US$ 6bn with 6% annual growth. • 50 GW installed capacity with 8% growth . • (AA- ) credit rating

  11. Scope of Operations

  12. CHALLENGES • Electricity is the basic infrastructure . • Power is capital-intensive infrastructure projects. • High growth in demand ( will continue 7- 8%). • High consumption for residential use (55%). • Low average load factor (60%) seasonal. • Inefficient old of generating units.

  13. WHY IPP? • Providing Financial Option for Highly Capital Intensive Generation Projects . • Helping To Re-Direct Available Funds To T&D (Monopoly Activities) • Reallocation Expenditure From CAPEX To OPEX. • Avoiding Mismatch Between Medium Term Financing and Long Life PP Projects.

  14. SUCCESSFUL IPP ROJECTS • Two IPP Projects in process: • 1. Rabigh Power Plant (Awarded July 2009) • 1200 MW / HFO • IPCOD APRIL 2012 • Investment 2.4 billion US$ • IRR 8.5% with 20% for SEC • 2. Riyadh Power Plant 11 (awarded last month) • 1800 MW / GAS • IPCOD APRIL 2013 • INVESTMENT 2.3 billion US$. • IRR 6.5% with50% for SEC

  15. Opportunities • Building more power generation capacity . • Replace all the old generation units. • Development of new power plants as an IPP. • Promote energy conservation initiatives. • Load management programs (time of use tariff). • Introduce smart grid and smart meters . • Encourage and support renewable energy.

  16. Conclusion • The growth of electricity demand will continue 7-8%. • Massive investments (80 billion US$). • 30% of generation expansion as IPP . • Private sector have the opportunity in these expansions. The challenges are great, but the opportunities are greater

  17. SAUDI NATIONAL GRID by 2020

  18. Saudi power plans • First long-term electricity plan developed 1979. • Between 1980-2000 regional planning by SCECOS. • 2003 SEC issued the first integrated power plan. • 10- year forecast becomes more practical in KSA. • Near term 5-year plan window used today. • periodic update of the plan every tow years. • Low residential tariff (8 hallah /kwh) . • Low average load factor (55%) seasonal. • Inefficient old of generating units.

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