23-24 April, 2013

Saudi Sustainable Energy Symposium 2013

Attendees Alaa Ramzie

Yong Hwan Kim

Muhammad Azeem

Brief summary

The Saudi Sustainable Energy Symposium: Value Localization Series aims at creating a common

understanding between all stakeholders including government entities, private sector organizations, local

companies, international players, original equipment manufacturers, and potential investors concerning the

development of the Kingdom of Saudi Arabia’s sustainable energy program.

Key objectives of the symposium

To present the Saudi sustainable energy program, highlighting the opportunities it presents

for both the local industry as well as global partners (services and manufacturing).

To highlight the ways in which Saudi and international players will be working together, and

how KA CARE will support the localization of the value chain

To showcase how localization is achieved  and the success it can accomplish in nuclear and

renewable energy

To introduce subsequent phases for the localization program

Participant focus

First and foremost, Saudi Sustainable Energy Symposium: Value Localization Series is designed to attract

local Saudi industrial companies in the domains of manufacturing and services. This event is a critical

opportunity for these companies to understand the importance of localizing nuclear and renewable

manufacturing and services value chains and to highlight the associated benefits and best methods to

succeed.

Additionally, this symposium will provide an opportunity for international vendors in the nuclear and

renewable field to meet with the local Saudi companies in an effort to work on future partnerships or

cooperation which will develop theses industrial sectors in the Kingdom of Saudi Arabia.

Brief Summary

1. There are many possible energy mix scenarios. The option of a balance between Hydrocarbons (50%) and (50%) New Sources maximizes the return.

2. Solar could represent the second largest source of Energy capacity after hydrocarbons.3. At the beginning, the Sustainable Energy ramp up will be mainly based on Renewable energy.4. The Plan calls for the first connection of a nuclear reactor to the grid in 2022.5. Localization will be based on four pillars to encompass all opportunities (manufacturing and

services) and secure sustainability with qualified resources and mastered technologies.a. Manufacturingb. Technology Transferc. Manpowerd. Services

6. The overall localization target of the program is 60% of the nuclear spend and 80% of the renewable spend.

7. Localization Methoda. Capability assessment of local supplier base through workshops, one on one meetings and

site surveysb. Screening and assessment of large local players and the hidden smaller championsc. Screening and assessment of large foreign players and the hidden smaller champions who

have demonstrated nuclear and/ or renewable expertised. Provide assistance with regards to partner/JV screening (e.g. partner evaluation and

prioritization)8. K.A.CARE will ensure that the localization methodology is applied and enhanced over time.9. The GDP impact of the alternative energies program will peak at ~1% for Nuclear and ~4% for

Renewables during construction.10. The Sustainable Energy program will create a total of ~155,000 absolute jobs from which 70,000 are

generated by Nuclear and 85,000 by Renewable.11. Value Chain Localization Approach

a. Push Approachb. Push-Pull Approachc. Pull Approach

12. Setup of the Nuclear Execution Team (NExT) up to supervise the Nuclear Procurement Process.13. K.A.CARE will initiate concrete steps with local and international partners.14. Financing the local nuclear suppliers is challenging – may need to be tied to nuclear plant contracts.15. Traditional and Islamic finance tools apply for the nuclear value chain.16. Several companies are visiting local market to maintain localization rate.

The companies/authorities who participated for this symposium are not limited to the following.

1. NERA2. Doosan3. Gavial4. Vallourec5. GE6. I & Energo7. Bureau Veritas8. International Atomic Energy Agency9. Nuclear Industry Association10. Ministry of Employment and the Economy, Finland11. Soitec12. Rio Glass Solar13. Desert Technologies14. Vestas15. Areva16. Alstom17. Abengoa

Nuclear

There are several companies who showed interest in Saudi Nuclear Program. It requires large investment however, something’s are easier than others like, BOP and turbine island & nuclear related issues. This might be a good opportunity for local suppliers to work together with nuclear vendor. It will be a challenging opportunity for all parties.

US$30-35 billion for 4-reactor site by type of plant

1. Nuclear Island (55%)2. Turbine / Conventional Island (25%)3. BOP (20%)

US$30-35 billion for 4-reactor site by type of cost

1. Construction and assembly (40%)2. Equipment procurement (35%)3. Design and engineering (25%)

Nuclear power plant components critical to reactor safety must comply with specific manufacturing standards.

Local suppliers of goods and services must meet vendor requirements for quality and other factors – some of which are determined by the nuclear safety regulator and standards organizations.

Vendor imposes requirements on suppliers because the vendor is responsible for delivering a nuclear power plant that meets quality, operability and safety requirements and assumes some cost and schedule risk.

Time to become qualified supplier in any category depends on factors including

1. Current supplier situation, skills, training, QA programme

2. Type of product or service and QA requirements3. Vendor/purchaser requirements and process to qualify suppliers4. Intensity of qualification/investment process

Healthy margins are achievable, as long as the industry costs and risks are managed actively and effectively.

Possibilities for knowledge transfer

1. Transfer of requirements by qualification process 2. Training support incl. on-the-job training 3. Transfer of best practice to the performance

Solar

The opportunity to build a global lead in solar implementation, in solar technology and in developing a Saudi presence in the solar value chain.

CSP & PV meet multiple Objectives – Including local business development, employment, and potential opportunities in global markets.

Some companies established a strategic partnership to develop the Kingdom market.

Invest in the people and for the people; it takes scientists and shopfloor operators to build a solar supply chain in KSA.

Material like bulk, steel structure, civil, etc. is available and manufacture in the Kingdom.

Local content requirements create a number of challenges:

1. Increase project risk and the cost of energy 2. Often does not lead to a sustainable supply-chain

It is much more feasible to select local partners who have a significant local presence in the Power Sector.

Some companies proposed plates, BOP to be local products.

Mechanisms for Achieving Sustainability

1. Establishing an Integrated Economic Framework for Atomic & Renewable Energy2. Applying global best practices in a transparent, collaborative manner3. Enabling sustainable growth for this economic sector through:

a. Achieving economic viabilityb. Enhancing the industrial and technical support to localize this sector in the Kingdomc. Supporting research, development and innovationd. Job creation and developing Saudi nationals skills

Financing

Several analysts advised on financing mechanisms to fund the local value chain.

Project financing through government funds.

Several issue related to increase the funding to maximum.