Saudi Arabia is a desert country with no permanent rivers or lakes and very little rainfall. Water is scarce and extremely valuable, and with the country s rapid growth, the demand...
Water demand surpasses renewable water resources by approximately 10 billion cubic meters a year, according to the US International Trade Administration. Saudi Arabia meets excess demand through seawater desalination, though desalination remains critical for groundwater treatment in the Kingdom as well due to high groundwater salinity. The Saline Water Conversion Corporation (SWCC currently operates 36 desalination facilities that address 60 to 70 percent of freshwater demand. The depleting natural precipitation and ground-water levels and increasing population are the major drivers of the sector in the region. A continued effort at increasing diversification of government income from hydrocarbons is another factor that has led to an increase in construction projects, industries, manufacturing plants, etc., leading to more demand for fresh water. Moreover, the government is supporting and encouraging the establishment of desalination plants to meet the nation s demands.
Restraints and Challenges
The biggest challenge of desalination is the cost. As per a study, the cost of desalinated water per meter cube was USD 1.04, 0.95 and 0.82 for multistage flash (MSF , Multi-Effect Distillation (MED, and reverse osmosis (RO , assuming a fuel cost of USD 1.5/ GJ. Moreover, energy accounts for approximately three-fourths of the supply cost of desalination. Transportation cost is also added to the overall cost, making desalination a very costly process. Another negative impact of desalination is on the environment with the treatment of brackish water leading to pollution of fresh water resources and soil. Discharge of salt on coastal or marine ecosystems also has a negative impact.
Opportunities
As suggested by the Electricity & Cogeneration Regulatory Authority (ECRA reports, USD80 billion is expected to be spent on desalination projects in Saudi Arabia over the next two decades, presenting a lot of attractive opportunities for private sector involvement. Private sector investment in building as well as financing desalination plants are conducted through purchasing of their services (such investors and technology transferring builders are called IWPPs or Independent Water and Power Producers by the Water and Energy Corporation (WEC , an off-taker for desalinated water produced by private operators. The purchase is made for Power and Water Agreements (PWAs , signed for a period of 2 decades. The SWCC plans to invest USD11.7 billion in capital expenditures and USD4.5 billion in operations expenditures through 2020, highlighting the vast opportunities for desalination technology and Engineering, Procurement, and Construction (EPC firms, according to the US International Trade Administration. The SWCC has traditionally granted large EPC contracts for the development of facilities and continues to do so however, it has also recently included Build Own Operate models in its portfolio that will expand the desalination market further into services. This trend may accelerate as budgetary shortfalls due to falling oil prices create demand for alternative financing models.
Recent Projects
Six major projects took place during the 2016 timeframe. The largest is the Jubail 3 thermal and reverse osmosis project. The remaining five projects are all saline water conversion plants utilizing reverse osmosis they include Haradh BWRO, USD1.6 billion Rabigh Phase 4, USD1.2 billion Yanbu 4, USD900 million Jeddah 4, USD800 million and Al Khafji Solar-powered SWRO phase 2, USD600 million.