More large-scale alternative and renewable energy projects, which reduce the per-unit cost of alternative energy, will be necessary in the GCC region to encourage households and businesses to reduce their use of conventional power sources, according to an expert.

 

Nina Skero, ICAEW economic adviser and economist at Cebr (ICAEW's partner and economic forecaster), pointed out that given the tremendous investment these projects require, and the fact that Gulf Cooperation Council (GCC) governments are seeing state revenues decline, investment will probably have to come from the private sector.

 

The GCC has grown to no longer be just a major energy supplier, but also a substantial demand hub with requirements' growth, Skero said in a report.

 

"This has motivated governments and businesses in the region to invest in alternative energy sources. However, despite these recent improvements and initiatives, the GCC's energy efficiency remain low compared to global benchmarks," the report Economic Insight: Middle East Q3 2015, produced by Cebr and commissioned by ICAEW, said.

 

According to the GCC Energy Intensity Project, which began in late 2011, the low prices of fuel, electricity and water are a substantial barrier to more efficient energy use in the region, it said.

 

In the context of sustained lower oil prices, this is likely to remain the case, especially given expanding energy demand and growing population across the region. 

 

In 2011, none of the GCC countries’ energy was from alternative sources. This looks set to change following a surge in innovative research and target-setting on behalf of governments in the region. 

 

The UAE, for instance, has committed to specific alternative energy targets with Dubai striving to generate at least five per cent of its total energy consumption from renewables by 2030, and Abu Dhabi setting a seven per cent target for 2020. 

 

The Mohammed bin Rashid Al Maktoum Solar Park in the Dubai, scheduled to open in 2017, will be able to power 30,000 average UAE homes. It aims to achieve a total capacity of 3,000 megawatts in 2030 once it is completed, said the report.

 

Meanwhile, with the car ownership and usage in the GCC well above the world average, governments are continuing to invest in public transport infrastructure to help reduce levels of energy consumption – and ease traffic congestion. 

 

The $200 billion GCC-wide railway network is due for completion in 2018, and contracts worth billions of dollars have been awarded for metro line construction in Abu Dhabi, Kuwait, Jeddah, Makkah and Madinah.

 

However, such infrastructure will only improve energy efficiency if the rate of public pick-up is substantial. The private sector can help encourage this public usage, by building facilities around major railway stations. The regional move towards limiting or eliminating fuel subsidies will also play a part in minimising car use, it said.

 

Shifting to alternative sources of energy in the water desalination sector will also help curb energy demand in the GCC, said the report.

 

Desalination – the process of converting seawater into freshwater – is both energy- and cost-intensive, and the UAE, Kuwait and Qatar are among the world’s top nations in terms of desalination capacity. 

 

With water consumption rates in the region continuing to swell, many of the GCC countries are considering how to make the desalination process more sustainable. 

 

Saudi Arabia’s King Abdullah City for Atomic and Renewable Energy is one such example of the steps being taken by the GCC countries on the road to ensuring long term freshwater supply.   

 

Michael Armstrong, FCA and ICAEW regional director for the Middle East, Africa and South Asia (MEASA), said: "Although the GCC countries have been progressively getting more energy-efficient, a lot of work still needs to be done to limit wasteful consumption by households and businesses. 

 

"As the Sustainable Development Goals come into play – the shared framework for global action and cooperation on sustainable development for the next 15 years – these efforts will intensify. This presents excellent opportunities for collaboration between the public and private sectors, and we expect more governments will follow the example of Dubai, passing laws to foster public-private partnerships for infrastructure funding." - TradeArabia News Service