According to a report released by the International Renewable Energy Agency in July, investment in renewable energy projects across the Middle East and North Africa rose 40% last year to $2.9bn, and the organisation predicts spending could reach $13bn in a few years.

Bahrain’s minister of state for electricity and water affairs, Abdul Hussain bin Ali Mirza, outlined the government’s strategy to reduce fossil fuel consumption in an interview with OBG in late 2012. Then in June, at the Kingdom’s fourth annual Energy and Water Conservation Expo and Forum, the minister announced specific steps to address rising energy demand, including improving power infrastructure, investing in renewable energy sources and promoting conservation.
New facilities under development

The solar power plant, a 5-MW facility that will supply electricity to Awali and the University of Bahrain, is a $30m joint venture between the
National Oil and Gas Authority
(
NOGA
), the state-owned Bahrain Petroleum Company (BAPCO), and two US firms, Petra Solar and Caspian Energy Holdings. The technology, provided by Petra Solar, will combine solar panels with smart grid infrastructure.

The government also plans to evaluate bids by the end of this year for the construction of a second 5-MW renewable energy project to be located near Al Dur power plant. The facility will combine 3 MW of solar generation capacity and 2 MW powered by wind.

Bahrain is additionally taking steps to improve the efficiency of its power grid. In May, the Electricity and Water Authority (EWA) signed an agreement with global software firm SAP to overhaul its IT systems. The upgrade is expected to improve fault detections, more effectively balancing customer demand and load profiles, and transition Bahrain to smart grid infrastructure.

The move toward renewable energy comes as electricity usage is increasing. According to the EWA, peak power demand grew from 1540 MW in 2003 to 2967 MW in 2012.

This has put pressure on the supply of natural gas, which is used to fire the Kingdom’s power plants. Of the 592bn cu feet of natural gas Bahrain produced in 2012, power companies tapped 36%, while Aluminium Bahrain required 22% to run its smelter. BAPCO and industrial companies accounted for the remainder, according to data from
NOGA
.

“Unless it is able to increase its own production, Bahrain will need to import natural gas supplies from its neighbours to meet future power needs,” the Gulf Research Centre, an independent think tank, stated in its 2012 “Renewable Energy in the GCC Countries” report.

The government appears to be taking a two-pronged approach to boosting its supplies, investing in gas production and building an LNG facility for future imports. Occidental Petroleum, Bahrain’s partner in the joint venture Tatweer Petroleum, will drill its first ultra-deep-water well next year to search for gas at twice the depths of known reserves, Bloomberg reported in April. This year, the government plans to move forward with construction of a 500m-cu-feet-per-day LNG import terminal by selecting a builder, and deciding between an onshore and floating facility.

While Bahrain’s investments in renewable energy projects have been limited to date, the Kingdom has the potential to generate 33 TWh per year from solar power, or more than twice the power demand in 2010, according to the Gulf Research Centre report.

The low price of natural gas may be a factor discouraging investment, as may be the lack of a formal policy framework to encourage the transition to renewables. Despite reduced subsidies, gas remains relatively inexpensive, at $2.50 per million BTUs, as compared with $3.15 in the US or $10.30 in the UK.

The government may be better-positioned later this year to focus its efforts. In an interview with OBG, Mirza pointed out that the solar-wind plant to be tendered in 2013 “should yield data to aid strategic decisions about how best to use renewable energies”.

© Oxford Business Group 2013

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