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Wed 24 Dec 2008 04:00 AM

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Power play

With a shortfall of power being experienced in the Middle East, Peter Ward looks into the state of the power generation sector by talking to four experts in different fields.

With a shortfall of power being experienced in the Middle East, Peter Ward looks into the state of the power generation sector by talking to four experts in different fields.Power cabling: Andrew Shaw, MD, Ducab

How does Ducab supply the power generation sector?

We are making the full range you need for a power station. The instrumentation control, the LV and metering voltage power and also we are making the 132kv, the high voltage.

We have tended to focus in the past on low voltage and medium voltage power which you use a lot of in a power station. But we've just taken an order for 123kv for Abu Dhabi which isn't exactly for power generation.

We have got an increasing capacity for 132kv coming on next year which is again aimed at the power generation market but if you are looking actually at the power station, the main usage of the power cables there is a lot of instrumentation control, quite a lot of low voltage power and a fair chunk of medium voltage power.

Then the only area for the high voltage cable the 132kv, is the stuff that basically takes the power out of the power station and into the substation. So we are making pretty much the entire package of cables needed for power generation.

How much more difficult is it to produce the 132kv cables?

Technically, it's more demanding because you are working at higher levels of electrical stress and you have to be that bit more careful on the way you manufacture the cable, the materials you use, its tested at much higher levels so you are searching for faults.

It's a big step up from medium voltage to be doing 132kv so it's the next big step for us.

How big a part of your business is through power generation?

It's a relatively small proportion, because in terms of relative in terms of apartment blocks being built or medium voltage cable going in by the road for distribution, it's a small amount. We did the last Dewa power plant with Toshiba, that's completed now and we did a lot of cable for that.

The other thing we supplied on the Toshiba job was we also did all the accessories for the cables, the joints and the accessories which we tend not to feature as much as we should.

These are products that we buy in and we offer a range from the UK. It's quite significant though, you can't have the cables without the accessories. It's a relatively small percentage though.

Do you see a lot of work in the future for Ducab in power generation?

We only get to know about the power plants when they are announced by the utilities. But what we see the utilities doing is working really hard to get the distribution cabling in and the generation.

I think their main issue now is that demand has gone ahead of the generating capacity. For a power station there is a certain amount of cable just for the station. Where the real amount of cable comes in is the distribution.

So the activity of DEWA in which you see them installing distribution cables, that's 11kv cables, alongside the roads, out into the new areas, that's where the real demand comes from our point of view. As long as Dubai is growing and needing more power then Ducab is in the position to supply.

Renewable power: Steve Geiger, director of industries unit, Masdar

Which renewable power generation methods are most suited to the Middle East?

The Middle East is a big place, if you break it down to the UAE, the GCC or the Middle East you will get a slightly different answer. I think the most immediately obvious one is solar power given the amount of sunshine in the region.That is a clear high priority target. Wind in certain localised areas is also commercially viable, although in other areas it is not entirely commercially viable so it depends on which location specifically you are dealing with. Waste-to-energy obviously has a realistic potential.

There is an amount of waste in each community that can be converted efficiently and cleanly to energy. Geothermal - I think it is an undeveloped field, there may be potential but the immediate view is that this may not be the best region for it.

What challenges does solar power in this area present?

There are a number of problems with the solar power. First and foremost is the intermittency issue. You are expecting to feed into a grid that is asking for an extremely reliable base load power and you are dealing with a solar resource that doesn't work 24 hours a day.

First of all you have to find ways to deal with intermittency of any of these energy types, mainly solar and wind, and how to guarantee reliable supplies of power when the resource isn't working. There are a number of ways to do that; you can start by simply addressing the peak shaving where the utility is looking to shave the peak and not necessarily looking for 24 hour base load power.

That is one application. Then putting some type of energy storage to allow to you to extend your ability by a couple of hours to capture peak demand in the late afternoon when the sun is going down. That is another area that allows you to augment your ability to produce power.

The other key issue is that solar is competing against very cheap electricity, or very cheap as its being currently supplied. Cheap can be defined differently depending on how you are calculating it, are you calculating the production cost of the resource, are you calculating the economic opportunity cost of the resource?

The bottom line is that a lot of these regions, particularly the GCC, have traditionally low energy costs so you are taking a technology whether it is wind or solar that has to compete against a very low base.

How hard is maintaining solar power cells in this region?

It is an issue that is a really big challenge and has to be addressed. We as Masdar have about 30 different systems in Abu Dhabi working around the year and we are monitoring the effects on the actual PV output based on humidity, temperature and dust and cleaning.

So we are getting some pretty accurate data, probably the best in the region of in-the-field performance of these systems.

You have to exercise caution if you are talking about a system and projecting the price based on the assumed 20-25 year performance. You do have to take into account the local conditions which are high humidity, potential corrosion, dust and the affects on the surface of the module as you clean it month after month year after year and the abrasions that are caused.

I don't think anyone has an accurate database of knowledge for 25 years but I think what we can do is extrapolate based on the data we are gaining from the field.

What are the challenges facing wind powers deployment?

They are the same in the sense that they are competing against cheap electricity and also have to deal with intermittent, sometimes the wind blows sometimes it doesn't.

So they also have to try and combine some kind of energy storage if they want to provide a more attractive opportunity for the utilities. But they have to be placed in a place where there is a sufficient wind source in effect. In the Gulf region there is the situation where you get a lot of sun but not a lot of wind.

I think you really have to take a realistic view of the resource available. We did an extensive study of the UAE for wind resources and we were only able to identify four locations in the country where wind is economically viable.

How do initial set up costs differ from conventional power generation plants?

I think you have to compare apples with apples. The conventional power plants were developed over many decades. They have fine tuned the systems. Solar, wind and other renewables are still at the early stage of development and there is a lot of possible cost reduction.

So they are definitely not the same price on up front cost as existing fossil fuel power generation, but its probably not a fair comparison given the different life cycles.

I think also when you factor in the added benefits of potential carbon taxes or credits in the future it makes greener methods more attractive. I think you have to take a full view of the core structures of any power system and not just look at the cost of building a power plant versus the cost of building a solar plant.

What benefits are there to using sustainable power generation systems?

There are a lot of benefits and you have to look at it in a medium term perspective. You are developing a sustainable renewable energy system, something that will be around in the medium and long term and will be an economically viable source of energy. At some point the world has to augment the existing hydrocarbon base of power.

There simply isn't enough power to meet global demand and one way or another these systems will be developed and implemented on a mass scale. The advantages for the countries that get in there early is that they get to develop the technologies and the know-how that allows them to be a player in what everybody knows will be very large emerging industries.

So the immediate benefit is to get into the business, get into the technology and establish yourself as a developer or manufacturer of these technologies that in the medium and certainly the long term are going to be very large industries. How will power generation be supplied in Masdar City?

Masdar City has very ambitious targets. Zero carbon and 100% powered by renewable energy, these targets have never been achieved by anyone anywhere in the world and we recognise that these will be a challenge. But the secret to it is to reduce the primary demand by 80%.

That is the first way that the city is going to be able to power itself by renewables is to reduce demand by 80% compared to a conventional city. Then through a mix of largely solar, some waste-to-energy and some wind they intend to provide enough power to meet the 100% renewable energy target. So it's going to be largely a solar and a waste-to-energy source of power with a little bit of wind.

One of the key ways they are going to be able to hit that target is by reducing the required amount of energy by 80%. Basically what you save on energy consumption offsets the additional cost of the renewable energy today.

What future do you see for renewable power generation?

The industry has to start off by providing supplemented and augmented power and then from that as the deployments get larger and larger and the scale economies kick in and the price of the installed renewable systems comes lower and storage systems become developed and deployed, then renewable energies can start playing a larger piece of the overall energy supply, get up to 10% or 20% but I think people have to be realistic that these intermittent power sources need a number of decades before they are going to be able to provide huge percentages of base power.

Temporary power: Julian Ford, business development director, Aggreko

What are the main issues in temporary power generation currently?

I would say that there is a huge opportunity for companies like Aggreko in the Middle East for all the right reasons, which is good.

The Middle East economy is growing and is driven largely by oil revenues in recent years but obviously the amount of construction in Dubai but not just here, right across the Gulf, means that there are some issues.

One is there is population growth because more and more people are coming to the region. And of course the more people you have in an area the more the power requirement goes up.

That is driving a need for more and more power plants to be built and by in large the rate of development of new power plants and the transmission of that power from the plants to the point of use is struggling generally to keep up with the rate of growth in the marketplace. So that is where companies like Aggreko step in and help out with short term solutions.

What kind of services does Aggreko offer in the power generation market?

Our main business is power generation rental so we don't sell equipment. We basically sell electricity rather than sell generators.

If people have got a construction site or a factory and they need power for a period of time, maybe until their main connection from the utility company is provided and maybe it's a summer peak and they need extra demand, then we bring our equipment along, we connect it up, talk to the customer understand what he is looking for and design and create a solution for that particular problem.

We commission it and sell power for however long is needed. Some of the jobs, we have been there three to six months. It varies, sometimes it is just a short time and sometimes it goes on a bit longer.

What challenges are being faced in the market?

The market has big demand and has seen a lot of growth. Having the equipment available to service the demand has been an issue and not just for us but for many other companies on the marketplace.

So having enough equipment to service the demand is our single biggest challenge. One of the advantages of being a global company is that we can take equipment from other parts of the globe.

How big a part do renewable methods of power generation play in this market?

Our business is a short term business so most of our customers are from two months to a year and the sort of business that we are in involves moving our equipment around quite quickly.

So flexibility of our systems and also safety and reliability is really what our clients want and also cost effectiveness. The products we have, the conventional diesel engines, are probably the best bits of equipment for that particular market at the moment simply because diesel is a safe and easy fuel to move around it safe and convenient and the equipment is reliable and well proven.

So we tend to stick with conventional power sources certainly for the construction market.

We have within the last couple of years introduced a range of gas powered generators because we recognize that some of our customers have got their own natural gas source available. So having generators that can burn natural gas has become quite an important feature for us.

In terms of the renewable sources such as solar and wind - they don't really lend themselves to the rental market too well. Usually due to cost considerations because they are an extremely capital intensive item and making that economically viable in the rental market is pretty difficult.

Also it takes a lot of space up, the amount of energy you can get out of a solar panel is not as much as you can get out of diesel generators and you can imagine on a building site there is a limit on the amount of space you have.

How is technology improving in the market?

The big driver in technology has been to do with the engine and the main driver there has been to do with emissions legislation. All the new equipment that we are manufacturing satisfies the most up to date emissions requirements of that market. Really that's the driver of technology in the generator business today. What is competition in the market like?

We do have competition we are the market leader in the Middle East which is always very gratifying. There are one or two big companies who we compete with, then a whole host of smaller companies.

When a market grows really quickly it tends to open itself to new companies coming in. The credit crunch is putting a bit of a cloud over the economic situation and there is a little bit of uncertainty on what the impact in the Middle East is going to be.

I think our view is that in the short term there isn't going to be a great deal of impact on the business but what might happen is projects getting deferred or delayed and that might impact on the growth of the market. I think it's fair to say that we are not expecting the market to grow as much as it has done in the past. Power technologies: Dr Mostafa Al Guezeri, GM, ABB

What are the main issues surrounding power generation in the Middle East?

There is an increased demand of power and water due to the unprecedented growth in the region ignited by the visionary of the leaders of the gulf region. Also dwindling hydrocarbon resources (natural gas and oil reserves) are an issue. Even though the present situation looks good, alternative energy source is essential for the future.

The main utility firms are unable to meet the rising requirement within the demanded time frame. Real estate developers are unable to come up with viable solutions.

What challenges are being faced in this region?

Meeting requirements within the short time frame. There are only a few manufacturers of main power generation equipment and they are facing long delivery problems.

How are these being overcome?

ABB is investing heavily in developing new technology and equipment for electrical losses and improving efficiency. ABB has invested up to US $1.2 billion in 2007, which is set to increase this year. Also, modern controls and automation for power and water generation reduces the cost of running utilities.

How do you see the future of the market?

I don't think the global credit crunch is going to affect the region to such an extent. We have already heard talks on nuclear power, coal based power plants coming up in the region

So thinking in the area is changing. Already solar energy is greatly getting tapped for power generation even up to the extent of 100-200MW. That is a significant growth and we are even moving towards hydrogen power plants

How is the region reacting to calls for greener methods of power generation?

Power generation accounts for some 40% of man-made carbon dioxide emissions so it is a huge issue. I believe that solar power is really one of the answers for the region. The utilities in the region are driven to reduce the CO2 and NOx emissions. So they are going in the direction of GT Low NOx conversion. Advanced design of burners and combustion chambers is also helping.

How does ABB contribute to the market demand?

ABB provides cutting edge technology in control systems for faster and precise control demands. We have upgraded the control systems in Aluminium Bahrain & Riffa power station for GT Low Nox control system upgrade together with Alstom.

Since none of the main equipment suppliers are willing to venture into EPC contracts, it is a good opportunity for EPC contractors to take ABB systems and technologies to amalgamate different main equipment.

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