Economic Transformation and Business Opportunities in Saudi Arabian Power and Water Sectors
ADSW - Jan 2017
Economic Transformation and Business Opportunities in Saudi Arabian Power and Water Sectors
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Economic Transformation and Business Opportunities in Saudi Arabian Power and Water Sectors
Key enablers!
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Economic Transformation and Business Opportunities in Saudi Arabian Power and Water Sectors
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Transforming power and water utilities is a gradual process: Industry structure IPP / IWPP Procurement • Generation unbundling • Creation of a Single Buyer Entity
Subsidy and tariff reforms
Market structure Done
Awaited
Next Steps
Competition for the market • X-Utility GENCOs privatization • WHOLESALE MARKET COMPETITION Transition towards RETAIL COMPETITION
NATIONAL TRANSFORMATION PLAN
Targets by 2020
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Strategic Partnerships Electricity Generation Water Production (Desalination) Treated Water Production
100%
52%
27% 16%
0%
Sustainable market based pricing Water & Electricity Subsidies less by SAR 200 b
20%
NATIONAL TRANSFORMATION PLAN
Targets by 2020
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Atomic Energy Identify and prepare locations for first nuclear plants and all related development including human capacity development, legislation, fuel cycle etc…
Renewable Energy King Salman Renewable Energy Initiative 4% 0%
3.45 GW of Renewables in to Energy Mix
Private Sector in Power & Water
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KSA Water & Power Sector Track Record and Lessons Learned can propel Vision 2030 IPP/IWPP since 2006
National Champion Created – ACWA Power is second largest developer in the region
Generation Capacity Share
3% 3% 3%
13%
Net Efficiency for Recent CCGT Plants = 57% (Rabigh 2) Life Cycle Cost Reduction CAPEX – 17% and OPEX – 67% (approx.) Long term financing in KSA by local & Int’l Banks
79% SEC
Rental
SWCC
WEC
IPP
Excellent Platform to develop local value chain and financial markets
ACWA Power – Proven Track Record
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ACWA Power’s journey bodes well with Vision 2030 In 10 years we have become the second largest power & water developer in the GCC region, and a name to contend with internationally
Aligned with Vision 2030
ACWA Power as a national champion can foster domestic entities A. Support for domestic growth Localized O&M Companies Improved logistics Creation of localized supply chain B. Access to new markets GCC Other Arab countries Global (in the long term, for ACWA Power)
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Success Factors
All Ducks are in a row
A Burning platform for transformation….
Saudi Arabia could need c.100 GW of new capacity and 40 GW of replacement capacity by 2030 Good financial standing as a starting point – a decade long boom that accumulated large financial and non-financial assets while overall debt remained low Economic and social development is a priority
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Initial Markers
Actions already visible on the ground.. SWCC plan for upcoming IWPPs and tenders expected this quarter SEC - Two 50 MW IPP solar plants GE and Saudi Arabian Industrial Investments Co (SAIIC) announced SAR 11.25 b of investments to develop innovative solutions in water and electricity Aramco and GE teaming up to install first wind turbine in Turaif DOW Chemical received trading license that will allow it to sell products including oil and gas, alternative energy and others NWC signed an agreement with GACA to jointly study a SAR 600 m to supply water to Taif Int’l Airport Demand management of electricity – tariff went up from SAR 0.12/kwh to SAR 0.20/kwh for consumption levels between 4000kwh and 6000kwh per month and SAR 0.30/kwh for consumption above 6000kwh per month
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Challenges
Planning, commitment, follow through, measurement, look back, fine tuning, and so much more…
Management of Reform Commitment to a road-map – time bound action plan Strong regulator Transparency
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Conclusions
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We all have a role to play! The benefits are compelling and shared by all stakeholders Water and Power Sector is well positioned because of history and experience – a great example for other sectors Any progress will be a plus
Thank You