Egypt Megaproject enters the operation phase

By the end of 2018 all three of the 4.8 GW Siemens H class combined cycle power plants that comprise the Egypt Megaproject are expected to be fully complete, achieving final TOAC (take over and acceptance certificate) following validation testing. This will mark the successful conclusion of what must surely qualify as the most ambitious combined cycle construction project ever undertaken, and increases Egypt’s installed capacity by around 45% (relative to 2015). The three new plants are intended to operate on indigenously sourced natural gas, but one block of each is also required to be operable on diesel (just in case).

The Beni Suef plant achieved TOAC in September 2018, while at the time of writing validation testing was still underway at Burullus and New Capital, with these plants expected to achieve TOAC in November 2018 and December 2018, respectively.

Remarkably this means the overall project has been executed on, or even a little ahead of, schedule, which is particularly impressive considering that these are among the world’s largest combined cycle plants (in terms of installed capacity). In addition, the plants to date have “exceeded all performance guarantees” during early operation.

Contributors to success

Speaking at a media event in Cairo on 22 October to mark successful completion and entry into the operational phase, Thierry Toupin, Siemens project director, commented that when the contracts were signed (in June 2015), “he was not sure that anyone would have bet an Egyptian pound that we would be where we are today.” Among key factors contributing to success was very strong support from the Egyptian government and its agencies, “a willingness among all stakeholders to make it happen” and “take some risks together”, with a prevailing spirit of “how can we help each other?”

It is significant that the main contractors (Siemens in partnership with Elsewedy for Beni Suef and in partnership with Orascom at Burullus and New Capital) were willing to start work before financial close had been achieved (itself representing a major piece of complex financial engineering involving over 30 banks and two export credit guarantee agencies, Euler Hermes of Germany and SACE of Italy, and involving a large dedicated team monitoring every step of the project to ensure compliance with International Finance Corporation guidelines).

Taking the shared risk of starting work without financing in place was a key driver in achieving success, Thierry Toupin believes, and departs from normal practice: “If we had waited for finance to be closed the project would have been delayed and we would not have achieved our targets.”

Another key driver was political will, with the recognition that something needed to be done about Egypt’s “electricity crisis”, exemplified by a major blackout in late 2014. This focused minds considerably and led to a government commitment to add capacity. In 2015 Siemens participated in a “fast-track electricity plan”, which included very rapid provision, in partnership with Elsewedy, of a 650 MWe simple cycle power plant at Attaqa, employing four E class gas turbines – constructed in 159 days.

Siemens’ biggest ever contract

The Megaproject – Siemens’ biggest ever contract – built on this experience. The total deal volume was some $8 billion, $6 billion for the three H class combined cycle plants, plus $2 billion for wind farms, a wind turbine blade manufacturing plant and grid upgrade, including eight 500 kV gas- insulated substations.

As previously described in Modern Power Systems (July 2017), although the core H class combined cycle equipment at each Megaproject plant is identical (eight SGT5-8000H gas turbines, eight HRSGs (with bypass stacks), four SST-5000 steam turbines, twelve SGen5-2000H generators, plus SPPA-T3000 control system), the overall plant layout varies (eg, with different cooling arrangements: Nile river/wet cooling towers at Beni Suef; seawater/wet cooling towers at Burullus; and air cooled condensers at New Capital). And each site posed its own particular set of challenges.

At Beni Suef (sited to meet power demand in Upper Egypt, including that of energy intensive industries such as cement, as well as remote settlements), site preparation entailed the excavation and removal of some 1 750 000 m3 of rock.

At New Capital (located to provide power to Egypt’s new administrative centre, planned eventually to host a population of around 5 million), an issue was absence of water sources for cooling, necessitating construction of one of the world’s biggest air cooled condenser installations, and what is believed to be the biggest yet deployed at a combined cycle power plant site.

Perhaps the most challenging site was Burullus (positioned on the Mediterranean coast to serve residential demand and energy intensive industry in Kafr El Sheikh and Alexandria, including gas and oil production facilities). This site was initially waterlogged and preparatory work involved a major piling effort (some 850 000 linear m, about 12000 piles). The cooling water intake pipework for Burullus, 2800 m long and 2m in diameter was transported from Norway to Egypt by sea as prefabricated floating 700 m sections.

Know-how transfer

Looking to the operational phase of the new H class combined cycle plants, Siemens signed an 8-year O&M services agreement in September 2018 with the Egyptian Electricity Holding Company, described as “the largest ever for Siemens Power Generation Services in terms of power generated.” The agreement covers all power generation equipment plus 500 kV gas insulated switchgear at each site, and includes implementation of the Siemens Omnivise digital service offering.

As a key part of the Megaproject, Siemens has trained 600 Egyptian technicians and engineers as O&M staff for the three plants. Training has been done during the construction phase, in both Egypt and Germany.

Looking beyond the immediate needs of training local people to run three power plants, Siemens has also implemented a longer term programme to help improve technical educational in Egypt, in partnership with the German Ministry of Economic Co-operation and Development. This consists of: developing a secondary technical school (Zein El Abedeen); upgrading a technical institute to become a leading qualification provider in mechatronics; and establishing a vocational training centre at the Siemens Energy Service Center, Ain Sokhna, Suez Canal Industrial Development Area. The three institutions are interlinked, the school leading to the institute and the institute to the training centre.

What next?

Building on its experience with the Egypt Megaproject, with the wide scope of supply going far beyond simply the supply of power generation hardware, Siemens believes there are further opportunities for it to exploit its position as a player in infrastructure provision. 

Iraq is, for example, seen by Siemens as presenting a potential opportunity to repeat the Egypt Megaproject model. A Memorandum of Understanding was signed in October by Siemens and the Iraq Ministry of Electricity envisaging the addition of 11 GW of generating capacity, but also encompassing “energy infrastructure, education, anti-corruption and financing.”

To somewhat confuse matters, GE has also signed a similar agreement with the Iraq MoE, which it call a “principles of co-operation”, and which “is expected to generate up to 14 GW” and help “the government realise savings and recoverable losses of up to $3 billion per year, establish a local technology centre and support water and healthcare access.”