Acwa Power and Engie dominate water

ranking
31 JANUARY 2023 | BY JENNIFER AGUINALDO (/AUTHOR/JENNIFER-AGUINALDO)

Only two independent water project contracts were awarded in 2021-

22

Saudi utility developer Acwa Power and France’s Engie continue to dominate MEED’s GCC desalination
developer ranking, each having cornered one of the only two independent water producer (IWP)
contracts awarded between 2021 and 2022.

According to the survey of 20 IWP and 22 independent water and power producer (IWPP) projects across
the six GCC states, Acwa Power has a net water desalination capacity of 2.9 million cubic metres a day
(cm/d) and gross capacity of 6.29 million cm/d across 16 projects.

GCC top 10 desalination developers ranking 2023

cm/d
Net capacity Gross capacity Number of IWPP/IWP contracts won
 Net capacity Gross capacity Number of IWPP/IWP contracts won

Number of IWPP/IWP
Net capacity Gross capacity
contracts won
Acwa Power 2,914,476 6,297,068 14
Engie 1,667,054 6,462,211 16
Gulf Investment
515,000 2,011,000 5
Corporation
Malakoff 473,275 1,631,000 4
Marubeni 471,496 2,245,400 4

Sumitomo 361,995 1,546,400 4

Sembcorp 260,912 652,280 2
GS Inima 256,000 400,000 2

Badeel 192,000 600,000 1

Saudi Brothers
Commercial 180,000 600,000 1
Company

Acwa Power widened its lead over Engie, which has a net desalination capacity of 1.67 million cm/d.
However, Engie maintained an upper hand in terms of gross capacity, which stood at 6.46 million cm/d
across 16 projects. 

Gross capacity refers to an independent seawater desalination project’s total capacity while the net
capacity is proportionate to each developer’s stake in the company implementing a project.

There are no significant changes in this year’s ranking, except for Marubeni giving up its third position to
Kuwait’s Gulf Investment Corporation and settling for the fifth spot below Malaysia’s Malakoff.

This follows the dismantling of Abu Dhabi’s first IWPP project, Taweelah A2, in which Marubeni
maintained 34 per cent equity, equivalent to 81,600 cm/d of net capacity.

Capacity additions
A team comprising Acwa Power and the Public Investment Fund-backed Badeel signed the $821m
contract to develop the Shuaibah 3 IWP last year (https://www.meed.com/firms-sign-800m-shuaibah-
3-plant-conversion), which has a design capacity of 600,000 cm/d.

This project entails the development of a new seawater reverse osmosis (SWRO) facility to replace the
existing plant equipped with the older and less energy-efficient multi-stage flash (MSF) desalination
technology. The existing plant is expected to be decommissioned by 2025.

Acwa Power’s 68 per cent stake in the project has resulted in over 400,000 cm/d of additional net
capacity, which took the company’s net desalination capacity to 2.91 million cm/d as of the end of 2022,
up almost 14 per cent compared to the previous ranking.
 p p p p g

Badeel’s 32 per cent shareholding in the project propelled it to ninth place among the developers, which
resulted in Japan’s Mitsubishi exiting the top 10.

In June 2021, Engie, in a consortium with local firms Nesma Company and Abdulaziz Alajlan Sons,
signed the water-purchase agreement with Saudi Water Partnership Company for the Jubail
(https://www.meed.com/jubail-3b-reaches-financial-clsoe) 3B IWP scheme
(https://www.meed.com/jubail-3b-reaches-financial-clsoe).

The project will have a capacity of 570,000 cm/d. Engie has gained a net capacity of about 228,000 cm/d
through its 40 per cent share in the company implementing the project.

Three other IWP projects reached the bidding stage in the past year. Engie and Spanish/South Korean
developer GS Inima have been selected to develop the Mirfa 2 (https://www.meed.com/engie-led-
team-selected-for-mirfa-2-water-contract) and Shuweihat 4 (https://www.meed.com/firm-bids-low-for-
shuweihat-4-water-scheme) IWP schemes in Abu Dhabi, respectively. Saudi Aramco has also selected a
team of Lamar and Mowah for a captive IWP at Jafurah.

This year’s survey includes 42 projects with a combined total gross capacity of about 15.8 million cm/d,
4.6 per cent higher than in 2021, after considering new, expired and discontinued capacity over the past
two years.

In terms of gross installed and under-construction capacity, projects structured as an IWP still lag behind
their IWPP counterparts by 12 percentage points.

Between countries, Saudi Arabia leads with a gross capacity of 5.8 million cm/d, with the UAE not far
behind at 5.6 million cm/d.

GCC independent desalination capacity by country

cm/d
IWP IWPP

Bahrain
855,300
KSA 3,670,000 2,079,000

Kuwait486,400

Oman 1,622,430
Qatar 1,329,760

UAE 1,691,118 3,899,951

/d bi t d
cm/d=cubic metres a day
Chart: Jennifer Aguinaldo • Source: MEED • Get the data • Embed • Download image • Created with

Most active independent water desalination projects across the GCC are structured as IWPs. So far, only
three known active IWPPs are being tendered in the GCC region, including Al-Zour North 2 & 3 and Al-
Khiran 1 in Kuwait and Qatar’s Facility E.

Historically, IWPPs tie a thermal power generation and water desalination plant together in a single
contract, with most of these desalination plants using energy-inefficient MSF or multi-effect distillation
(MED) desalination technologies to treat seawater.

Price
The past two years scuppered the expected freefall in unsubsidised water production costs in the region.
In 2021, low costs for electricity; engineering, procurement and construction (EPC); and finance
underpinned the world record-low levelised water cost (LCW) offer of 27.77 $cents a cubic metre ($c/cm)
for Dubai’s first IWP in Hassyan. However, the implementation of the project faced challenges and the
contract was ultimately retendered.

This has meant Jubail 3A, awarded in 2020, remains the scheme with the lowest LCW, at about 41.3
$c/cm so far.

GCC IWP levelised water cost

$/cubic metre

Rabigh2*
Shuqaiq
Taweelah
Yanbu
Hassyan 
Jubail
Mirfa
Shuweihat
3A
3B
433 4*
*Water-purchase agreements for both schemes have yet to be signed as of 18 January 2023
Chart: Jennifer Aguinaldo • Source: MEED • Get the data • Embed • Download image • Created with

The trend of rising water tariffs was confirmed last year when bidders submitted prices for the Mirfa 2 and
Shuweihat 4 IWP contracts in Abu Dhabi. Engie submitted a price of 48.3 $c/cm for the 545,530 cm/d
Mirfa 2 while GS Inima offered 56 4 $c/cm for Shuweihat 4
Mirfa 2 while GS Inima offered 56.4 $c/cm for Shuweihat 4.

In May, the CEO of a new developer aiming to make a mark on the region’s independent desalination
sector cautioned that “we are at the end of a period where the [water] supply chain is comfortable from
the point of availability and prices are decreasing, to a period of instability”.

“If the conditions prior to the pandemic resume, then that is great for everybody. But I am not sure if the
current [construction cost-led] water pricing model will hold, assuming uncertainty will continue,” Alon
Tavor of Israel’s IDE Technologies told MEED.

Robert Bryniak, CEO of Dubai-based Golden Sands Management Consulting, says: “A year or so ago, a
continued downward trend in water tariffs looked promising, but recent prices seem to have dashed these
hopes, at least for the time being.”

While awarded prices for Saudi IWPs in 2018-21 were within the 42-47 $c/cm range, the 40 $c/cm barrier
has yet to be broken.  

“Higher interest rates, supply production and delivery bottlenecks, higher inflation worldwide, along with
EPC contractors and developers having a full plate of contracts at hand, have made it difficult to get lower
tariffs,” says Bryniak. “It is somewhat surprising that recent tariffs have not been even higher.”

While supply bottlenecks might ease as China opens up following its latest Covid-19 lockdowns, the other
factors are still in play. This could prevent the 40 $c/cm barrier from being broken this year, Bryniak adds. 

“If inflation eases and interest rates start heading down, we might see lower tariffs. Until then, tariffs are
more likely to remain in the 40-50 $c/cm range for 2023.”

Decarbonisation impact
The need to decarbonise industrial sectors in line with most of the GCC states’ net-zero carbon emissions
objectives is having an impact on the region’s energy-intensive desalination sector.

Two IWPP assets in Oman and Abu Dhabi, where desalination plants relied on MSF technology, have
been dismantled following the expiry of their contracts. The MED-based desalination plant at Oman’s
Barka 1 IWPP is also being decommissioned.

Similarly, the conversion of the desalination plant at Saudi Arabia’s Shuaibah 3 IWPP into an SWRO
facility is in line with the need to lower the carbon footprint of these assets.
In addition, the planned $1bn SWRO complex in Saudi Arabia’s Neom aims to be a model for a zero- or
low-carbon facility. It is expected to be powered 100 per cent by renewable energy and will use advanced
membrane technology to produce separate brine streams. The project will convert brine, the main waste
output of desalination, into valuable industrial materials that can be used locally or exported
internationally.

Some recent IWPs have also integrated a solar photovoltaic plant to reduce consumption from the
national electricity grid while lowering overall production costs, but there has been mixed feedback about
how well this option achieves that goal.

Julio de la Rosa, Middle East business development director at Spanish-headquartered Acciona Agua,
notes another trend: the long-term goal of clients to monetise all impacts associated with the development
of projects – particularly those deviating from environmental, social and governance principles. “This
allows a more comprehensive view when calculating an asset’s net present value,” he says.

Making the desalination production process more eco-friendly also helps projects to attract financing,
which is increasingly challenging for traditional projects. “More and more investors require their money to
be invested in either a neutral or positive carbon footprint,” De la Rosa says.

Unawarded
MEED expects at least four IWP contracts to be officially awarded in 2023, including Mirfa 2 and
Shuweihat 4 and potentially Abu Dhabi Islands and Hassyan 1 in the UAE and Rabigh 4 and Ras
Mohaisen in Saudi Arabia.

Long term, Saudi Arabia has the largest pipeline, with at least 10 more IWP projects scheduled under its
latest procurement plan spanning 2020 to 2026.

The overall ambition to expand the non-oil industrial output across the GCC region, and the multitrillion-
dollar economic programmes between Saudi Arabia and the UAE in particular, are expected to continue
to accelerate water demand in the long term. Net-zero targets and the need to attract green finance will
also require these countries to make innovation a top priority.