saudi arabia’s sustainable energy program ... - ksa climate

K.A.CARE 1 1

K.A.CARE overview

Saudi Arabia’s Sustainable Energy Program

in a Nutshell

K.A.CARE 2 2

Contents

I. Introduction 4

II. K.A.CARE’s initiatives for achieving its targets 18

A. Nuclear energy program 20

B. Renewable energy program 26

C. K.A.CARE City 31

D. Research development & innovation 35

K.A.CARE 3 3

Saudi Arabia will be witnessing a steady growth in population throughout the

coming decades…

Source: EIU Report 2014

Population growth

26.3

27.1

28

28.9 29

29.8

30.6

24

25

26

27

28

29

30

31

2009 2010 2011 2012 2013 2014* 2015*

Population (m)

Source: CIA World Factbook 2014

Population pyramid

62%

K.A.CARE 4 4

…Accompanied with a rapid growth in the economy…

GDP growth

Source: EIU Report 2014

1,609

1,976

2,511

2,752 2,826 2,864

3,051

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2009 2010 2011 2012 2013 2014* 2015*

Nominal GDP (SR bn)

GDP breakdown

Source: SAMA Annual Statistics Report 2013

Agriculture & Fishing, 2.1%

Mining, O&G, 51.6%

Manufacturing & Refining,

11.6%

Power & Utilities, 1.3%

Construction, 5.5%

Wholesale & Retail, 9.8%

Logistics & Communicatio

n, 5.5%

Finance, Insurance,

Real Estate , 10.6%

Community and other

Services, 2.0%

K.A.CARE 5 5

… However, in order to meet the growing energy demands of the

Kingdom, a sustainable energy program is required…

25

26

27

28

29

30

31

2010 2015 2020 2025 2030

0

100

200

300

400

500

600

700

0

2

4

6

8

10

12

14

2010 2015 2020 2025 2030

Total

Energy

Demand

(TWh)2

260 321 403 520 638

Domestic oil production & consumption3

Millions of barrels per day

The opportunity cost of domestic oil consumption is set to increase from $96 BN in 2010 to $206 BN in

2030 making it necessary to find more economical power sources

Barr

els

per

Day (

Mill

ions)

Population growth1 and total energy demand

1. 2023 onwards population level is a projection based on 2018 – 2023 growth; 2. Total energy demand from generation planning report approximated using 5 year growth; 3. Available for export

is defined as production less consumption; 4. Opportunity cost is consumption multiplied by EIA Annual Energy Outlook 2011 projection; Cash flows have been discounted at a rate of 3%;

Source: Center for Engineering Research (Updated Generation Planning for the Saudi Electricity Sector), Bloomberg (Energy Demand), BP (Oil Supply Data), US-Saudi Business Council Press

Release (Aramco CEO quote) (Consumption data), EIA Annual Energy Outlook 2011 (export oil value)

Discounted

opportunity cost

of consumption

($US B/year)4

96 134 169 194 206

To

tal P

op

ula

tio

n (

Mill

ions)

To

tal E

nerg

y D

em

an

d (T

Wh)

Available for exportConsumptionProductionTotal energy demandTotal Population

Energy demand CAGR : 5%

Source: Center of Engineering Research, Bloomberg, BP, US-Saudi Business Counsel Press Release, EIA Annual Energy Outlook 2011

25

26

27

28

29

30

31

2010 2015 2020 2025 2030

0

100

200

300

400

500

600

700

0

2

4

6

8

10

12

14

2010 2015 2020 2025 2030

Total

Energy

Demand

(TWh)2

260 321 403 520 638

Domestic oil production & consumption3

Millions of barrels per day

The opportunity cost of domestic oil consumption is set to increase from $96 BN in 2010 to $206 BN in

2030 making it necessary to find more economical power sources

Ba

rre

ls p

er

Da

y (

Millio

ns)

Population growth1 and total energy demand

1. 2023 onwards population level is a projection based on 2018 – 2023 growth; 2. Total energy demand from generation planning report approximated using 5 year growth; 3. Available for export

is defined as production less consumption; 4. Opportunity cost is consumption multiplied by EIA Annual Energy Outlook 2011 projection; Cash flows have been discounted at a rate of 3%;

Source: Center for Engineering Research (Updated Generation Planning for the Saudi Electricity Sector), Bloomberg (Energy Demand), BP (Oil Supply Data), US-Saudi Business Council Press

Release (Aramco CEO quote) (Consumption data), EIA Annual Energy Outlook 2011 (export oil value)

Discounted

opportunity cost

of consumption

($US B/year)4

96 134 169 194 206

To

tal P

op

ula

tio

n (

Millio

ns)

To

tal E

ne

rgy D

em

an

d (T

Wh

)

Available for exportConsumptionProductionTotal energy demandTotal Population

Energy demand CAGR : 5%

Total population growth and total energy demand Domestic oil production and consumption (m barrels)

K.A.CARE 6 6

… In a country where the residential sector makes up the majority

of energy consumption…

Source: Saudi Aramco June 2011

Power generation and water desalination consume more

than 50% of Saudi’s energy….

…Where residential consumes the majority of the

utilities output

OilProduction,

8%

utilities, 51%Industrial, 15%

Transportation, 21%

Other, 5%

Aramco, 6%

Industrial, 12%

Residential, 53%

Government, 12%

Commercial, 11%

Other, 6%

K.A.CARE 7 7

… A number of considerations have to be taken in order to identify the proper solution

mechanisms that would develop a sustainable energy sector for the Kingdom…

Considerations Mechanisms to develop a sustainable energy

sector

Steady population and economic

growth

Increasing demand on electricity and

desalinated water

Maintaining the global energy

market’s stability on the long term

Guaranteeing a reliable source of

income to the future generations

The establishment of an integrated

energy economic system in the Kingdom

to generate electricity and desalinate

water by building multi technology power

plants and creating the required

industrial and service based sectors to

support it

Enabling the growth of this economic

sector through the support of innovation

and research & development and also

by the development of the required

human capital

K.A.CARE 8 8

…In 2010 a Royal decree was issued to launch King Abdullah City for Atomic and

Renewable Energy (K.A.CARE), Where the Program’s parameters were carefully

examined…

Value chain

development

Economics

of energy

mix

Electricity and

desalination

demand

patterns

Technology

choices

Regulatory and

physical

infrastructure

requirements

Human

capacity

development

Energy Mix

K.A.CARE 9 9

… Which identified sustainable power generation as a feasible alternative…

Energy mix scenario (TWh) Suggested installed capacity ramp-up scenario (GW)

54 GW

0

100

200

300

400

500

600

700

800

Y0 Y2 Y4 Y6 Y8 Y10 Y12 Y14 Y16 Y18 Y20 Y22

Nuclear Renewables Fossil

27%

53%

% of mix

Electricity production in 2032

NUK program 140

RES program 180

Total alternative 320

21%

Fossil

Renewables

Nuclear

Source: K.A.CARE analysis

0

25

50

75

Y0 Y2 Y4 Y6 Y8 Y10 Y12 Y14 Y16 Y18 Y20

Renewable Nuclear

17.6

54.5

72.1

K.A.CARE 10 10

…To generate significant oil savings …

Conversion rate1:

1 TWh = 1/ (45% x 1.7) = 1.3 MM boe

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Nuclear

Renewables

Total

Electricity production (in TWh)

Nuclear program 8,382

RES program 4,920

Total Alternative energies 13,302

Projection bias

beyond 2040

Total barrels of oil equivalent saved (billion barrels) Yearly barrels of oil equivalent saved (‘000 Mboe)

Source: K.A.CARE analysis

17.6 GW

54 GW

10.9

6.4

17.3

0

2

4

6

8

10

12

14

16

18

20

Nuclear Program RenewablesProgram

Total

Total program lifetime270 years 64 years

K.A.CARE 11 11

…And also have a wider economic Impact on GDP and employment…

1. KSA gross domestic product projections are based on IMF forecasts; alternative energy impact is measured as yearly contribution to business-as-usual KSA GDP

2. Program lifecycle calculated as the time between the start of the first construction and the last decommissioning year

Source: International Monetary Fund; Oliver Wyman analysis

K.A.CARE 12 12

… Through the proper localization strategy of nuclear energy components…

Nuclear energy components targeted for localization (% of capex and opex)

1. Based on average score from market, financial, KSA impact dimensions; main drivers include NPV, IRR and payback calculations

2. Based on average score from technology and KSA gaps dimensions; main driver is feasibility for KSA to compete globally

Note: NNG = Non nuclear grade

Source: Oliver Wyman analysis

K.A.CARE 13 13

…as well as the localization of renewable energy components…

Renewable energy components targeted for localization (% of capex and opex)

K.A.CARE 14 14

…in a time frame that would allow the Kingdom to capture maximum

value of the sustainable program

Localization roadmap

K.A.CARE 15 15

Contents

I. Introduction 4




C. K.A.CARE City 31


What are the initiatives KACARE is taking to achieve its targets?

K.A.CARE 16 16

The K.A.CARE strategy covers a number of initiatives to develop

sustainable power generation…

Nuclear program K.A.CARE’s strategy is to develop a range of nuclear power plant projects to sustain the base load demand. The

first step is to prepare the requirements for first wave of NPPs

Renewable

energy program In order to ensure the optimum efficiency in the development of the sector, a framework for energy generation

and procurement is being established to allow for the most competitive renewable generation market.

Atomic regulatory

framework To ensure the safety and security of the nuclear power plants, an independent regulator, inline with international

guidance, is being setup currently within K.A.CARE.

K.A.CARE City A physical city is being developed to host the National Laboratories and the supporting cluster of sustainable

energy components in collaboration with the private sector to ensure proper tenant attraction and efficiency of

assets developed.

Research,

Development and

Innovation

The National Laboratories will be the anchor of the physical city micro-economy and the driver of innovative

solutions towards the technologies associated with sustainable energy. It will also enhance the value chain

through the commercialization of patents generated by the RDI.

All initiatives are developed on a sustainable economic framework that ensures efficiency and

maximize impact on the energy value chain in Saudi Arabia

K.A.CARE 17 17

… All initiatives are developed to maximize public/ private participation and

ensure a steady growth of Saudi Arabia’s economy…

In order to ensure the sustainability of the energy

program, K.A.CARE has:

Established a framework for competitive procurement to for

the renewable energy sector.

Identified localization opportunities within the value chain of

the nuclear and renewable energy industry.

Provide a workforce development strategy through the

Human Capacity Building Program that defines the required

skills, competencies, and behaviors by sector and over time

K.A.CARE 18 18

… In line with the Saudi Arabia’s energy demand projections

Nuclear energy program Renewable energy program Physical city

K.A.CARE 19 19

Contents

I. Introduction 4




C. K.A.CARE City 31


Beginning with the Nuclear Energy Program…

K.A.CARE 20 20

.. Through careful study of the Nuclear Program requirements…

K.A.CARE is preparing for the safe, secure

and efficient introduction of Nuclear Power

through:

1. Preparation of the supporting

infrastructure

2. Preparation of the internal

requirements

K.A.CARE 21 21

…. And the preparation of the supporting infrastructure…

The introduction of Nuclear Power is a complex procedure and as such K.A.CARE has

been focusing on the supporting infrastructure necessary for its safe introduction

Supporting

infrastructure

Identifying changes to

the grid necessary to

accommodate NPP

Grid Impact

The Nuclear industry is

heavily regulated

worldwide and several

Bilateral agreements

need to be in place to

facilitate its introduction

Bilateral Agreements

Understanding the

characterization for

each proposed site

Site preparation

A critical tenant of

K.A.CARE’s strategy is

to ensure localisation

wherever possible and

practical

Local Supply Chain

K.A.CARE 22 22

… as well as the preparation of the internal requirements

K.A.CARE has also been preparing the internal requirements that must be developed

before engaging with the market to construct and operate Nuclear Power Plants

Tech

no

log

y S

ele

cti

on

Cri

teri

a

Internal Requirements

Ow

ner

Re

qu

ire

me

nts

Do

cu

me

nta

tio

n

Pro

cu

rem

en

t A

pp

roa

ch

an

d S

tra

teg

y

Human Capability Development

K.A.CARE 23 23

An independent atomic regulator is required…

An independent atomic regulator

Laws

Regulations

Regulatory Guides

Increased

Frequency

of

Revision

Increased

Detail

Revision & Validation

Against IAEA Requirements

Promulgation &

Empowerment of regulator

Completion, Finalization

Revision & Validation Publishing by regulator

Completion

Revision & Validation Publishing by regulator

K.A.CARE 24 24

… that is built around a solid governance framework to ensure

the safety, security, and efficiency of the nuclear power plants

The framework outlined:

– Regulatory approach

– Roles of Saudi Arabian atomic regulatory authority

– Saudi Arabian atomic regulatory authority divisional functions

– Required skills and competencies

– Saudi Arabian atomic regulatory authority preparatory tasks

– Approach to licensing nuclear facilities

– Partner regulators, and technical and legal support

K.A.CARE 25 25

Contents

I. Introduction 4




C. K.A.CARE City 31


In parallel, KACARE will be launching the Renewable Energy Program …

K.A.CARE 26 26

… Built around a comprehensive Renewable Energy Framework …

Localization

Job creation

Training

Research, Development & Innovation

Sector Leverage Strategy

Legal and Regulatory Structure

Procurement Models

Financial Models

Procurement schedule & milestones

Stakeholder analysis & integration plan

Bid documents, manuals, application forms, & other templates

Procurement Process

Off-taker

Clear Procurement & Communication channel

Facilitation Services

Other requirements

Supporting Tools Renewable Energy

Framework

K.A.CARE 27 27

… That capitalizes on a sector leveraging strategy…

The sector leveraging strategy is to deliver on the broader macroeconomic & social

goals under K.A.CARE mandate

This strategy is meant to leverage the Kingdom’s sustainable energy spend in a

balanced manner to fulfill national objectives

Localization

Research, Development & Innovation

Job creation

Training

K.A.CARE 28 28

… and lays out a clear and transparent procurement process…

K.A.CARE will launch the Kingdom’s RE Procurement plan over several

“rounds”, to enable the achievement of the following:

Maintain consistency with K.A.CARE energy targets

Allow for all RE related stakeholders to build their expertise required to

support the program’s implementation

To obtain lessons learned from each round & apply them to the

proceeding rounds

Allow the gradual growth of the local RE industry & international

community to support the program’s implementation

Allows validating the existing globally benchmarked prices across multiple

technologies while applying these prices to the local market context

EPC

Multiple procurement “rounds” conducted every 1 to 2 year

periods, where K.A.CARE will identify the targets,

capacities & eligible technologies for each round

Solar PV CSP Wind Geothermal

Procurement Models

Eligible Technologies Rationale for multiple procurement rounds

IPP

Waste to Energy

Procurement rounds

Off-taker

Single Procurement & Communication channel

Facilitation Services

Other requirements

Supporting Tools

K.A.CARE 29 29

… allowing for multiple technologies to be part of the energy mix to ensure

optimum effectiveness and efficiency

K.A.CARE

Negotiated Prices

Sustainable Energy Developers

Main Offtaker

Contract

(Facilitation)

(Procurement Leveraging Strategy)

K.A.CARE 30 30

Contents

I. Introduction 4




C. K.A.CARE City 31


A physical city is being constructed that would bring together the seed cluster

of the sustainable energy program…

K.A.CARE 31 31

…Playing a central role in achieving the sustainable energy program objectives…

The City will play

a central role in

achieving

K.A.CARE’s

objectives by

establishing a

defined center for

this new industry

This is essential

for Saudi Arabia

in order to

develop the local

value chain and

human capacity

required to serve

the sector

An innovation ecosystem mixing entrepreneurs and

researchers that allows to build capabilities and

enables research advancements in target sectors,

fostering the development of a knowledge-based

economy

A home for companies spurring the development of

atomic and renewable energy sectors in the Saudi

Arabia, promoting energy efficiency and resource

sustainability, and contributing to the sustainable

development of the country

A model to demonstrate an improved quality of life

and sustainable living that can be replicated across

Saudi Arabia

A place to kick-start the deployment of renewable

energy generation and to pilot innovations under

local conditions

Innovation and Capability Building Companies and Employment

Replicable Sustainable Living Energy Generation

K.A.CARE 32 32

… Through creating a cluster of sustainable energy research, development, and

industrial development, offering a comprehensive lifestyle to its tenants…

Amenities Full set of social and visitor

amenities enabling an improved

quality of life and economic

development

Production

Engine

Platform for the deployment of pilots

of innovative renewable energy

technologies

Light manufacturing with strong

R&D ties

Enabling

Infrastructure

State-of-art infrastructure with

the deployment of innovative

and sustainable technologies

(e.g., district cooling, smart

canopy, transportation)

Companies

Cluster

Residential

Housing

R&D and

Innovation Hub

State-of-the-art business facilities to host companies

focused on the atomic, renewable energy, energy

efficiency and resource sustainability sectors

Housing offering mix that caters to all income levels

and preferences

Sustainable building design and efficient energy

systems to demonstrate improved sustainability

National Labs to drive research advancement

in core sectors

Development of capabilities through graduate

and technical programs

Key city components

K.A.CARE 33 33

… In a time line that is consistent with the Industry’s development…

Phase 1A Phase 1B Phase 2

Ground Breaking Yr 0 Yr 3 Yr 4

Completion

Infrastructure Yr 3 Yr 6 Yr 7

Start Occupancy Yr 4 Yr 7 Yr 8

Completion Yr 6 Yr 9 Yr 10

K.A.CARE 34 34

Contents

I. Introduction 4




C. K.A.CARE City 31


… Anchored by the National Laboratories of Research & Development of

the different technologies of sustainable energy…

K.A.CARE 35 35

… Which will play a pivotal role in the advancement of sustainable energy

technologies…

Funding

• Gov’t Funds

• Energy Rate Fees

• Private Endowments

National Strategy

• Mission / Vision

• Advisory Committee

• Technology Foresight

Government

• Regulatory Support

•Management Support

People

• Existing Engineers

and Managers

• International Hires Industry Formation

• New Ventures

• Technical Assistance to

Companies

• Commercial Partnerships

• Intellectual Property

Energy Workforce

• Researchers

• Managers

• Plant Operators

Knowledge Production

• Publications

• Collaborations

• World Class Research

Outcomes Technical Program Operations

R&D

Planning,

Agenda

Economic,

Standards,

and Policy

Analysis

Staffing ,

Equipment,

Buildings,

Operations

Capacity

Building

Scholarships,

Outreach,

Training

R&D Program

Nuclear

Technology,

Renewable

Energy,

Energy Efficiency

Industrial

Development

Program

IP Mgmt.,

Business

Development

Inputs

K.A.CARE 36 36

…in an effort to position Saudi Arabia as a global leader of innovation in

sustainable energy

National Sustainable

Energy Policy Analysis

Training & Education Nuclear Regulatory Authority

Sustainable Energy

Industrialization

Sustainable Energy Portfolio National Energy

Research Complex

KA-CARE

Sustainable

Energy

National

Laboratory

K.A.CARE 37 37

For More Information, Please Visit our Website

WWW.KACARE.GOV.SA

http://www.kacare.gov.sa/

saudi arabia’s sustainable energy program ... - ksa climate

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