Dubai has selected a consortium that includes the Saudi Arabian power and water firm Acwa Power to build and operate a US$1.8 billion clean coal power plant, the first such facility in the Arabian Gulf.
Acwa is part of a consortium that includes China’s Harbin Electric, France’s Alstom and US-based NRG Energy that will build and operate first phase of the 1,200 megawatts Hassyan clean coal power project for a 25-year period, according to Dubai Electricity and Water Authority (Dewa).
The consortium, one of four bidders for the project, submitted the lowest bid of 4.501 US cents per kilowatt hour, based on coal prices in May. Acwa had initially submitted a price of 5.177 cents per kilowatt hour. That compares to 5.84 cents per kilowatt hour achieved for solar when the latest 200MW phase of Dubai’s Mohammed bin Rashid Al Maktoum solar park was awarded this year, also to Acwa, and about 9 cents per kilowatt hour for electricity produced from natural gas in the UAE.
One 600 MW unit will be operational in March 2020 and the other in March 2021. The second and third phases will bring total capacity to 3,600 MW.
Dewa is planning Dh60 billion worth of projects over the next five years to help meet rising demand for power and water and to diversify its energy mix, which currently relies mainly on gas to generate power.
Power demand, which was forecast to rise 5 per cent this year, has risen to an annual rate of growth of 6.4 per cent. Dewa plans to generate 71 per cent of its electricity from gas, 15 per cent from solar power, 7 per cent from clean coal and the rest from nuclear power by 2030.
Dewa plans to secure the help of the private sector in building a big chunk of new projects, which will be based on an independent power plant (IPP) model.
Hassyan, an IPP project, will be 78 per cent financed by the developer and the rest by equity, with Dewa having a 51 per cent stake and the developer the rest. Dewa will finance its $200 million equity stake from its own resources.
Acwa is in talks with a Chinese export credit agency and several local, regional and international banks for a $1.4bn loan to finance the 78 per cent debt tranche. These banks include Industrial and Commercial Bank of China, Bank of China, Abu Dhabi-based FGB and the UK’s Standard Chartered, according to Acwa.
EDF Trading, part of the French utility EDF, will supply the coal for the project. The price of coal is included in the $4.501 cents per kilowatt hour tariff. Coal could be imported from Australia, Indonesia and South Africa, said Acwa.
The company also said it would be interested in bidding for the two other phases of Hassyan. It also plans to bid for the 800 MW third phase of the Mohammed bin Rashid Al Maktoum Solar Park.
dalsaadi@thenational.ae
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