Exclusive: Plant expected to be commercially operational by July 2022, says Acwa Power’s CIO
Acwa Power has announced that it has reached financial closure for the 150 million imperial gallons per day (MIGD) Umm Al Quwain Independent Water Project (IWP). The consortium consists of Acwa Power, MDC Power Holding Company, a fully owned entity of Mubadala Investment Company (Mubadala) and the Federal Electricity & Water Authority (FEWA).
Acwa Power said that the $800 million project is funded on a debt equity ratio of up to 85/15, for which a syndicate of seven international and local lenders will provide $680 million senior debt.
The mandated lead entities including Korea Development Bank, MUFG Bank, Siemens Bank, Standard Chartered Bank, Sumitomo Mitsui Banking Corporation, First Abu Dhabi Bank and Samba Financial Group helped structure the first IWP non-recourse project finance debt for FEWA on a 24.5-year door-to-door tenor.
This is Acwa Power’s second desalination plant based on reverse osmosis technology that has started limited construction. Acwa Power, along with Ewec, a subsidiary of Abu Dhabi Power Corporation is constructing the world’s largest reverse osmosis desalination plant in Abu Dhabi, the Taweelah IWP for $868.5 million.
Rajit Nanda, chief investment officer of Acwa Power, said: “We are delighted to have shown FEWA that we are a partner of choice through the timely financial close of this project and our contribution to securing cost-effective and energy efficient potable water supply for the Northern Emirates.”
During an exclusive interview with MECN, Nanda said: “Some of the trends we are seeing in the region concerning water projects are that governments have started recognising that there is double-digit growth in this sector and are trying to meet this increasing demand with reverse osmosis based desalination.”
“In the past, reverse osmosis based water production used to be slightly expensive, but with the advancement of technology, and the use of solar power- since the most important operating cost of desalination is electricity, it has become very cost-competitive.”
“Apart from that, there is a significant improvement in the membrane technology, as well as in terms of efficiency and longevity, all of this coupled together is leading to breakthroughs in the cost of desalinated water production. It has become half of what it used to be six, seven years back in this region,” explained Nanda.
He said that there are several different forms of desalinated water technologies that are currently in the pilot stage, and with their expansion into commercial viability, the expected cost of water production is going to go even further down from the current $0.5 per cubic metre to maybe 30 or 35 cents per cubic metre. Seven years back the cost of producing water was $1 per cubic metre, he stated.
Acwa Power is the lead developer and holds 40% of the shares, while another 40% is owned by Mubadala and 20% is owned by the FEWA. The water purchase agreement is with FEWA; hence, they are the off-taker as well as part share-holder.
The plant will be located at a coastal site in Umm Al Quwain along the border of Ras Al Khaimah.