Middle East: Towards an energy mix: The role of conventional power sources in the changing energy landscape

While renewable energy generation continues to gain traction in the region, traditional power generation from sources such as oil, natural gas and coal will continue to have a crucial position in the broader energy mix amid soaring demand for power

Early this year, GE and Japan’s Sumitomo Corporation reached a public-private partnership (PPP) milestone by signing a 25-year Power Purchase Agreement (PPA) with the Sharjah Electricity and Water Authority (SEWA) to develop, build and operate a 1.8 gigawatt (GW) combined cycle power plant located in Hamriyah. Equipped with GE’s HA technology, including the world’s largest and most efficient heavy-duty gas turbine, the flagship project is expected to be the most efficient power plant in the Middle East’s utilities sector upon completion and will enable SEWA to substantially improve the overall efficiency of its operations. The project will consist of three combined cycle blocks, the first of which is expected to come online in 2021. A consortium of banks and JBIC will co-finance the Project for a total private-public co-financing amount of approximately $1 billion.

The new project in Sharjah is expected to boost the emirate’s electric power supply, but most importantly, it emphasizes the critical role of gas power in the wider energy mix, as the Middle East steps up investments on renewable energy including solar, wind and nuclear.

Saudi Arabia has for instance earmarked over $100 billion for renewable energy investments. But the Kingdom is at the same time furthering investments on new gas power projects, in recognition of gas’ essential role in narrowing the electricity demand-supply gap. “We want the best of all possible power generation sources. We do not intend to play one against the other. To cope with the fast rising demand of electricity, we will need renewable energy to complement traditional sources of power generation including gas,” Khalid A. Al-Falih, Saudi Arabia’s former minister of energy, industry and mineral resources told Utilities Middle East last year.

In Sharjah, where GE is building the emirate’s new 1.8 GW gas power plant, power generation activities are dominated by gas turbines, which represent 83.2% of its available capacity. No target policies for the large-scale deployment of renewable energy exist in the emirate. SEWA is looking to kick-start its own renewable energy programme that will address the immediate needs of the emirate, but at the same time pursue conventional power generation, which it considers necessary for a reliable energy mix.

“What our neighbours in the region are doing in terms of new solar projects, nuclear and clean coal plants is good in terms of boosting power capacity. We would like to pursue a strategy that will guarantee sustainable and uninterrupted power supply,” says Dr. Rashid Alleem, Chairman of SEWA.
According to a report from the Gas Exporting Countries Forum (GECF), the Middle East’s demand for electricity is expected to reach 2,419 terawatt hours (TWh) by 2040, double 2016 levels. This has prompted regional utilities to explore other sources of power, including renewable energy.
However, in an energy-hungry world marked by a spiralling demand for electricity, the intermittency of renewable power means one cannot rely upon it as the sole source of electricity. The sun does not always shine down upon us through clear blue skies, winds do not always blow at stable speeds, rainfall patterns are not always reliable enough to ensure a planned, constant flow of hydropower and today’s energy storage solutions have yet to evolve to a level where they can plug in the gaps that may be caused by this intermittency.

“The world will have to depend upon a mix of conventional resources and renewable power to meet the need for dependable, affordable and sustainable energy over the foreseeable future. Traditional and alternative sources should be seen as complementary, not competing forces, to meet our electricity needs,” says Joseph Anis, President & CEO of GE Power in the Middle East, North Africa and South Asia.

Looking at the coal example, he points out that, while coal-fired generation capacity has been markedly reduced in Europe and the US, it has continued to increase in Asia, and some countries in the Middle East like Pakistan or the UAE are adding coal to their energy mix for greater reliability and energy security. “We estimate that thermal generation will still play a role in this part of the world for at least another 20 years, but the nature of the role will change”, says Massimo. “Clearly, today the thermal power generation is becoming a facilitator of renewable energy. We see less and less of thermal generation as a baseload, and more to flexibly sustain the grid balance by basically kicking in when the sun is not shining or when the wind is not blowing. Thermal power generation technology continues to evolve to play that new role. Today, both gas and coal power plants can deliver the flexibility that’s needed to balance intermittency.”

The issue of intermittency from solar and wind means that it is difficult to get reliable power from either, as it is weather dependent, which is unpredictable. Since energy storage is currently not efficient enough to be cost effective, this creates the need for dependable energy sources to supplement.

Fossil fuels automatically raise the emission question, particularly coal. Can coal still be a viable source of energy in times of global efforts to address climate change? “While we all wish for abundant power generation with zero environmental impact, this is not the reality today. For some countries the is no viable alternative to coal as a major energy source today. So if we continue using coal, we should do it in the best possible way, using modern technology to limit the environmental impact”, says Massimo.

Technology has much evolved over the past few years. GE’s ultra-supercritical (USC) technology is today’s standard bearer for coal power plants across the globe. Operating at temperatures and pressures above the critical point of its predecessors, ultra-supercrititcal coal plants are capable of generating power at a higher efficiency rate with significantly reduced CO2 emissions, as well as related operational costs.

“GE is already leading the way with this technology at various coal power plants around the world, including the Hassyan power plant currently under construction in Dubai”, says Massimo. “And we don’t stop here; GE is already working on the next generation of technology that we call Advanced USC. Integrating both mechanical and digital industrial platform capabilities, this technology is projected to heighten efficiency rates by an additional 1.5%, lessen emissions by another 3%, and adding approximately $50mn to its customers’ NPV (Net Present Value) through reduced operational and lifecycle costs.”