Independent water and power projects (IWPP) represent a recent trend in delivering the large-scale investments needed to sustain the rapidly growing utility sector in the Middle East. Since the first IWPP was implemented in 1998, more than half of the region’s new capacity for power and water production has been purchased using this model.

IWPPs rent power and water production capacity to a utility company for a term of typically 20 years. Under such an arrangement, the utility company does not have to raise large amounts of capital to purchase a plant and then to operate and maintain it efficiently throughout its life. Evaluation has shown that an IWPP can offer tariff savings of up to 30 percent compared with a utility-owned facility.

Modern power and water projects in the Middle East link an efficient combined-cycle gas-turbine and steam-turbine power plant with thermal desalination. The low-grade heat used to drive the multi-stage distillation process used to extract fresh water from seawater is supplied as low-pressure exhaust steam from the power plant.

Abu Dhabi, one of the United Arab Emirates, led the introduction of IWPP. It has a successful program of such projects and at the time of writing was evaluating bids for its fifth. PB has been involved with each of these projects in various capacities. This article relates particularly to the third IWPP implemented in Abu Dhabi, the Shuweihat S1 project located about 250 km (150 miles) west of Abu Dhabi city on the south coast of the Persian Gulf. (This project was featured in PB’s 2003 Annual Report, page 4.)

The Shuweihat S1 IWPP has a planned capacity of 1500 MW of power with 450,000 m3 (120 million gallons) of desalinated water per day, the largest capacity single contract for a power and water plant to date. The project was bid in 2000 and awarded in 2001 to a consortium comprised of CMS Energy and International Power. Requiring a total investment of $1,600 million, the plant is due to become fully operational late in 2004.

PB was selected by the developers to develop their bid with the engineer/procure/construct (EPC) contractor, a consortium of Siemens AG of Germany and Fisia Italimpianti of Italy. Subsequently, we acted as owners’ engineer, responsible for design review and supervision of site construction and commissioning work.

The IWPP Developer’s Challenge

The significant difference between independent water and power projects and utility procured projects is in the competition for the work. Independent projects are awarded to a developer who will not only install a plant but also operate it for a long period. This arrangement profoundly affects the way such projects are bid and the structure of contracts they incorporate.

To win the contract for supplying water and power, the bidders need to convert the utility’s technical outline and commercial definition into a detailed technical and commercial proposal offering the capacity for the minimum tariff. As can be appreciated, this is a complex process because the developer must select an appropriate design, establish a price for its construction and fund the investment. Funding is usually secured from a group of commercial investors, usually including international banking groups.

Minimising the tariff for power and water in the Middle East, where fuel costs are low, has conventionally been achieved by minimizing project investment cost. This has normally meant offering a relatively inefficient but low-cost plant that results in more wasteful use of natural resources and higher emissions of carbon dioxide (CO₂) and other pollutants. For the Shuweihat Project, PB and the developers’ technical team proved that an alternative was possible.

The Difference with Shuweihat

The Shuweihat bid by CMS and International Power worked differently from the start. The technical team, comprising specialists from the developers, their contract modelling advisor and PB, explored possible plant concepts early in the bidding process. Despite the larger than usual group, a healthy constructively competitive team spirit grew up committed to winning.

In this atmosphere no options were discounted until they had been demonstrated to offer inferior financial performance, not merely for first cost but for life cost. This open environment resulted in the team overturning the conventional lowest first cost approach and demonstrating that despite low fuel costs, a much more efficient and sustainable plant offered the lowest life cost.

Figure 1: Conventional Process

Figure 2: Improved Process

Finding the Best Solution

As the team worked on optimising the design, a subtle but significant thermal loss was identified between the power plant and the desalination facility. The challenge to reduce this loss was “thrown down” at the end of a meeting, and PB’s specialists left determined to find a solution.

Even before we completed the two-hour return journey, a novel idea had been conceived and rough estimates of its value computed. A modification to existing, proven technology was involved, however. We had to convince ourselves that the benefits were real before taking our solution back to the team.

The mismatch between the cycles arises as the operating temperature of the desalination process determines the temperature of the steam condensate returned to the power cycle. This hot condensate is pumped back to the gas turbine heat recovery steam generator (HRSG) to be reheated and evaporated as part of the steam cycle. The high temperature of the condensate limits the energy that can be extracted in the HRSG, increasing cycle losses to the stack.

The PB invention combines the recovery of heat from the hot condensate back into the desalination cycle, reducing steam consumption in the distiller with cooling of the return condensate to the HRSG allowing more heat to be recovered from the gas turbine exhaust gases. The combined effect is to improve the overall power and water production cycle thermal efficiency. The conventional and improved processes are illustrated by Figures 1 and 2.

The hot condensate is cooled in a conventional heat exchanger with a flow of cool distilled water from the distiller. The reheated distilled water is then recycled into the distiller so that its heat is recovered into the distillation process. The equipment required for the invention is all conventional process equipment; but the modification to the distillation process is novel and needed careful evaluation.

Our engineers spent several days modifying analytical software to check the impacts of the idea on the power and water cycles. When the full analysis was completed the benefits were found, if anything, to be larger than preliminary estimates. The concept was scrutinised further—had a fatal flaw or adverse impact on the distillation process been overlooked?

Finally, confident of the work, the idea was introduced to the rest of the technical team, with us expecting serious reservations and probable rejection. True to form, the group gave the idea a searching examination. It was then incorporated into the bid. Eight months later the CMS Energy International Power consortium was awarded the project, gaining part of their competitive advantage from this, now patented, PB innovation.

How Good is PB’s Innovation?

The new cycle modification has a number of benefits:

• Economic impact: Reduces fuel burn by up to 2 percent, and pays back the small additional investment in a few months
• Environmental benefit: Reduces CO₂ emissions by up to 2 percent, and would avoid 3 million tons per year of CO₂ emissions if applied to 30 percent of existing power and desalination plant
• Societal Benefit: Demonstrates that sustainability can be self-financing.

Although the gains of this innovation appear small, the subsequent award of the project has changed the way purchasers and bidders have approached later IWPPs. The longer-term effect has been to focus developers’ attention on valuable improvements in sustainability, however they are achieved.

The judgment of the market on the technology is relevant here. Few projects have been initiated since 2001 in the Middle East but confidence has recovered recently. Further, the Shuweihat project has now reached an advanced state of commissioning and the PB technology has been proven to perform as predicted in 2001.

Lessons Learned

1. Early involvement of specialist skills offers projects the best improvement in sustainability.
2. Contribute new or unusual ideas wherever they offer benefits.
3. Keep the whole solution in view; gaps between technical areas may hide opportunities.
4. Ensure that proper evaluations of costs allow sustainability to sell itself.
5. Seek opportunities to leverage sustainability gains though advocacy and publicity.