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National Grid SA: Taking measures to adapt Saudi Arabia’s grid to changing energy mix [free access]

August 8, 2017

In the 1990s, the Saudi government began the process of consolidating and regulating the electricity market to ensure reliability and formed the Saudi Electricity Company (SEC) by Royal Decree in 1999. SEC, along with its subsidiaries and affiliates, is Saudi Arabia’s monopoly integrated electricity generation, transmission and distribution company. It is a joint stock company in which the Saudi government and the government-owned Saudi Aramco own over 81 per cent of the shares. SEC holds the sole licence for the transmission and distribution of electricity in the Kingdom of Saudi Arabia.

 

In 2012, under a restructuring programme, SEC formed the National Grid SA, which is wholly owned by it, for all operation and maintenance activities related to the transmission grid within the kingdom. National Grid SA works to improve and develop transmission networks in all sectors of the SEC (Central, East, West and South). The Saudi network code contains several rules and regulations to organise the work of the National Grid SA. The company’s mission is to run the electrical system, transmit electrical power from production sites to consumption centres, study the expected loads, develop plans to enhance the electrical system to meet the expected demand, communicate with major customers to determine their needs and ascertain the best way to supply them with electricity. It also cooperates with independent producers to sign purchase and energy exchange agreements and to represent SEC as a prime buyer from independent producers.

 

 

Current Scenario

Over the last few decades, inflated oil prices coupled with large fuel subsidies have paved the way for high population growth and rapid industrial expansion in Saudi Arabia. This in turn has spurred heavy energy demand in the country. As a result, yearly increases in electricity demand are cutting directly into the country’s oil export volume and export earnings. Besides, the recent downturn in prices has led to declining oil revenues and large budget deficits, which means that the government can no longer continue to support the provision of cheap power.

 

The country is predicted to work towards greater efficiency and diversification of electricity generation, including alternative and renewable energy. Under the ‘Saudi Arabia Vision 2030’ the country has made a commitment to developing non-conventional sources. It is expected that by 2030, Saudi Arabia will generate 70 percent of its electricity from natural gas and 30 percent from renewable and other sources. The target is to install 41 GW of solar, 9 GW of wind and 4 GW of other renewable capacity by 2032. The government aims to eliminate energy subsidies by 2020, entailing higher electricity costs for consumers.  These higher costs are expected to result in a fast-growing demand for technologies, services, and products related to energy efficiency.

 

Accordingly, to reduce consumption of oil in power generation, Saudi Arabia is eager to upgrade its entire power sector. Apart from increasing its non-oil generation capacity, the country is looking to replace its outdated distribution infrastructure, implement smart grid technology, and promote international grid connectivity.  Therefore, with the aim of developing a robust network and a competitive electricity market, National Grid SA plans to improve the performance of the transmission network so as to transfer energy with high reliability and at optimal cost.

 

Existing network

During 2016, National Grid SA increased the country’s transmission network by 8 per cent. A total of 5,161 circuit km, comprising underground cables and overhead lines, were added to the existing system. In addition, 65 new substations with 217 transformers, totalling a capacity of 33,589 MVA, were also added to the network. The length of the transmission network reported a cumulated growth of 7.9 per cent for the period 2012-16. In the same period, the network of 110 kV to 132 kV transmission lines expanded by 6.2 per cent, whereas the network of 230 kV to 380 kV power lines increased by 10.1 per cent. From 2012 to 2016, transformer capacity and number of substations increased at a compound annual growth rate (CAGR) of 13.7 per cent and 7.4 per cent respectively.

 

Table 1: Growth in transmission network


2012

2013

2014

2015

2016

Line length (circuit km)

51,881

54,318

59,797

65,186

70,347

132 kV/115 kV/110 kV

30,256

31,677

34,872

36,659

 38,532

–OHL AC

26,680

27,933

30,751

32,059

33,266

–UGC AC

3,576

3,744

4,122

4,601

5,266

230 kV

4,278

4,479

4,931

28,527

31,816

–OHL AC

4,231

4,430

4,877

–UGC AC

47

49

54

380 kV

17,347

18,162

19,994

–OHL AC

17,117

17,921

19,729

–UGC AC

210

220

242

–USC AC

20

21

23

Transformer capacity (MVA)

185,243

203,006

231,000

273,938

310,063

132 kV/115 kV/110 kV

89,805

98,416

111,988

119,219

132,213

230 kV

21,769

23,856

27,146

154,588

177,850

380 kV

73,669

80,733

91,866

Number of substations

660

699

755

812

877

Number of transformers

1,869

1,982

2,307

2,528

2,745

Note: Totals may not match as the figures might be rounded of

OHL - overhead lines; UGC- underground cables; USC - undersea cables; AC - alternating current

Source: SEC, National Grid SA                                                                             

 

Financial and operational performance indicators

During 2016, National Grid SA posted a profit of SAR231,756 million from operations. The company reported an 18.14 per cent increase in the operating income and a 17.31 per cent increase in the net income on a year-on-year (y-o-y) basis.  In 2016, the share of total liabilities and shareholder’s equity increased by 30.8 per cent over 2015. The non-current assets increased by 29.36 per cent and the current assets decreased by 16.39 per cent on y-o-y basis. Moreover, during the five-year period (2012-16), the company reported a CAGR of 0.5 per and 20.1 per cent in operating income and current assets respectively. The shares of non-current assets and liabilities and shareholder’s equity increased at a CAGR of 18.2 per cent each.

 

Table 2: Key financial indicators (SAR million)


2012 

2013 

2014 

2015 

2016 

Operating income 

8,260,898

7,878,813

6,995,933

7,127,308

 8,420,375

Current assets 

 610,260

722,888

1,051,715

  1,518,106

1,269,237

Non-current assets 

 57,942,403

 63,012,846

 71,913,554

85,842,697

113,002,000

Total liabilities and shareholders' equity 

58,552,663

 63,735,734

72,965,269

87,360,803

114,271,238

Profit from operations 

  1,416,543

1,723,660

     148,209

    266,539

        231,756

Net income 

1,427,036

1,772,505

     249,330

    203,251

238,435

Note: SAR - Saudi Riyal

Source: National Grid SA

 

The performance efficiency of the system improved from 32.8 per cent in 2012 to 38.1 per cent in 2016. System average interruption duration index (SAIDI) reduced from 108.28 in 2015 to 48.09 in 2016. The system average interruption frequency index (SAIFI) reduced from 0.42 in 2015 to 0.30 in 2016. The company has been able to maintain network losses due to interruptions to around 0.005 per cent.

 

Table 3: Key indicators of operational performance


2012

2013

2014

2015

2016

SAIDI (average minutes of interruptions per delivery point)  (more than 5 minutes)

38.413

50.650

41.021

108.279

48.093

SAIFI (average number of interruptions per delivery point) (more than 5 minutes)

0.411

0.391

0.311

0.424

0.301

Frequency (number) of short-term separation of lines per 100 km

1.912

1.513

1.311

1.596

1.223

Percentage of energy lost due to interruptions (ENS)

0.004

0.005

0.003

0.006

0.003

Note: SAIDI - system average interruption duration index; SAIFI - system average interruption frequency index

Source: National Grid SA

 

Future plans and investments

Saudi Arabia plans to significantly expand its transmission network in order to minimise congestion, interconnect isolated regions and connect new power plants to the grid. The peak electricity demand in the country is expected to increase from 66,185 MW in 2016 to 84,010 MW in 2020 and further to 105,110 MW in 2025. To meet this demand, Saudi Arabia is expected to generate 495,545 GWh of power in 2020 and 623,160 GWh in 2025. As part of its short-term strategic plan (2017-2019), National Grid SA intends to add 21,007 circuit km of transmission lines and 278 substations. In the long-run (2020-24), the goal of the company is to expand the network by 9,306 circuit km and 175 substations. Other than this, National Grid SA expects to add 77,264 MVA and 57,395 MVA of transformer capacity during 2017-19 and 2020-24 respectively. The company aims to reach out to approximately 2.3 million new customers by 2021.

 

Figure 1: Transmission lines planned in Saudi Arabia (circuit km)

image_1_592_02

Note: OHL- overhead lines; UGC - underground cables

Source: National Grid SA

 

Figure 2: Number of transmission substations planned in Saudi Arabia

image_2_573_04

Source: National Grid SA

 

Figure 3: Transformer capacity additions planned in Saudi Arabia (MVA)image_3_604_02

Source: National Grid SA

 

The main focus of National Grid SA is to strengthen inter-regional linkages; connect the northwest and northeast regions to the grid; establish linkages with other gulf countries; and develop an interconnection with the Arab Republic of Egypt.

 

Presently, National Grid SA is executing works for the 380 kV North Western Network (Stage 2). The project involves the construction of overhead, alternating current (AC) lines and is likely to be completed in 2017. Apart from this, the company is reinforcing the 380 kV Hail–Al Madinah transmission line. The project aims to meet the growing demand for electricity in the region. To connect to Power Plants 11, 12 and 13, it is also developing the 500 kV Western Operating Area (WOA)–Central Operating Area (COA) high voltage direct current (HVDC) interconnection.

 

National Grid SA is also executing the 1,320-km-long interconnection project with Egyptian Electricity Transmission Company (EETC). The project entails the construction of a ±500 kV multi-terminal HVDC link from Badr in Egypt to El-Madinah El Munawara via Tabuk in Saudi Arabia. Estimated to cost USD1.6 million, the link will allow both countries to capitalise on the differences in their peak power demand times, facilitate trade and lead to cost savings. Currently, the project is in the contractor selection phase and is slated for completion in the first quarter of 2019. In addition to this, the company is implementing a cross-country connection with Jordan. The interconnection will help meet the rising power demand in Jordan by transferring surplus power from Saudi Arabia. A memorandum of understanding (MoU) for the interconnection between the Jordan government and GCC Interconnection Authority (GCCIA) was expected to be signed in 2016.

Table 4: Key planned transmission projects

Name of project

Voltage (kV)

Status

Scheduled completion

Cross-border projects

Egypt-Saudi Arabia interconnection project

500 kV

Under contractor selection

2019

Jordan–Saudi Arabia interconnection project

NA

Proposed/Announced

2018

Domestic projects

380 kV North Western Network (Stage 2)

380

Under construction

2017

380 kV Ras Alkhair Bulk Supply Point interconnection (Stage 1, 2 and 3)

380

Proposed/Announced

2017 (Stage 1); 2018 (Stage 2); 2019 (Stage 3)

5th transmission interconnection between Eastern Operating Area and Central Operating Area

380

NA

2017

Construction of Ras Abo Qames Bulk Supply Point (Stage 1 and 2)

115 kV and 380 kV

Proposed/Announced

2020-2021

Najran–Abha interconnection

380

Proposed/Announced

2020

Reinforcement of Hail–Al Madinah interconnection transmission

380

NA

2017

Western Operating Area (WOA)–Central Operating Area (COA) HVDC interconnection

500

NA

2017 (station I); 2018 (HVDC line and station II)

HVDC – high voltage direct current; NA - not available

Source: Global Transmission Research

 

Conclusion

The electricity sector in Saudi Arabia is presently going through a crucial transformation. Increasing pressures of industrialisation combined with the slump in international oil prices have left no option for the country but to turn to alternate sources of generation. With demand for energy set to rise, the kingdom has planned to increase generation capacity to 156 GW by 2040. It has identified alternative forms of energy such as nuclear, solar and combined natural gas plants to expand its production. To accommodate this, the country needs to directly integrate new energy supplies into its transmission network. This will entail expanding and modernising the system so as to capitalise on potential energy efficiency gains through investments in capacity addition and latest technologies.