The Challenge

In order to inform an investment decision, the Client wanted to understand the long term revenue prospects for an exisitng IWPP project, the security of the project’s gas supplies, and the outlook for gas prices. The Client therefore required mid- and long-term insight into Bahrain’s energy market fundamentals, covering the power, water and gas markets. Given our strong track record in the region, IPA was commissioned to undertake its bespoke analysis and examine the outlook for the power market and the security of supply for future domestic gas end-users for the next 30 years.

Our Solution

IPA provided a long-term forecast of supply and demand in the domestic gas, power and water markets. This analysis was used to provide revenue forecasts for the client's projects in their post-Power and Water Purchase Agreement (PWPA) periods, based on a set of technical and economic assumptions. Our work consisted of:

  • An assessment of the availability of domestic natural gas supplies and future LNG imports, and the future demand for gas from the power, industrial and commercial sectors. This included an assessment of indigenous gas field production profiles, development plans and proposed LNG imports.
  • The identification and assessment of issues affecting security of supply within regional gas markets and their potential impact on the domestic power market.
  • The development of global and domestic gas price forecasts;
  • The development of electricity and water price scenarios for Bahrain’s electricity system, using fundamental analysis of demand and supply costs;
  • Projections of the dispatch of electricity and water for the projects throughout their operating lives;
  • A comparison of the projects’ cost structures against close competitors, including new and existing power and/or water projects; and
  • An assessment of the potential value extension of each project beyond the PWPA period.

A full market report was delivered to inform discussions with potential investors and other key stakeholders.