5FUTURE CAPITAL INVESTMENT Over the next 10 years:Generation expansion US$45 billionsTransmission expansion US$ 22 billionsDistribution expansion US$ 13 billionsTotal capital investment US$ 80 billions
9IPP PROGRAM 30 – 40 % of Future generation will be IPP . 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 .
10IPP PLANNED PROJECTS US $ 15bn TO BUILD 12 GW NAME OF IPP PROJECT CAPACITY (GW)INVESTMENTBlnUS$PROJECT COMPLETIONQURAYYAH1.82.32014DHEBA1.62.12015SHUQAIQALOGAIR2.42.82016JEDDAH SOUTH2017RAS ALZOUR2.92019
11Conclusion The growth of electricity demand will continue 7-8%. Massive investments (80 billion US$).30% of generation expansion as IPP .Private sector have the opportunity .Private sector have responsibilityInfrastructureTechnology and Saudi work force
13Power 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 .
14SAUDI 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 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
15Scope of OperationsSEC’s operations are split into four main regions, which reflects the historical regional structure of the power sectorInterconnection of the four regions is a high priority for SEC, which will mitigate the need for some new capacity and will harbour greater efficienciesThis will be covered in greater detail by our Transmission Division
16CHALLENGES 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.
17WHY 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.
18SUCCESSFUL IPP ROJECTS Two IPP Projects in process:1. Rabigh Power Plant (Awarded July 2009)1200 MW / HFOIPCOD APRIL 2012Investment 2.4 billion US$IRR 8.5% with 20% for SEC2. Riyadh Power Plant 11 (awarded last month)1800 MW / GASIPCOD APRIL 2013INVESTMENT 2.3 billion US$.IRR 6.5% with50% for SEC
20Opportunities 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).Our medium term plan will see continued investment in our generation plants to ensure that we maintain our capacity margin of 10%The two charts provide a breakdown of our planned annual capacity additions by region in terms of MW and costsIn addition, IWPP’s are planning to add additional capacity of 6,000MW over the next 6-7 yearsIntroduce smart grid and smart meters .Encourage and support renewable energy.
21Conclusion opportunities are greater 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 theopportunities are greater
23Saudi power plans First long-term electricity plan developed 1979. Between 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.