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FY2018 Study on Business Opportunity of High-quality Energy Infrastructure to Overseas
Feasibility Study for the Introduction of Electricity Energy Supplying Infrastructure for Off-Grid Facilities with Solar Power Generation and Hybrid Control
in the Kingdom of Saudi Arabia
Final Report
March 2019
Ministry of Economy, Trade and Industry of Japan
Oriental Consultants Global Co., Ltd.
Marubeni Metals Corporation
Preface
We, Oriental Consultants Global Co., Ltd. and Marubeni Metals Corporation were given in trust by
the Ministry of Economy, Trade, and Industy of Japan (METI) and conducted the Feasibility Study
(“F/S”) in the Fiscal Year 2018 for “The Introduction of Energy Supplying Infrastructure for
Off-Grid Facilities with Solar Power Generation and Hybrid Control in the Kingdom of Saudi
Arabia” project in the Kingdom of Saudi Arabia. We summarized the result of the F/S in this
report.
The F/S, “Feasibility Study for the Introduction of Electricity Energy Supplying Infrastructure for
Off-Grid Facilities with Solar Power Generation and Hybrid Control in the Kingdom of Saudi
Arabia” aimed to build an infrastructure project which can fully utilize Japanese advanced
technique and know-how by developing the “energy” field ― which is estimated to grow in the
Kingdom of Saudi Arabia ― based on Japanese Government’s policy “Infrastrucrure System
Strategy”, and by differentiate by creation of new business model.
We hope this report will help to realize such projects, and will provide useful information to
Japanese stakeholders.
March 2019
Oriental Consultants Global Co., Ltd.
Marubeni Metals Corporation
Abbreviation Abbreviation Official Name
AI Artificial Intelligence B/C Buyer’s Credit B/L Bank Loan CDM Clean Development Mechanism CO2 Carbon Dioxide DEWA Dubai Electricity and Water Authority DG Diesel Generator DNA Clean Development Mechanism Designated National Authority (Under Ministry of
Energy, Indsutry, & Mineral Resources) ECRA Electricity and Cogeneration Regulatory Authority EIA Environment Impact Assessment EMS Energy Management System EPC Engineering, Procurement and Construction F/S Feasibility Study GAMEP The General Authority of Meteorology and Environmental Protection GCC Gulf Cooperation Council GCF Green Climate Fund GDP Gross Domestic Product GE General Electric GEC Global Environment Centre Foundation GHG Green House Gases GTM Greentech Media HCIS High Commission for Industrial Security IEEJ The Institute of Electrical Engineers of Japan IPP Independent Power Producer IRR Internal Rate of Return ISO International Organization for Standardization IUCN International Union for Conservation of Nature and Natural Resources JBIC Japan Bank for International Cooperation JCM Joint Crediting Mechanism JICA Japan International Cooperation Agency JV Joint Venture K.A.CARE King Abdullah City for Atomic and Renewable Energy MCI Ministry of Commerce and Investment MEIM Ministry of Energy, Industry and Mineral Resources MEWA Ministry of Environment, Water & Agriculture MJ Mega Joule MoE Ministry of Education NDC Nationally Determined Contribution NEDO New Energy and Industrial Technology Development Organization NIDLP National Industrial Development and Logistics Programme NREP National Renewable Energy Program
Abbreviation Official Name NTP2020 National Transformation Program 2020 ODA Official Development Assistance OECD Organization for Economic Co-operation and Development OPEC Organization of the Petroleum Exporting Countries PCS Power Conversion System/Primary Cut out Switch PIF Public Investment Fund PR Public Relations PV Photovoltaic RC Responsible Care REN21 Renewable Energy Policy Network for the 21st Century REPDO Renewable Energy Project Developent Office RFP Request for Proposals ROM dump station
Run of Mine dump station
SAGIA Saudi Arabian General Investment Authority SAR Saudi Arabia Riyal SEC Saudi Electricity Company SIDF Saudi Industrial Development Fund SPC Special Purpose Company UAE United Arab Emirates USD United States Dollar
Contents Outline of Target Country and Related Sectors ........................................................... 11 Chapter 1.
Economy, Financial Status in the Target Country ............................................................... 11 1.1.1.1.1. Economy ..................................................................................................................... 11 1.1.2. Industrial Structure ...................................................................................................... 12 1.1.3. Population ................................................................................................................... 13 1.1.4. Investment from Overseas .......................................................................................... 14 Outline of Object Sectors of the Project ............................................................................. 15 1.2.
1.2.1. Power Sector ............................................................................................................... 15 1.2.2. Mining Sector .............................................................................................................. 16 1.2.3. Cement Sector ............................................................................................................. 17 Trends in Policies ................................................................................................................ 18 1.3.
1.3.1. Saudi Vision 2030 ....................................................................................................... 18 Outline of Project Area ....................................................................................................... 20 1.4.
Survey Method ............................................................................................................ 21 Chapter 2. Surey Contents .................................................................................................................... 21 2.1. Survey Method and Organization ....................................................................................... 23 2.2. Survey Schedule ................................................................................................................. 24 2.3.
Contents of the Project and Examination of Technical Aspects .................................. 28 Chapter 3. Background and Necessity of the Project ........................................................................... 28 3.1.
3.1.1. Renewable Energy Trends in the World ...................................................................... 28 3.1.2. Renewable Energy Trends in the Middle East ............................................................ 29 3.1.3. Integrity of Renewable Energy Trends and Government Policy in Saudi Arabia ....... 30 Selection of Project Site and Examination for Implementation .......................................... 30 3.2.
3.2.1. The Mine of the affiliated company of company A .................................................... 30 3.2.2. The Cement Factory of the company B ...................................................................... 31 3.2.3. Examination of Project Model .................................................................................... 31 3.2.4. Examination of Legislative System Related to the Project ......................................... 32 3.2.5. Examination of Project Implementation in the Potential Sites.................................... 33 3.2.6. Examination of Basic Design of Infrastructure system ............................................... 39
Environmental and Social Considerations .................................................................. 47 Chapter 4. Policies, laws, and regulations related to environmental and social considerations ........... 47 4.1.
4.1.1. Overview of policies, laws, and regulations related to environmental and social considerations ............................................................................................................. 47
4.1.2. Procedures relating to Environmental Impact Assesment implementation ................. 50
Analysis of current environmental and social conditions ................................................... 52 4.2.4.2.1. Current state of environment in the mine of the affiliated company of the company A
.................................................................................................................................... 52 4.2.2. Current state of environment in the factory of the company B ................................... 53 Expected impact from the proposed project implementation ............................................. 53 4.3. Environmental Benefits from the project implementation .................................................. 57 4.4.
Economic Viability ..................................................................................................... 59 Chapter 5. Project cost estimation ........................................................................................................ 59 5.1. Preliminary economic analysis ........................................................................................... 59 5.2.
Implementation Schedule of the Project ..................................................................... 65 Chapter 6. Implementation Schedule ................................................................................................... 65 6.1.
6.1.1. Presentation of Project Imprementation Period .......................................................... 65 6.1.2. How the Project Period should be Set ......................................................................... 66
Capacity of the Executing Agency in Saudi Arabia .................................................... 67 Chapter 7. Organization for the Implementation in Saudi Arabia ........................................................ 67 7.1.
7.1.1. Company A ................................................................................................................. 67 7.1.2. Company B ................................................................................................................. 67
The potential of Japanese companies including technology aspects ........................... 69 Chapter 8. The estimated structure of the Japanese companies in the project ...................................... 69 8.1. Potential of the Japanese companyies to implement the project ......................................... 69 8.2. Necessary measures to encourage Japanese companies to receive the order ...................... 70 8.3.
Action Plan and Tasks for Realization of the Project .................................................. 72 Chapter 9. Current Status for the Realization of the Project ................................................................ 72 9.1.
9.1.1. Promotion and Expansion of the Project ..................................................................... 72 9.1.2. Introduction of the storage battery .............................................................................. 72 Current Status of Government Offices Concerned and Executing Agencies in the Host 9.2.
Country for the Realization of the Project .......................................................................... 74 9.2.1. Response Status of Executing Agencies to Government Policy ................................. 74 9.2.2. Current Status of Reserve Fund by Executing Agencies ............................................. 75 9.2.3. Current Statsus of Orgaization Preparation in Executing Agencies ............................ 75 Envisioned Financial Scheme ............................................................................................. 75 9.3. Activities and Tasks for Realization of the Project ............................................................. 80 9.4.
9.4.1. Examining of Measures to Foreseen/Not Foreseen Risks ........................................... 80 9.4.2. Future Activities and Tasks ......................................................................................... 80
Figures Figure 1.1 Position of Saudi Arabia............................................................................. 11 Figure 1.2 Age-specific ratio among the total population ......................................... 13 Figure 1.3 Spread Plan of Renewable Energy in Saudi Arabia ............................... 16 Figure 1.4 Market Share in 2018 ............................................................................... 18 Figure 1.5 Saudi Vision 2030 and Targets of NTP2020 ............................................ 18 Figure 1.6 Main Off-grid Areas ................................................................................... 20 Figure 2.1 Implementation Organization .................................................................. 24 Figure 3.1 Investments for Renewable Energy Power Generation / Fuel in the
World ..................................................................................................................... 28 Figure 3.2 Total Capacity and Annual Installation of Photovoltaic Power
Generation in the World ...................................................................................... 29 Figure 3.3 Daily Load Curve in the Mine of the affiliated company of company A
(kW) (on Jul. 27th 2018 and Feb. 9th 2019) ......................................................... 34 Figure 3.4 The demand of the every fedder in the mine ........................................... 35 Figure 3.5 System to Suggest (in the Mine of the affiliated company of the company
A) ............................................................................................................................ 39 Figure 3.6 Demand in July 2018 and PV Generation in the Mine .......................... 41 Figure 3.7 Simulation Result of the Battery Capacity in the Mine (with 20% of DG
Generation) ........................................................................................................... 41 Figure 3.8 Simulation Result of the Battery Capacity in the Mine (without Any DG
Generation) ........................................................................................................... 42 Figure 3.9 Power Demand in February 2019 and PV Generation in the Mine ...... 42 Figure 3.10 One Kiln and PV20MW/40MW .............................................................. 44 Figure 3.11 One kiln and PV20MW ........................................................................... 45 Figure 3.12 One Kiln and PV40MW ........................................................................... 46 Figure 3.13 The reduction rate of the fuel by introducing the PV and battery ...... 46 Figure 5.1 Reduction of fuel cost and cash flow through the project (Domestic Price case) . 61 Figure 5.2 Reduction of fuel cost and cash flow through the project (Price control case) ..... 61 Figure 5.3 Reduction of fuel cost and cash flow through the project (International Price case)
............................................................................................................................... 62 Figure 5.4 Reduction of fuel cost and cash flow through the project (Domestic Price case) . 63 Figure 5.5 Reduction of fuel cost and cash flow through the project (Price control case) ..... 63 Figure 5.6 Reduction of fuel cost and cash flow through the project (International Price case)
............................................................................................................................... 64
Figure 8.1 The image of the reduction of the life-cycle cost ..................................... 71 Figure 9.1 The appearance of the substation of the storage battery in Buzen of
Kyushu Electric Power ......................................................................................... 73 Figure 9.2 Outline of JCM Scheme ............................................................................ 77 Figure 9.3 Image of Buyer's Credit (B/C) and Bank-to-Bank Loan (B/L) of JBIC .. 78 Figure 9.4 Image of Green Climate Fund .................................................................. 79
Tables Table 1.1 Exports of Non-oil Products in Saudi Arabia (1995-2016) ....................... 12 Table 1.2 Projects Related to Renewable Energy ...................................................... 15 Table 2.1 Schedule ....................................................................................................... 25 Table 2.2 First Field Survey Schedule ....................................................................... 25 Table 2.3 Second Field Survey Schedule .................................................................... 26 Table 2.4 Third Field Survey Schedule ...................................................................... 27 Table 3.1 Procedures for Installation of PV Generation ........................................... 32 Table 3.2 Electricity Usage of Each Feeder in the mine ........................................... 35 Table 3.3 Daily Power Consumptions in the Mine (from Feb. 2nd to 8th) ................. 36 Table 3.4 Comparison of Power Consumptions in the Mine ..................................... 36 Table 3.5 Functions Assumed for EMS ...................................................................... 43 Table 4.1 Outline of the General Environmental Law ........................................................ 47 Table 4.2 Necessary contents of an environmental impact assessment study .................. 51 Table 5.1 Project cost estimation by project sites ...................................................... 59 Table 5.2 Comparison of Fuel cost by type ................................................................ 59 Table 5.3 Reduction of fuel cost .................................................................................. 60 Table 9.1 Approved methodologies ............................................................................. 76
11
Outline of Target Country and Related Sectors Chapter 1.
Economy, Financial Status in the Target Country 1.1.
Economy 1.1.1.
The Kingdom of Saudi Aragia (herein after
referred to as “Saudi Arabia”) is the largest
country in the Middle East, and it occupies
about 80% of the Arabian Peninsula. The
territory has geographical advantages as the
center and the entrance of trades in the
Middle East since it faces the main canals.
Also, Saudi Arabia is known as an oil
producing country. Main exports are not
only oil and oil products but also synthetic
resin, organic/inorganic chemicals, natural
gas, city gas, and transportation equipment
etc.The export value of oil and oil products
in 2017 was of 169,400 million USD and it occupied 75% of the total export value. 60% of the
revenue is also derived from the oil sector, and the oil has been the basis of economy of Saudi
Arabia. Besides this situation, the Saudi Arabian economy went into the red for 4 consecutive
years from 2014 to 2017 due to the fall of the oil prices. In 2018, the revenue increased about
28.6% compared to the previous year due to an income increase by rising of the oil prices, but
the economy has not turned into normal yet.
Due to the agreement of reducing oil production among the Organization of the Petroleum
Exporting Countries (herein after referred to as “OPEC”), the Saudi Arabia’s nominal gross
domestic product (herein after referred to as “GDP”) in 2017 showed negative growth, but it
improved and grew 2.3% in 2018. The period for reducing oil production was originally
planned to finish by the end of 2018, however, it was decided to be prolonged for 6 months
from January 2019 in the meeting by OPEC in December 2018. Though this aims to raise the
oil price, the oil demand may decrease, thus it is uncertain that the oil price will be increased,
and this uncertaintity would affect the GDP in Saudi Arabia. In addition, the GDP growth rate
in 2019 was of 2.9% as of January 2019.
The whole unemployment rate is around 6%. When it is classified in navtive and non- native
Saudi Arabian, the unemployment rates are about 12% and 1% respectively; the native has
Source: Study Team
Figure 1.1 Position of Saudi Arabia
0 3,600km
12
higher rate compared to the non-natives.
Industrial Structure 1.1.2.
The base industry in Saudi Arabia is the oil sector. After 2011, the produced oil is more than 5
million tons every year. The GDP in 2017 was of 635,100 million USD and 43.4% was
represented by the oil sector. The rest 56.6% was occupied by the non-oil sector (gorvenment
service: 13.9%, retail and whole sale: 9.1%, manufacturing industry (excludes petrochemistry):
8.5%, and telecommunication: 5.9% etc.). In addition, the export value of non-oil industry in
2016 grew about 6.5 times compared to 1995, and its ratio increased 9.2%. The continuous
growth of non-oil industry is expected since Saudi Industrial Development Fund (herein after
referred to as “SIDF”) found in 1974 supports industry by investment and counselling as a part
of the SIDF’s purporse: promoting the export of the non-oil industry.
Especially in Riyadh, the Capital City of Saudi Arabia, the economic growth is shown in
various fields as the population increase. The scale of Saudi Arabian economy is large and
important for the Middle East. As of 2014, the employees in Riyadh were composed by the
following industry type and ratio; public service: 24.5%, manufacturing: 17.7%, business and
finance: 15.7%, mining including agriculture and oil-well drilling: 14.8%, transportation: 8.8%,
construction: 8.8%, commercial and sightseeing: 7.3%, and public welfare: 2.5%.
Table 1.1 Exports of Non-oil Products in Saudi Arabia (1995-2016)
Year Industrial Exports (SAR’ Million)
Percentage of Total Exports
Percentage of Non-Oil GDP
1995 22,558 12% 6.6% 1996 21,364 9.4% 6% 1997 24,721 10.9% 6.4% 1998 21,131 14.5% 5.5% 1999 19,488 10.3% 4.9% 2000 22,920 7.9% 5.5% 2001 26,547 10.4% 6.2% 2002 27,691 10.2% 6.3% 2003 35,743 10.2% 7.6% 2004 47,566 10.1% 8.7% 2005 60,000 8.9% 9.8% 2006 70,044 8.9% 10.2% 2007 83,311 9.5% 10.9% 2008 98,710 8.4% 11.4% 2009 84,997 11.8% 9% 2010 113,924 12.1% 10.6% 2011 151,125 11.1% 12.4% 2012 162,428 11.2% 12% 2013 171,041 12.1% 11.6%
13
Year Industrial Exports (SAR’ Million)
Percentage of Total Exports
Percentage of Non-Oil GDP
2014 185,631 14.5% 11.6% 2015 156,423 20.4% 8.9% 2016 145,911 21.2% 8.1%
Source: Saudi Industrial Development Fund “Industrial Development in Saudi Arabia”
Population 1.1.3.
According to General Authority for Statistics, the total population in Saudi Arabia is about
33.41 million, and the number is growing every year. As shown in Figure 1.2, the ratio of the
0-14 year-olds is about 24.6%, 15-65 year-olds is about 72.2%. From this fact, the market
expansion and economic growth is expected. However, about 38% of the total population and
about 44% of the working age people is not native Saudi Arabian.
Source: Created by the Study Team based on General Authority for Statistics
Figure 1.2 Age-specific ratio among the total population
As a part of “Saudization”, an initiative which promotes the employment of the natives, the
Ministry of Labor is carrying out “Nitaqat”. Nitaqat meaures the ratio of the natives in private
companies based on the standard of the Ministry of Labor, and classifies in 6 categories
(platinum, high green, mid green, low green, yellow and red) according to their attainment.
Platinum is the highest ratio category and red is the lowest. When companies attainment was
low, they were given some penaltites such as the prohibition to issue and renew the visa of
non-native workers. Nitaqat became one of the causes of losing labor from overseas; more than
667,000 people left Saudi Arabia since 2017.
Despite this situation, the number of non-native workers has been growing after 2014 while the
number of native workers is remaining constant, and as mentioned above, the unemployement
rate of the non-natives is 1% and that of the natives is 12%. It can be said that increasing the
native employees is a problem to solve in Saudi Arabia.
24.6%
72.2%
3.2%
0-14 year-olds
15-64 year-olds
65~ year-olds
14
Investment from Overseas 1.1.4.
Saudi Arabian General Investment Authority (herein after referred to as “SAGIA”) extended the
validity of investment licence, which was issued to foreign investors from 1 year to 5 years in
February 2018 (Only 1 year-licence is also available if the investor want). In addition, to
simplify the required procedures, the online-application was introduced. Through the
online-application, the duration to get the licence is expected to be reduced from 2 days to 4
hours. The deregulation related to the investment in Saudi Arabia has been promoted, and the
number of commercial registration by foreign company increased; according to MCI e-Portal,
the number was 201 in 2017, and 261 in 2018. Moreover, the installation of the green card
system within 5 year was announced at the same time as the publication of “Saudi Vision 2030”.
The system allows foreigners working and staying in Saudi Arabia for a long time. Those facts
show that the investment climate for foreign companies has been established.
In the end of October 2017, the economic investment forum “Future Investment Initiative” was
held in Saudi Arabia, and the development project of a new industrial city “NEOM” was
announced. This project plans to develop a city with the latest technology such as renewable
energy which can cover all the energy consumption in the city, and it will be operated by Saudi
Arabian government fund “Public Investment Fund (herein after referred to as ‘PIF’)”. The
project will need 500 billion USD. It is expected that the investment will come from the
government, the PIF as well as from private investments (local and foreign).
In the end of October 2018, “Future Investment Initiative” was held again and contracts for a
total of 56 billion USD were made. Some speakers and sponsors such as the top of the financial
agency and high government official from European and American countries did not attend the
forum due to the killing in the consulate of Saudi Arabia in Turkey of Saudi Arabian journalist.
This issue increased the political risk in Saudi Arabia and frozen the investment to Saudi Arabia
by foreign companies and foreign investment by PIF. Prince Mohammad bin Salman Al Saud
announced that the policy reform of the economy and the society in Saudi Arabia will not be
changed after the affair mentioned above.
In January 2019, the Ministry of Energy, Industry and Mineral Resources (herein after referred
to as “MEIM”) disclosed the plan to accept 450 billion USD of private investment by 2030
under the National Industrial Development and Logistics Programme (herein after referred to as
“NIDLP”). NIDLP is the industrial strategy which promotes the investment to the mining
industry and energy sector. According to the plan, 27 billion USD will be spent in 2019 and
2020.
This industrial strategy has 42 projects related to mining industy, distribution, and renewable
15
energy. As for renewable energy projects, about 60 GW renewable power generation is planed
to be installed by 2030. Some candidate sites to install the renewable energy plant include some
parts of the future city “NEOM”, which was announced in October 2017. Table 1.2 shows the
projects related to renewable energy.
Table 1.2 Projects Related to Renewable Energy
Project Site Outline Investment
(SAR’ Million) Nacelle Housing NEOM, Yanbu Plant to assemble wind nacelle housing 400 Wind turbine blades NEOM, Yanbu,
Rabigh Plant to assemble wind turbine blades 937
Cells and modules NEOM, Sudair Plant to manufacture solar PV units 13,000 Wind tower NEOM, Yanbu,
Rabigh Plant to manufacture wind turbine towers 1500
Al-Faisaliah solar park Al-Faisaliah 600MW solar power plant 600 Jeddah solar production Jeddah 300MW solar power plant 1,000 Rabigh solar production Rabigh 300MW solar power plant 1,000 Madinah solar PV park Madinah 50MW solar power park 188 Rafha solar PV park Rafha 45MW solar power park 169 Qurayyat solar PV park Qurayyat 20MW solar power park 75 Mahd al-Dahab solar PV park
Mahd al-Dahab 200MW solar power park 750
Source: National Industrial Development and Logistics Program
Outline of Object Sectors of the Project 1.2.
Power Sector 1.2.1.
In Saudi Arabia, the peak power demand is 60GW, and almost all of the annual power demand
(274,502GWh in 2014) is covered by power generation which mainly uses gas and oil (heavy
fuel oil and crude oil). Along with the rapit growth of economy and population, the demand of
primary energy increased 6.6% of annual rate during 2008 - 2014. Accordingly, the energy
consumption in Saudi Arabia is estimated to increase 3 times by 2030. Also, Saudi Arabian
government aims to reduce the fossil fuel consumption in Saudi Arabia and increase the exports
of heavy fuel oil and crude oil to overseas for acquisition of foreign currency. Saudi Arabia
prioritises securing energy sources other than oil (heavy fuel oil and crude oil).
16
Source: K.A.CARE “Building the Renewable Energy Sector in Saudi Arabia”
Figure 1.3 Spread Plan of Renewable Energy in Saudi Arabia
Due to the reasons mentioned above, King Abdullah City for Atomic and Renewable Energy
(herein after referred to as “K.A.CARE”) announced the spread plan of renewable energy by
2032 in 2012. K.A.CARE decided to install 41GW of photovoltaic and solar heat power
generation and 13GW of other renewable power generation sources by 2032 (As of January
2015, the target year was prolonged to 2040). In addition, in July 2017, the cabinet of Saudi
Arabia approved “Saudi National Atomic Energy Project” which brings the plan to construct 2
large power reactors and some small power reactors into perspective for the purpose of the
divergence of energy mix and increase the generation capacity.
Saudi Arabian government has policies to improve power infrastructure, and to secure
alternative energies such as atomic and renewable power and to reduce the frequency of
blackouts, and to promote self-manufacture of technology and materials related to renewable
energy. To expand and diversify the competitiveness of the energy sector and the investment to
the energy sources, the government of Saudi Arabia built a clear standard of the subsidy
according to the demand.
In December 2018, Saudi Aramco, the national company which has the largest amount of oil
production in the world opened composite facilities to promote investment to power,
manufacturing, and chemistory sector. The facilities are called “King Salman Energy Park
(SPARK)” and are located between Dammam and Al Ahsa, in the Eastern part of Saudi Arabia.
Moreover, Saudi Electricity Company (herein after referred to as “SEC”) is planning to install
300MW of solar power generation in connection with the project. The plan to provide 30GW of
thermal heat (gas turbine) by 2030 was also proposed.
Mining Sector 1.2.2.
Saudi Arabia is one of the richest countries in minerals. There are various kinds of minerals
17
such as gold, silver, copper, zinc, etc. Some promising mineral deposits were discovered in the
western side of the Arabian Peninsula by early 1980, and then the first gold mine called Mahd
abh Dhahab was developed in 1988. The government of Saudi Arabia established a national
mining company in 1997 to promote the development of mining mineral resources.
About 250,000 million people was engaged in the mining sector as of 2019. This sector bears
the economy and is very important for Saudi Arabia, which is making effort to be independent
on oil. Also, mining sector is one of the investment targets of NIDLP.
In February 2019, the government of Saudi Arabia announced that about 3,800 million USD
will be invested through NIDLP. It aims to create employment and be independent on oil by
making the mining industry grow for a decade as part of the industrial strategy to verify the
economy and promote 426 billion USD of investment. This investment will go to the
improvement of data quality which reduces the risks of investment to mine gold, zinc, and rare
eath etc. In addition, the government has already started the preparation of the digital platform
to reduce the duration to get the permission of exploration from 6 months to less than 60 days.
Also, the government made public that 51 exploration projects including 14 projects to explore
gold and copper are taken into consideration.
In Saudi Arabia, there are some off-grid areas such as Sharourah, Farasan islan, and Rafha that
are in the control area of SEC, and there are many mines in those areas. Those areas tend to
provide the power by diesel generators. Since the government intends to reduce the
consumption of the fossil fuels in Saudi Arabia, installing renewable energy is estimated to be
effective as a investment to the mining sector.
Cement Sector 1.2.3.
Saudi Arabia has the largest capacity and demand of cement among the Middle Eastern
neighbor countries, and its market occupies approximately 61% of the demand in the GCC
countries.
While the production including export in 2018 (45.28 million tons) decreased 4.1% compared
to the previous year (47.24 million tons), monthly national sales in December 2018 increased
16.8% compared to the previous month though annual national sales in 2018 decreased 9.9%
compared to the previous year. There are 17 cement companies in Saudi Arabia and the
domestic market share is shown in Figure 1.4.
18
According to the interview from
the Cement Companies, Cement
industries have a large amount of
CO2 emission as well as the glass
industry and the steel industry. In
addition, almost of all cement
companies in Saudi Arabia uses
heavy fuel oil which is cheap and
provided by the government. It is
estimated that the construction of
factories that utilize clean energy
will be the main trend in the Saudi Arabian cement market from 2018 to 2022. Also, large-scale
infrastructure development based on Saudi Vision 2030 announced by the government will
promote the expansion of construction market, and it may be the cause to affect the cement
market.
Trends in Policies 1.3.
Saudi Vision 2030 1.3.1.
Since the oil is the base of Saudi
Arabian economy, the economy
tends to be easily influenced by
the oil prices. Due to the fall of
the oil prices, the economy
showed a loss for 4 consecutive
ears from 2014 to 2017. To get
out of the red, the government
increased the price of fuel, water,
and electricity from December
2015. At the same time, the large
amount of subsidies by the
government also took drastic
measures. Commodity tax and other taxes were increased after 2017, and the sources of
revenue will be verified by phased installation of value added tax and new taxes in the future.
Due to this situation, the government of Saudi Arabia announced its policy “Saudi Vision 2030”
and “National Transform Program 2020 (herein after referred to as “NTP2020”) to be
Source: Cement Dispatches for December 2018 (Al-Jazira Capital )
Figure 1.4 Market Share in 2018
Source: Study Team
Figure 1.5 Saudi Vision 2030 and Targets of NTP2020
19
independent on the oil in the economic and environmental aspect, and to realize the
comprehensive development. Moreover, the other policies and programs such as “Nationally
Determined Contribution (herein after referred to as “NDC”), “National Renewable Energy
Program (herein after referred to as “NREP”), and “King Salman Renewable Energy Initiative”
were also announced and have been executed.
Saudi Vision 2030 was designed and announced by the Council of Economic and Development
Affairs, where the Croun Prince Mohammad bin Salman bin Abdulaziz Al-Saud acts as
chairperson since April 2016. The growth strategy is in the center of the government’s policy.
This vision has 3 pillars: “a vibrant society”, “a thriving economy”, and “an ambitions nation”,
and has many concrete numeric targets. One of the targets is to increase the capacity of
renewable energy generation to 9.5GW by 2023, however, the new Saudi Arabia renewable
energy strategy changed it into higher target to increase the capacity to 58.7GW by 2030 in
January 2019.
To achieve the targets of Saudi Vision 2030, many reform programs such as “the government
restructuring program”and “the strategic directions program”are in process. In 2018, 28 billion
USD were donated as the budged for the execution of the main infrastructure projects in Saudi
Vision 2030. The amount was more than twice thah the previous year, 10.4 billion USD. The
budget was allocated for the improvement of public health services, the construction of dams,
the mining of wells, the leak detection services, the development of renewable enegies, and so
on. Most of the expenditure in 2019 will be allocated to the economic resources and
infrastructure, like the mega project which will be featured in Saudi Vision 2030 and renewable
energy projects as well.
NTP2020 was built in July 2016 as concrete interim goals in the economic aspect; to increase
the power generation capacity of renewable energy from 0GW to 3.45GW (The ratio among the
whole generation capacity from 0% to 4%) by 2020 as one of the goals, for example. The goals
are based on 6 points: balanced finance, reduction of expenditure, raising non-oil sector,
privatization and stimulation of the private sector, improvement of unemployment rate, and
policy of energy and resources.
Both NREP and King Salman Renewable Energy Initiative were announced by MEIM. The
contents of them support Saudi Vision 2030 and NTP2020. The revision of legal regulations
frame, the participation to the renewable energy sector by private companies, and the
adjustment of the investment process are planned with the announcement of King Salman
Renewable Energy Initiative.
Furthermore, NDC was conducted by MEIM in November 2016. NDC aims to reduce the GHG
20
emission of 130 million tons by CO2 conversion by 2030 through the installation of renwable
energy, and to invest to the technologies of renewable energy and saving energy for breaking
away from an economy dominated by oil.
Outline of Project Area 1.4.
This feasibility study (herein after referred to as “F/S”) is focused in the off-grid areas which
have possibility to install the photovoltaic power generation. As mentioned above, the main
off-grid areas in Saudi Arabia are Sharourah, which is 150 ~ 200 km away from Yemen, Rafha
and Farasan island which are close to the National border between Iraq. In Rafha and Sharourah,
the northern and southern part of the off-grid areas controlled by SEC, Solar IPP project by
Renewable Energy Project Development Office (herein after referred to as “REPDO”) are
planned. In addition, Al-Uwaiyqilah and Farasan island are also off-grid areas. The gold mine
area is off-grid as well, and REPDO is planning a 20MW of another Solar IPP project in the
gold mine area in Mahd Aldhab. Mahd Aldhab has a 40MW small power plant, and REPDO
and SEC will replace it with renewable energy as a project.
Source: Created by the Study Team on the Google map
Figure 1.6 Main Off-grid Areas
Company A is examining to install solar power generation and battery to its own off-grid mines.
According to the company A, the power demand in each mine is 30MW. This demand is
enough to organize the off-grid power infrastructure at a constant scale. Also, this company A
has some mines in the off-grid area, and these mines were also the candidates for this study.
Rafha
Sharorah Farasan island
21
Survey Method Chapter 2.
Surey Contents 2.1.
In this survey, we conducted the investigations in the mine or the factory owned by mine or cement company, to examine the possibility of introducing a independent power source (photovoltaic power generation + hybrid battery) with EMS (Energy Management System) at the off-grid mines.
(1) Benefits to the host country by the project
Estimation of the effects on economy and employment creation, and CO2 emission reduction by ・the project
Explanation of the benefits by the project to the concerned agencies, which will promote their ・sufficient understanding to the concept of the proposal and superiority and reliability of the
technology
(2) Trends in policies of government municipalities
Collection and organization of the information related to the policies such as Saudi Vision 2030 ・
Explanation of the project to the concerned government agencies to understand that the project ・will promote the policies of the government of Saudi Arabia.
(3) Basic design of infrastructure system
Selection of the right site from the candidates of the project planning process, and a basic ・design
Examination of phased business model beginning from the installation works to the operation ・and maintenance work
(4) Collection, survey, and analysis of information for the proposal
Collection and organization of the information related to regulation to the installation works ・(civil work, environmental and social considerations, and development application)
Collection and organization of the information related to the power demand, the power quality, ・the grid configuration, telecommunications infrastructure, etc.
Analysis of the detailed teaming and global supply chain of each organization related to the ・project
22
(5) Calculation of the project scale
Calculation of the project scale based on the information above ・
Discussion with related agencies about the appropriate project scale ・
Report to the related departments of the METI, and receive feedback from them ・
(6) Implementation organization and schedule
Discussion of the precise implementation organization with the concerned Japanese and local ・companies by making use of the network between those companies and the JV
Making the implementation preparation schedule including the applications (development ・application, financial application, etc.)
Making the implementation schedule building the business model through the life cycle of the ・project
(7) Examination and proposal of finance
Discussion with the concerned organizations keeping the Joint Crediting Mechanism (JCM) ・project and application of prospective new scheme in mind
Examination of the offset finance as the secondary purchase price of base metals for the EPC ・project
(8) Outlook of application for the policy supports
Examination of the application for ODA loan fund cooperation to Operation and Maintenance ・
Examination of the application for the supports related to “Japan Saudi Vision 2030” ・
(9) Survey of reduction of CO2 emission of energy origin, effect of environmental improvement, and influence on the environment and society
Estimation of the reduction of CO2 emission based on the project scale ・
Survey and organization of the environmental regulations and environmental guideline in the ・Saudi Vision 2030 to calculate the effect of environmental improvement
Making the environmental check list based on “Guideline for Environmental and Social ・Considerations” issued by JICA
(10) Confirmation of advantages of Japanese companies/survey for enhancement of the project
23
Confirmation of the advantages in the project and business development in Saudi Arabia ・through the interview to Japanese Companies
Thick discussion with the concerned agencies and examination of correspondence to the ・demand from the Client
Examination of correspondence to the foreseen/not foreseen risks ・
(11) Possibility of wide development and promotion measures of development
Examination of the off-grid electricity energy infrastructure keeping the future candidates of the ・project site and the business model for the site in mind
(12) Plan of cost competitiveness reinforcement when Japanese company joins the project
Definition of the infrastructure quality required to the project, and examination of application of ・the eliminated technology
Examination of the cooperation with the companies in the third country or local area regarding ・to the field which does not have high added value
Survey Method and Organization 2.2.
(1) Field Survey
The field survey was conducted based on the results of the domestic survey about the outline ・and the background of the project. To define the challenges of participation of Japanese
companies, the local demands and the situation of infrastructure improvement, we organized the
field survey. Selection of the project site and verification of installation validity of energy
supply infrastructure was also conducted.
The field survey was conducted three (3) times, and each survey was about for one (1) week. ・Each survey team consisted of three (2) or four (6) members. The future problems were defined
by sharing the information gained through the visit to the host country’s government, the
concerned agencies and companies, etc.
(2) Domestic Survey
Necessary information through the sources such as books, internet, news, and other survey ・reports to conduct the survey listed above were collected and analysed.
24
Figure 2.1 Implementation Organization
Survey Schedule 2.3.
(1) Schedule
Schedule is shown in Table 2.1 below.
Oriental Consultants Global Co., Ltd. Project Manager, Photovoltaic Power Generation, Regulations/Policy Information Collection/Environmental and Social Considerations, Economics/Financial Analysis, Cost Estimation
Marueni Metals Corporation Feasibility Examination
Kyuden International Corporation
Battery, EMS
Recommission
Recommission
25
Table 2.1 Schedule
Survey Items 2018 2019
11 12 1 2 3
Field Survey 【First Field Survey】 Proposal of the Project Information collection Interview with the concerned people 【Second Field Survey】 Visit/Selection of the candidate sites Confirmation of feasibility Discussion about the project
implementation
【Third Field Survey】 Schedule adjustment for the project
implementation
Discussion for the agreement of the project implementation
Holding of the reporting session Domestic Survey Analysis of existing materials / information Project design Meeting with the concerned people in Japan Discussion about the policies and measures
of the field survey
Report on the field survey Preparation of the report, and reporting
(2) Field Survey Schedule
We conducted the field survey 3 times in total. Each schedule is shown in Table 2.2 ~ Table 2.4 below. The survey team had meetings with main agencies such as company A (a mine company) and concerned government agencies, and discussed the project implementation with them.
Table 2.2 First Field Survey Schedule Date Contents Place
12/3(Mon) The team planned to visit mines, and collected materials related to the minerals and the mines in Saudi Arabia
Marubeni Corporation Riyadh branch
12/4(Tue) Interviewed about materials which can be references of regulations of environmental and social considerations in
MEWA
26
Date Contents Place
Saudi Arabia
12/5(Tue)
Visited the Mine, and interviewed Outline of the Mine of the affiliated company of company A (number of workers, positional relation between towns and cities around the mine) Status of power supply, power plant and average power consumption, variation of power demand by seasons, etc.
The mine of the affliated company of company A
12/6(Wed) Organization of survey results, and organization and design of future survey plan
Marubeni Corporation Riyadh branch
12/9(Sun) Interviewd about the installation of photovoltaic power generation
The office of the stake holders
12/10(Mon) Interviewed about the situation and recognition of JCM in Saudi Arabia and situation of CDM
DNA
12/11(Tue)
Interviewed about the Environmental and social considerations when photovoltaic power generation is installed
GAMEP
Interviewed about the Off-grid area in Saudi Arabia and the procurement of the Diesel Generator for the off-grid in a gold mine
SEC
12/12(Wed) Interview of the place where the meteorological data such as solar radiation in Saudi Arabia is collected K.A.CARE
Table 2.3 Second Field Survey Schedule
Date Contents Place
2/4(Mon) Interview about the power condition in the off grid area SEC
2/5(Tue) Interview about the project implementation and field survey Company B
2/6(Wed)
Interview about the policy for the renewable energy K.A.CARE
Interview about the plan of the introducing renewable energy of the company G (agricultural products seller)
Marubeni Corporation Riyadh branch
Interview about EPC business (mainly solar power generation) with the company E (EPC company)
Company E
2/7(Thu) Field survey The cement factory of the company B
2/8(Fri) Site visit of solar power generation SEC 10MW Solar site
2/9(Sat) Movement -
2/10(Sun) Field survey the mine of the
27
Date Contents Place
affiliated company of company A
2/11(Mon) Movement -
2/12(Tue) Interview about the installation of the battery in Saudi Arabia SEC
2/13(Wed) Report about the progress of the F/S to Mr. Kobata from Embassy of Japan in Saudi Arabia
Marubeni Corporation Riyadh Branch
2/14(Thu) Interview about EPC of the solar power generation project TYPSA
2/17(Sun) Organization of collected information -
2/18(Mon) Movement -
2/19(Tue) Report of the field survey in the mine the affiliated
company of company A
Table 2.4 Third Field Survey Schedule
Date Contents Place
3/10(Sun) Presenting the result of the study Company B
3/11(Mon) Internal Meeting -
3/12(Tue) Movement -
3/13(Wed) Presenting the result of the study The affiliated company of company A
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Contents of the Project and Examination of Technical Chapter 3.Aspects
Background and Necessity of the Project 3.1.
Renewable Energy Trends in the World 3.1.1.
The Paris Agreement launched in 2017 has a long-term goal which aims to balance the emission
of GHG and its absorption by forests in the late 21st century through making efforts to reduce
world’s GHG emission as soon as possible by keeping the rise of the world average temperature
lower than 2°C, preventing it from surpass 1.5°C. The effect of shifting conventional energy
sources to renewable energies contributes to reduce the GHG emission, and the installation of
the renewable energy has been promoted in the world.
The total amount of renewable energy which was newly installed in the world in 2016 was of
161GW, and its ratio was increased about 9% compared to the previous year. Also, the amount
of new investments for renewable energy was of 249,800 million USD. This amout has been
twice as that for the thermal power generation for 5 consecutie years. The amount of the
investment for renewable energy is gradually increasing; the amount in 2016 grew 2.5 times
from 2006. In addition, the Renewables 2017 Global Status Report issued by REN21 said that
65% of renewable energy experts estimate that the ratio of renewable energy among the world
will be more than twice as present by 2050.
Source: Created by the Study Member based on Renewables 2017 Global Status Report issued by REN21
Figure 3.1 Investments for Renewable Energy Power Generation / Fuel in the World
0
50
100
150
200
250
300
350
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
(1 billion USD)
29
The total capacity and annual installation of the photovoltaic power generation in the world has
been growing about 300 times in a decade, from 2006 to 2016, and the demand is estimated to
continue increasing in the future.
Source: Created by the Study Members based on Renewables 2017 Global Status Report issued by
REN21
Figure 3.2 Total Capacity and Annual Installation of Photovoltaic Power Generation in the World
Renewable Energy Trends in the Middle East 3.1.2.
According to the GTM Research1, 8GW of photovoltaic power generation (herein after referred
to as “PV”) will newly be installed in 2018, and the total PV installation is estimated to reach
22.4GW by 2023. The reason for the increase of PV installation in the Middle East, is in charge
of government’s policies. The Institute of Electrical Engineers of Japan (herein after referred to
as “IEEJ”) (2018)2 said that the countries in the Middle East are aiming to achieve an economy
independent on the oil industry by promoting the installation of the renewable energy to save
the oil as the precious export resource, diversification of industrial structure and expansion of
employment. The second reason is their climate and geographic conditions; they have abundant
solar radiations and large deserts. The third reason is that the companies which develop the PV
can reduce extra costs since the governments in each country usually secure the land and the
connection of the transmission lines in advance. The cost of power generation by large-scale PV
in the Middle East is cheap among the world (IEEJ 2018), and UAE and Saudi Arabia had
1 GTM Research, “Global Solar Market Attractiveness Index” 2 Periodical reports by IEEJ, May 2018
0
50
100
150
200
250
300
350
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
(GW)
30
renewed the world lowest price of the sales agreement of PV bidding3.
Integrity of Renewable Energy Trends and Government Policy in Saudi Arabia 3.1.3.
Saudi Arabia is one of the leading countries among the Middle East countries which introduced
renewable energy. In 2016, the government of Saudi Arabia aimed to install 9.5GW of
renewable energy (5.5GW of PV is included) by 2023 as the national growth strategy for being
independent on oil based on Saudi Vision 2030. However, it was changed in January 2019; the
new goal aims to install 58.7GW of renewable energy by 2030. It includes 40GW of PV and
16GW of wind power generation. In addition, Saudi Arabian government and Softbank Group
from Japan exchanged a memorandum in regard to the construction plan of mega solar in
March 2018, and it is estimated that the facility capacity will be 200GW and the total
investment will be 200 billion USD (approx. 21 trillion JPY). The news reports announced that
the project suspend its operation in the past, but Mr. Khalid A. Al-Falih, the Minister of MEIM
said that the project was resumed in December 20184. The reasons why Saudi Arabia is largely
installing renewable energy are same as the other Middle East countries descrived above.
Especially in Saudi Arabia, where the raising the domestic oil prices to the international
markets were done in order to get more foreign currency incomes.
Selection of Project Site and Examination for Implementation 3.2.
The off-grid areas mentioned above have possibility to be the project site. To install the energy
infrastructure, easy access to information is important. Therefore, the study team chose the
mine owned by the affiliated company of company A and the cement factory operated by
company B, one of the 17 cement companies in Saudi Arabia as the candidate of the project
sites. Their outlines are as follow:
The Mine of the affiliated company of company A 3.2.1.
The mine is lolated in the off-grid apart from neighboring power supplies. There are 186
workers in the mine. About 50 of them commute from neighbouring area of the mine, and the
3 According to IEEJ (2018), the consortium of ACWA Power from Saudi Arabia and Spanish company’ s tender for the 200MW photovoltaic power generation project was accepted by 5.85 cents/kWh (the lowest price in the world at that time) in the bidding held by Dubai Electricity and Water Authority (DEWA) in UAE in January 2015. In addition, the 300MW Sakaka photovoltaic power generation project which executed by REPDO adopted the tender by ACWA Power by 2.34cents/kWh in February 2018. 4 URL: https://www.epochtimes.jp/2018/12/38822.html
31
others stay in the camp in the mine.
The Cement Factory of the company B 3.2.2.
The cement, which is produced in the factory have two types,: Ordinaly Portland Cement which
is used for modern buildings, repairing, and maintenance, and Sulphate-Resistant Cement
which is used for dams and water desalination facilities.
The cement plants are composed of 2 kilns and diesel generators (herein after referred to as
“DG (s)”). There are apartment-houses for family and residential area for the singles 2km away
from the plants. The power in the apartment-house is supplied by rental DGs with 0.5MW of
capacity, and the power in the residential area is supplied by the DGs in the plant. The heavy
fuel oil which purchased from the government and chips of wasted tires which is purchased
from the municipality of Riyadh is used as the fuel.
Examination of Project Model 3.2.3.
As described above, Saudi Arabia has many independent grid areas which are not connected
with any large-scale power grid, and the diesel generators are supplying the power there. The
unit price of the power generation in those areas is high due to the transportation cost of the fuel
for power generation and the maintenance. To solve the problem, the existing diesel generators
will be substituted by the independent off-grid power source (PV + battey) and EMS will
control the independent power source. Through this solution, the reduction of diesel fuels will
be possible, and it will also contribute to the reduction of national oil consumption and GHG
emission.
Keeping the demand and supply balance of the power is important but also it is important to
keep its quality. When it is connected with a large-scale power system, the control system is
equipped and keeps the balance, but, the off-grid areas are required to keep the balance by
themselves. The reasons to break the demand and supply balance in the off-grid areas with PV
systems are fluctuation of the power demand and fluctuation of the solar power generation
along with changes of the weather. In order to keep the demand and supply balance under those
conditions, the battery system has to charge and discharge according to the fluctuation and
EMS will make hybrid control if necessary. Also, the efficiency of the existing diesel generator
will be studied and their availability as the backup power source will be verified. A best
organization of power sources and control methods as well as the power infrastructure in the
off-grid areas will be examined.
32
Examination of Legislative System Related to the Project 3.2.4.
There are some formalities and legislative systems for the installation of the Project’s main component, PV generation as follow.
1) Environmental Impact Assesment (herein after referred to as “EIA”) 2) Subsurface investigation 3) Grid impact study 4) Licence aquisiton from Electricity and Cogeneration Regulatory Authority
(herein after referred to as “ECRA”) 5) Land aquisition 6) Acquisition of permission for construction from the municipality 7) High Commission for Industrial Security (herein after referred to as “HCIS”)
In case of the IPP of PV generation by REPDO which is ongoing in Saudi Arabia, REPDO is in charge of 1), 2) and 3) above. The project company will be in charge of 4), and the EPC manufacturer ordered by the project company usually will be in charge of 6) and 7). The party which is in charge of 5) depends on the project. This project plans to install the PV generation to the off-grid areas, which are owned by the private companies. The procedures and the correspondences for this project are shown in Table 3.1.
Table 3.1 Procedures for Installation of PV Generation
Procedures/Legislative System Summary Correspondence by the affiliated company of
company A
Correspondence by the company B
EIA Refer to “4.1 Policies, laws, and regulations related to environmental and social considerations4.1”
It will be carried out according to the related law
It will be carried out according to the related law
Subsurface investigation Investigation of soil bearing capacity required by the structural design of the foundation and the frame for PV generation and battery
It will be carried out by the EPC manufacturer
It will be carried out by the EPC manufacturer
Grid impact study Estimation of the influence to the large-scale grid by simulations when the
Utilization of the PV generation in the off-grid areas is excluded from the
Utilization of the PV generation in the off-grid areas is excluded from the
33
Procedures/Legislative System Summary Correspondence by the affiliated company of
company A
Correspondence by the company B
renewable energy is connected with the large-scale grid
procedures procedures
Licence acquisition from ECRA Acquisition of the development licence of the power project along with the electricity law established by ECRA
The affiliated company of company A will be in charge
Company B will be in charge
Land aquisition Land acquisition for the place to install the equipment
It is excluded from the procedures since the mine area to install the PV generation is already owned by the affiliated company of company A
It is excluded from the procedures since the area which is adjacent to the cement factory is already owned by the company B
Acquisition of permission for construction from the municipality
Acquisition of permission for construction from the municipality which owns the land to install the equipment
Ditto Ditto
HCIS Measures to remove the effects on the safety of the neighboring areas (regulations by the Ministry of Home Affairs)
It is excluded from the procedures since the mine area to install the PV generation is already owned by the affiliated company of company A
Safety ensuring by installing fences around the candidate sites which is adjacent to the the company B
Source: Study Team
Examination of Project Implementation in the Potential Sites 3.2.5.
(1) Current status of the equipment in the potential sites
a) The mine of the affiliated company of company A
Equipment Profile ・
The mine of the affiliated company of company A has 5 diesel generators and 3
generators are always under operation.
Power Demand and Operation Status ・
34
The daily maximum power generation and the daily power consumption (kWh) were confirmed
based on the daily load curve of July 27th 2018 and February 9th 2019 shown in Figure 3.3. The
daily mean of maximum power is 1.5MW ~ 2MW (the hourly output was 2,400kW at
maximum and 824kW at minimum in February 9th 2019), and the daily mean of power
consumption were 46MWh/day in July 2018 and 33MWh/day in February 2019 (from February
2nd to 8th). The difference of the power consumption between the data of the 2 days was
12MWh (refer to Table 3.3 and Table 3.4).
The major power demands comes by the crushing activities in the mine, by the diesel train load
out, and by ROM dump station load as shown in Source: Study Team.
The data in July shows a decrease of power load at 6:30 and 19:30. The cause was the stop of
the operation along with the shift of the operators. The 2 shifts system was adopted for the
operators according to the diesel train load out in the morning and the evening.
The power load does not have any sharp fluctuations throughout a day, however, 3 diesel
generators are always operated because 5 ~ 6MW of the sudden load at maximum occurs when
the crusher is operated or the diesel train load out is done. Each sudden load period is very short
but the diesel train load out takes 4 ~ 5 hours per once, and it is assumed that this makes the
sudden loads occur intermittently.
Source: Study Team
Figure 3.3 Daily Load Curve in the Mine of the affiliated company of company A (kW) (on Jul. 27th 2018 and Feb. 9th 2019)
35
Table 3.2 Electricity Usage of Each Feeder in the mine
Source: Study Team
*The total number and the total of the fedder doesn’t match because the data of every hour is checked by the visual
observation
Source: Study Team
Figure 3.4 The demand of the every fedder in the mine
TIME FEEDER 1 FEEDER 2 FEEDER 4 FEEDER 5 FEEDER 7 FEEDER 8 FEEDER 10 FEEDER 11 TOTAL
7:30 36 170 52 56 47 92 219 54 824
8:30 155 170 452 47 41 94 264 54 1361
9:30 172 179 555 48 48 108 249 57 1575
10:30 178 171 485 891 48 109 249 50 2470
11:30 178 170 455 907 50 102 253 56 2378
12:30 158 170 466 59 19 109 241 50 1281
13:30 163 171 430 59 21 103 216 55 1244
14:30 170 171 380 46 26 99 200 52 1224
15:30 145 170 563 849 18 97 317 54 2242
16:30 37 171 40 205 23 86 218 55 879
17:30 115 170 462 280 25 85 263 56 1519
18:30 154 171 270 273 37 94 254 54 1214
19:30 112 172 274 47 41 89 282 54 1146
20:30 108 172 468 352 37 92 278 54 1624
21:30 1163 180 492 46 38 91 242 54 1422
22:30 162 163 522 46 36 93 235 56 1392
23:30 170 163 483 46 38 39 228 54 1390
0:30 145 163 414 46 37 97 204 52 1251
1:30 146 163 416 46 41 97 227 55 1259
2:30 176 163 415 46 41 97 225 55 1250
3:30 177 163 509 46 39 90 223 52 1376
4:30 246 162 518 46 36 86 223 53 1366
5:30 175 164 509 46 37 94 219 55 1422
6:30 157 164 476 46 35 89 297 53 1422
36
Table 3.3 Daily Power Consumptions in the Mine (from Feb. 2nd to 8th) Date 2/2 2/3 2/4 2/5 2/6 2/7 2/8
kWh/day 35 33 34 35 29 31 31 Source: Study Team
Table 3.4 Comparison of Power Consumptions in the Mine Power
Consumption July 27th (summer) February 9th (winter)
Difference (July/February)
Average of power consumption
1,924kW 1,439kW +485kW
Total power consumption
46MWh 34MWh +12MWh
Source: Study Team
Problems on Operation ・
For the average demand 2MW, 3 DGs with 2.2MW rated capacity are always operated; the load
factor of each DGs is 30%. Such operation causes the increase of the fuel cost derived from the
degradation of the oil consumption and affects on the DG life span. By reconsidering the
number of the DGs to operate will make possible to operate with a higher load factor.
Nevertheless, the crushing and the train load out to carry out the products from the storage takes
4 ~5 hours every day, and those works make the power load raise to 5 ~ 6 MW at maximum per
once. To cope with this fluctuation, 3 DGs are needed to be constantly operated.
Fuel Cost and Consumption ・
The price of the gas oil procured by the government of Saudi Arabia is 48 halala/ ℓ by March
2019 and it is supplied from the city which is 200km away from the mine. According to
interview from the worker in the mine, the total fuel cost including the transportation cost is
estimated to be 49 halala/ ℓ.
According to the interview, annual fuel cost of the gas oil is 1 million SAR.
b) Cement Factory Operated by company B
Equipment Profile ・
As mentioned above, there are 17 cement companies in Saudi Arabia and company B is one of
them. It has a middle class factory with 10,500t/day (5,000t/day + 5,500t/day) of the production
capacity, and 3.8 million tons of the cement is usually produced every year.
The factory has 10 DGs, 1 steam turbine, and 1 DG for a black start in the whole area. All the
power generators are made by Wartsila, a manufacturer in Finland. The DGs are divided into 2
37
sections; section 1 consists of 6 DGs with 7.5MW rated capacity (total 45MW), and section 2
consists of 4 DGs with 8.25MW rated capacity (total 33MW). The total rated capacity of the 10
DGs (excludes the DG for a black start) is 78MW. The steam turbine is made in China, and its
capacity is 14.25MW utilizing the steam which is generated by the waste heat recovery. The
total power capacity surpasses 90MW.
The fuel of the DGs is heavy fuel oil (both for gas oil and for heavy fuel oil are used to the tank
names but the heavy fuel oil is actually used). It is transported from Western Yanbu Refinery
which is 1,000km away from the factory by a tank lorry every day. The steam turbin power
generator uses the toll waste tires as its fuel, and is used for kiln. The company B is the leading
company which is trying to reduce the fuel consumption and effectively uses the industrial
waste at the same time.
Power Demand and Operation Status ・
By checking the operation status, the power capacity keeps 35MW degree, and there is not any
sharp fluctuation of the power load throughout a day and a week except for the holidays.
The main power loads are by the mills and the kilns.
There are some periods where the power capacity decreases in the daily record of the power
load. It is assumed that the decrease is caused by stopping the kilns when the silo gets full, and
about 8MW reduction. Its duration is about 4 ~ 5 hours. Moreover, the record of the power
capacity for a week (from January 30th to February 7th) shows the periodic increase and
decrease of the power capacity, and it continued for a few hours per once.
38
When the study team visited the site, only 1 series of rotary kiln were operated though there are
2 series of rotary kiln, and the power load was 35MW ~ 40MW. 2 of the 6 DGs of section 1
were operated (7.5MW x 2 = 15MW) and 2 of the 4 DGs of the section 2 were operated
(8.2MW x 2 = 16.4MW): 32MW in total. Also, the steam turbine generator (HWR: 14.3MW)
was operated and its total capacity was 46.3MW. Even if both series of rotary kilns were
operated, the power load will be 60 ~ 70MW and always becomes less than 90MW. The
maximum capacity is assumed to be about 90MW when the power loads suddenly rose due to
the operation of the crushers and the mills.
Problems on Operation and Fuel Cost ・
There are 10 DGs in total and they use heavy fuel oil. The heavy fuel oil has a larger impact on
the environment than the gas oil while the heavy fuel cost is estimated to be much cheaper.
According to the fuel cost extimation based on the interview, the heavy fuel oil costs 9 halala/ℓ
and the transportation cost is 9 halala/ℓ (assumption), so the total cost will be of 18 halala/ℓ.
Moreover, the power plant stops some DGs according to the power load status: the availability
was kept high (80% per DG on the day which the study team visited).
Thus, the operation of the DGs was carried out very effectively when the impact on the
environmental aspect is not considered.
(2) Operational Elements of Facilities in the Potential Sites
a) The Mine of the affiliated company of the company A
Daily mean of fuel usage : 10,920 ℓ/day (2/2 ~ 2/8) Daily mean of power usage : 34MWh/day (2/2 ~ 2/8) Annual fuel usage : 10,000ℓ/day × 300 days = 300 million ℓ/year Annual power usage : 34MWh/day × 300 days = 10,200,000MWh Fuel consumption of power generator
: 0.32ℓ/kWh
Efficiency of power generator : 29.5% = (34,000kWh × 3.6MJ/kWh)/(10,920ℓ×38MJ/ℓ) Heat capacity of diesel oil : 38MJ/ℓ (Standard Heat Capacity) Unit price of fuel (diesel oil) cost : 0.48SAR/ℓ≒0.5SAR/ℓ Annual fuel cost (assumption basedon the usage)
: 300 million ℓ/year × 0.5SAR/ℓ = 1.5 million SAR/year = 45 million JPY/year
Annual fuel cost (result from the interview)
: 1 million SAR = 30 million yen/year
Cost per kWh : 4.8 JPY/kWh (= 0.32ℓ/kWh × 0.5SAR/ℓ × 30 JPY/SAR)
39
b) Cement Factory Operated by company B Daily mean of fuel usage : 1 million ℓ/day (Consumption by both Kiln and DG is
included. The allocation to the power is unclear.) Daily mean of power usage : Not identified Annual fuel usage : 300 million ℓ/year (Consumption by both Kiln and DG is
included. The allocation to the power is unclear.) Fuel consumption of power generator
: 0.24ℓ/kWh
Efficiency of power generator : 38.7% (= 6,637kWh × 3.6MJ/kWh) / (1,584ℓ × 39MJ/ℓ) (Wartsila Catalog value: 44%)
Heat capacity of heavy fuel oil : 39MJ/ℓ (Standard Heat Capacity) Unit price of fuel (heavy fuel oil) cost (from the interview)
: 0.18SAR/ℓ (= 0.09SAR/ℓ + transportation cost (0.09SAR) )
Cost per kWh (from the interview) : = 1.30 JPY/kWh (= 0.18SAR/ℓ × 0.24ℓ/kWh × 30 JPY/SAR)
Examination of Basic Design of Infrastructure system 3.2.6.
The proposed system for the off-grid area is comprised of: PV, the battery system, EMS and
other peripheral devices.
Source: Study Team
Figure 3.5 System to Suggest (in the Mine of the affiliated company of the company A)
Though the data of power demand and solar radiance for 1 year in the potential sites is needed
to calculate the best capacity of PV and the battery, the data was not obtained in the F/S. The
power demand data for 24 hours which was supplied in the sites and the PV capacity data on
March 23rd 2017 in Cuba (24 degrees north), which is almost the same north latitude as Saudi
Arabia were used to calculate and examine the best capacities.
40
(1) The mine of the affiliated company of the company A
Selection of PV Output, Battery Output and Capacity ・
In this F/S, the data of the power demand in the mine in July 2018 and February 2019 was
obtained. There were some differences in the power load between those data. However, the
interview in the mine provided information that the power load usually keeps almost 2MW (it
sometimes sharply increase to 5 ~ 6MW for a short time during the crushing or the train load
out, though). Unfortunatelly, this F/S could not get the annual data of the power load; the
information from the interview that the power load keeps almost 2MW is assumed that it is
accurate and proper to simulate.
Presently, 3 DGs with 2.2MW rated capacity are always operated although the power load is
2MW; the fuel cost is wasted. This examination aims to reduce the 1/3 of the whole fuel cost by
introducing the PV and the battery system.
When the time zone where the PV can generate power is taken into the consideration, the
operation during the night should be the same as the present. Instead, the number of DGs which
are operated during the daytime should be decreased as much as possible to reduce 1/3 of the
whole fuel cost; and the number of the DGs should be limited to only 1 at the maximum. On the
other hand, since the project sites are located in the off-grid area, to make the source of the
voltage and the synchronizing power from the rorary machines zero base is not profitable plan
in terms of the securing the power of the Power Conversion System (herein after referred to as
“PCS”) and EMS, and correspondence to the rush current occurs with the launch of DGs in case
of considering the problems on distribution system.
This examination assumes that at least 1 DG is active while the PV is operated during the
daytime.
41
Source: Study Team
Figure 3.6 Demand in July 2018 and PV Generation in the Mine
When the condition mentioned above (the power demand is 2MW and 1 DG is operated) is put
into the consideration, 2MW is estimated to be enough for the PV capacity since the DG
capacity is expected to be 2.2MW at the maximum and 440kW (20% of the rated capacity) at
the minimum.
First of all, the fuel cost reduction rate when the 2MW of PV is installed was simulated based
on the assumption above and the power load data in July 2018. The fuel cost reduction rate
became 32% and it almost achieved the target in this simulation.
Also, the battery capacity to store the surplus power generated by the PV was simulated at the
same time. According to the result, the necessary capacity is 1.7MWh; it is estimated that
2MWh would be enough for a battery capacity with 20% tolerance.
Source: Study Team
Figure 3.7 Simulation Result of the Battery Capacity in the Mine (with 20% of DG Generation)
0
500
1,000
1,500
2,000
2,500
月 最低 蓄電池容量制限なしケース
DG Generation Battery Discharge PV Direct Stored Energy PV Generation
42
Source: Study Team
Figure 3.8 Simulation Result of the Battery Capacity in the Mine (without Any DG Generation)
The case when all the DGs are stopped was also simulated for reference. In this case, 500kWh
is enough for the battery capacity (to adopt this simulation result, some technical problems such
as stopping all the DGs should be solved).
Following the first simulation, the fuel cost reduction when the 2MW of PV is installed based
on the power load data in February. Though the battery capacity does not increase, the fuel cost
reduction rate became 33%; in this case almost achieved the target as well.
Source: Study Team
Figure 3.9 Power Demand in February 2019 and PV Generation in the Mine
However, the power demand data in February 2019 is extremely different from the result of the
interview, and the average demand is about 1.5MW. As descrived above, this F/S could not
0
500
1,000
1,500
2,000
2,500
DG全台停止許容ケース
DG Generation Battery Discharge PV Direct Stored Energy PV Generation
43
obtain the annual power load data and the annual mean of power demand was about 2MW
according to the interview. From the viewpoint of those conditions, the credibility of this data is
questionable if the operation was nomal. Therefore, it is assumed that the situation was special
on that day and the result is used just for reference.
Functions Assumed for EMS ・
EMS is one of the technologies Japanese enterprises are in excellent position in the world.
Functions shown in Table 3.5 will be necessary deriving from the past demonstration results
and the commercialized products by Japanese manufactures.
Table 3.5 Functions Assumed for EMS
Function Contents
1. Monitoring of PV generation
Collect the total generation by each PV and calculate its short cycles fluctuation
Control the charge/discharge to restrain the short cycles fluctuation 2. Monitoring of
Frequency Monitor the deviation from the standard frequency and calculate the
MW which is equivalent to the short cycles fluctuation Control the charge/discharge to restrain the short cycles fluctuation of
the frequency fluctuation 3. Monitoring of the
battery status and control of the charge/discharge
Monitor the charged power in the battery and calculate the amount of dischageable power
Control the charge/discharge of the battery based on the difference between the power generation and the demand
4. Monitoring of power drop
Detect the power drop of the operating PV and DG Control the discharge of the battery to cover the power drop
5. Predict of PV generation
Predict the fluctuation of power generation for several hours, and plan and control the power storage rate of the battery and/or the number of diesel generators to run to cover it
6. Restraint and control of PV generation
When the DG generation adjustment cannot cope with the surplus supply to the demand, the PV generation will be restrained to the bare necessities according to the number of active DGs and their capacity, the capacity of each solar park, and their expectancy.
7. Control of system voltage
Since the quantity of the reactive power which can supply to adjust the voltage decrease according to the decrease of parallel operation of DGs, the reactive power which restrains the voltage fluctuation will be controlled.
(2) Cement Factory
PV capacity ・
There are 2 series of rotary kilns. The power load when both series are operated is 60 ~ 70MW
degree, and the power load when only 1 serie is operated is 35 ~ 40MW degree. According to
44
the interview, the 2 series are hardly operated at the same time; usually only 1 is operated. To
supply for the power load, 1 steam turbine (14.25MW) and 5 DGs are usually operated. As the
assumption of the examination, 1 steam turbine and 1 DG will be remained and the other 4 DGs
will be replaced with PV to reduce the fuel consumption as much as possible.
The steam turbine will be constantly operated. When the capacity of the steam turbine is
realistically taken into consideration, the capacity which will be replaced with PV is 20MW in
case of this simulation.
Source: Study Team
Figure 3.10 One Kiln and PV20MW/40MW
Figure 3.10 shows the power demand for 24 hours in the cement factory and 20MW and 40MW
of PV generation.
a) Installation of 20MW of PV
For the 35MW of power demand, the steam turbine (14.25MW) is assumed to perform the rated
operation and 1 DG is assumed to have the lowest power load (3.5MW). When all the remained
power demand is covered by PV, the minimum power capacity which can supply (equivalent to
2 DGs) becomes as shown in Figure 3.11.
45
Source: Study Team
Figure 3.11 One kiln and PV20MW
Battery Capacity ・
As shown in Figure 3.10 and Figure 3.11, there is not any time zones which the 20MW of PV
generation surpasses the demand unlike the mine of the affiliated company of company A; the
battery is not needed since the surplus power will not be generated.
However, the active DGs do not have any reserved capacity and the PV capacity is minimal. If
PV capacity decreased, the suspended DGs need to be activated.
Thus, to cover the demand for 20 minutes during the startup of the DGs, 20MW/6.7MWh of the
battery capacity is necessary.
The reduction rate of the fuel cost will be about 21% (▲153MWh/day) (the orange zone of
Figure 3.11).
b) Installation of 40MW of PV
For the 35MW of the power demand, the steam turbine (14.25MW) is assumed to perform the
rated operation and 1 DG is assumed to have the lowest power road (3.75MW). When all the
remained power demand is covered by PV, the spare rate of the PV generation will be same as
the usual operation (equivalent to 4DGs).
46
Source: Study Team
Figure 3.12 One Kiln and PV40MW
Battery Capacity ・
Figure 3.12 and Figure 3.13 will show the power demand for 24 hours in the cement factory
and the 40MW of PV generation. In this case, PV generation will surpass the power demand
and there will be some surplus power. The battery stores them to discharge when the PV
capacity decreased (the green zone of Figure 3.12). The battery will be installed to store the
surplus power.
The necessary battery capacity will be 20MW/63.3MWh. In this case, the fuel cost reduction
rate will be about 39% (▲287MWh/day) (the orange zone of Figure 3.12).
Source: Study Team
Figure 3.13 The reduction rate of the fuel by introducing the PV and battery
Figure 3.13 shows the PV generation, the battery capacity, and the fuel cost reduction rates.
For the assumed function of EMS, the restraint and the control of PV generation is not needed
since the situation which forces to restrain the PV generation since some DGs are constantly
operated. Except for this point, the assumed function is the same as the mine case.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
7:30 8:30 9:30 10:30 11:30 12:30 13:30 14:30 15:30 16:30 17:30 18:30 19:30 20:30 21:30 22:30 23:30 0:30 1:30