The demand for electricity in the GCC will grow at a rate of 7 per cent per year over the next 20 years, which can be met by improved interconnections and migration to renewable sources, said a report.

The GCC power requirements measure up against a global demand growth rate of 1.8 per cent per year, according to A T Kearney, a global management consultancy.

For every megawatt-hour of power not supplied to key industries in the Gulf Cooperation Council (GCC) approximately $700,000 is lost in revenue, with a corresponding drop in GDP, said an A T Kearney study.

While peak electricity demand in the GCC increased by more than 60 per cent between 2003 and 2009 (usage rising from 47 gigawatts (GWp) to 77 GWp), GCC countries face the challenge of planning immediate capacity increases as well as building sustainable power sources to meet soaring power needs.

Developing renewable power sources, grid expansion across neighbouring countries, unbundling processes and regulatory schemes will improve power generation capacity, said the study.

Electricity generation in the GCC, which is predominantly oil and gas based, is straining fossil fuel reserves, shortening their duration and contributing to an already high CO2 footprint. In addition, using oil or gas as the primary source for domestic electricity consumption manifests a lost opportunity in monetising the export of oil and gas and their derivatives.

“Adding new conventional capacity is the typical approach. However, given consumption of fossil resources in power generation is not economically sustainable; this is not a long-term solution,” said Louis Besland, partner at A T Kearney Middle East.

According to the A T Kearney study, inconsistent distribution is affecting the region’s ability to meet rising demand for electricity. While there is no shortage of power on an aggregate level in the region, at a granular level pockets of over-capacity currently exist.

This is the case in Saudi Arabia and within parts of the UAE, such as Abu Dhabi and Dubai, while Sharjah suffers from electricity shortages. Kuwait, Oman, and Bahrain all experience power shortages at times of peak demand. Qatar has solved the problem by building additional combined cycle gas turbine (CCGT) capacity in an impressively short period of time.

José A Alberich, partner at A T Kearney Middle East, explained further, “The imbalances will be solved with interconnection capacity developments. Grid interconnection improves reliability, reserves pooling, load factors, and modulation capacity through interconnecting systems that have different load profiles and generation mixes.”

“Improving interconnection across borders brings transparency in the contracting and use of the capacity available, and yields additional benefits from harmonising technical procedures and balancing regimes.”

GCC countries have initiated steps towards an integrated Gulf grid to allow electricity exchange among the various nodes of the network with other neighbouring countries, and further developments are in the pipeline.

Increasing pressure to comply with international environmental standards aimed at reducing carbon emission footprints, to which the GCC will be subject to comply given its membership to the World Trade Organization, will only strengthen the focus on clean-tech and renewables-based power generation.

By 2020 solar photovoltaic is projected to become a highly competitive source of electricity compared to all peak demand technologies, and by 2030 is likely to outperform all other power generation technologies, according to a study by the European Photovoltaic Industry Association (EPIA) and the Alliance for Rural Electrification (ARE), in collaboration with A T Kearney.

Given the GCC region has an obvious solar energy capacity advantage over western countries, A.T. Kearney expects that solar energy will increasingly become part of the regional energy mix, enabling the region to fulfill the soaring power needs needed to fuel economic development and private household demand.

“Faster migration and expanding renewable sources of generation capacity needed in the years ahead can contribute significantly to solving the problem of scarcity of natural gas and improve the carbon footprint. Governments and companies in other countries have already made the investment to bring solar technologies to an industrial level with utility scale installations, and the GCC countries can benefit from this,” concluded Alberich. – TradeArabia News Service