straight talk

Will the GCC Power Grid meet the towering demands?

Connecting Resources
BY SINDHU NAIR HE gures are not all good and the path being followed is unsustainable. This is the latest on the GCC's utility sector, which urgently needs enormous capability enhancement to meet the demands of the growing population. And according to a report by consultancy rm Research & Markets, the utility sector requires huge investment over the next seven years as economic growth gathers momentum in the region. In the region, the growth in demand for electricity is about 10 percent and desalination 8 percent a year, the report said. Based on 2007 unit costs, the GCC (Gulf Co-operation Council) region will require about $50 billion of investment in new power generating capacity and $20 billion in desalination. According to the report Power and Water in the GCC: the Struggle to Keep Supplies Ahead of Demand, the Gulf region is facing an unprecedented capacity building programme to cope with a regional economic boom that is accompanying record oil prices and investment levels. An estimated 60,000MW of new capacity, as well as ve other GCC countries, will be required by 2015, while desalination capacity will have to double to over 5,000 million gallons a day (MIGD) to meet the
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Yousef A Janahi, Corporate Planning and Business Development Manager at Qatar General Electricity and Water Corporation (KAHRAMAA) and the Chairman of the GCC Interconnection Authority (GCCIA) board

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projected growth demand. A major step to bridge the gap is the GCC Power Grid. It couldn't have come at a better time with the deepening power crisis in the region. Major industrial projects are starting to fall by the wayside, increasing the urgency of regional efforts to address the decit. Despite the lack of publicity, the $1.6 billion project the Gulf region's rst business development to involve all six GCC states is already well advanced, and due for completion in 2010. Qatar Today spoke to Yousef A Janahi, Corporate Planning and Business Development Manager at Qatar General Electricity and Water Corporation (KAHRAMAA), who is also the Chairman of the GCC Interconnection Authority (GCCIA) board, this year and consequently the right person to answer all the issues that the grid hopes to answer and some that it will not. Work Report "The rst phase of the power grid is about 80 percent complete. By the rst quarter of 2009, we expect this to be complete," says Janahi. The grid project is being carried out in three phases. The rst, to be completed next year, would create a north GCC power grid to include the four founding states, Qatar, Bahrain, Saudi Arabia and Kuwait. The second phase would connect the UAE and Omani transmission systems to create a south grid. Linking the north and south grids would complete the project. "Phase two is basically linking UAE and Oman and also the verication of the internal network in UAE. Though the internal network in UAE already exists, it needs to be veried to check whether it can transfer the ing certain percentage of the total. "Qatar is paying 14.8 percent of the total cost of the Phase one. The total cost can be decided only after the other phases are complete. But we might not have to pay more than what we paying currently." "KAHRAMAA (KM) represents the shares of Qatar in this project. Therefore we are the members of the board and the General Assembly. Qatar holds the Chairmanship of the Board of Directors. The Chairman-

Source:www.gccia.com.sa

The most promising bulk supply is nuclear, but only at certain gas prices and if the additional safety hazards due to this technology are acceptable and mitigated. As the market price of gas goes up, it makes sense to look at alternative resources like nuclear energy.

capacity. The link between UAE and Oman is also under evaluation and that has to be submitted to GCCIA. This is also almost complete but under evaluation." "Phase three which links the north and south grid, is also under construction, we have signed a contract last July for the overhead lines and by the end of this month we will sign a contract for the substation at Silah in UAE." In such a huge project involving billions, the nancial structuring of the project is equally vital. The authorised share capital of the GCCIA (according to www.gccia. com.sa) is xed at $1,100,000,000 divided into one million one hundred thousand (1, 100, 000) shares of $1,000, with each country subscrib-

ship is allocated to all GCC countries on a rotational basis every three years between the states who paid their share." Sharing of Power The development is important because it would halve the amount of reserve power capacity that each country would otherwise have to build to ensure an adequate electricity supply for peak demand periods and contingencies such as power station shutdowns. "The interconnection design is made to cover emergency and catastrophe situations and when there is a potential for any spare, the line is used for economic trading. The Qatar link, though, is limited to cover only the catastrophe scenario, which
OCTOBER 2008 Qatar Today 39

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equals to 750MW. With this interconnection, we will improve the reliability of the present network by reducing our reserve by 50 percent, which is around 450MW of power and this is our saving. These gures were arrived at as per our forecast prepared in 1991. And that gure when worked on economically will present about 14 percent of our contribution nancially." The GCCIA estimates that Gulf States could save hundreds of millions of dollars annually by agreeing to share power supplies and building the infrastructure to do so. The payback period for the investment could be less than four years. More critically, by using their combined power generating capacity more efciently, the GCC countries could ease their power crisis and gain breathing space in their race against time to build new power plants and secure alternative fuel sources for electricity production. An agreement for power sharing is in the pipeline, Qatar will sign it soon. But, in Qatar's case, the gures were calculated as per forecast reports of the year 1991. The question now is how feasible these gures will be when the power needs of the country are already much ahead of what was predicted that long back. "The grid will have the same advantage but the value is debatable." Bigger Plans in the Making On the talks of Saudi Arabia embarking on grid-connectivity projects with Egypt and Yemen and also a pan-Arab grid to link the GCC States through Saudi Arabia with other Arab nations, Janahi says, "Neither GCCIA nor KM is aware formally or otherwise of any bi-lateral interconnection that Saudi is undertaking. But we are aware of an Arab Interconnection feasibility study for a panArab connection. That is as per the directive of the council of Arab Electricity Ministers. They have agreed to launch the necessary studies. Qatar has also agreed to fund its share of the cost." Alternative Resources Meanwhile alternative resources are being harnessed around the world and even in the GCC. Oman is considering building coalred plants. But coal-red facilities take about four years to develop, and coal supplies for Ajman may have to be sourced from as far away as Indonesia or Australia and would be subject to a hefty risk premium for being shipped into the Gulf. The nuclear option, which the UAE and Saudi Arabia, among others, are considering, would take more than twice as long to implement. Qatar is investigating potential sites for a nuclear power plant and also on its techno-economic feasibility. Qatar is also involved in GCC Nuclear power & water plant investigations. "KAHRAMAA is undertaking numerous feasibility studies with the Ministry of Environment to work on the advantages of alternative resources, both renewable and nonrenewable sources. For renewable, there is a committee that oversees the study and our Vice Chairman, HE Issa Shaheen Al Ghanim, heads that committee. "Though feasibility studies are being undertaken, the only approved source of power is oil and gas. We are not using oil and are harnessing from our abundant resources of gas." Janahi also represents KAHRAMAA in the GCC nuclear power station study. "The most promising bulk supply is nuclear, but only at certain gas prices. As the market price of gas goes up, it makes (commercial) sense to look at alternative resources like nuclear

HUGE CAPACITY EXPANSIONS IN GCC

GCC countries are in a serious drive to expand their power capacity and have already earmarked $217 billion on power projects to date. Majority of the new projects are in Saudi Arabia, where power-starved mega projects are expected to go on stream from this year up to 2012, according to data from projects information specialist ProLeads. Saudi Arabia, the world's largest producer and exporter of oil, is shelling out $111 billion on new power generation and transmission projects to stem the growing demand for electricity. Second to the pack is the UAE with 58 projects valued at $55 billion followed by Qatar, with 12 projects valued at $21 billion. Kuwait's planned and ongoing projects stands at $14 billion while Oman and Bahrain's power projects are put at $10 billion and $5 billion respectively. The UAE power demand is among the largest in the region due to nancial and tourist projects as well as a growing population. According to Global Insight, UAE has added 24 percent electricity-generating capacity at an annual rate over the last 30 years. Current total capacity for electricity production is around 16.7 giga watts (GW), but will need to increase further considering the 10 percent per year demand rise expected through 2010.

Gulf States could save hundreds of millions of dollars annually by agreeing to share power supplies and building the infrastructure to do so.

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energy. With the current gas prices, which is almost half of the world's the next ve year period, if all power nuclear energy is not feasible. But total articial water production, be- and water plants contacted via the when gas triples in value, nuclear ing used in the region, the region is purchase agreements are impleenergy is the next resource to fall on an unsustainable and scary path. mented in time. back on." Janahi agrees to the fact that wa"We even have the scope for enFrom the economic point of view, ter is indeed a priced commodity in ergy trading with GCC (Bahrain, is renewable energy like solar and this part of the world and points out one example) in 2009 through the wind energy is least feasible, due that KAHRAMAA has been trying to power grid. This again is a whole to the high cost involved in setting educate the society on water conser- process, the line is reserved through them up. To make renewable energy vation. auction, and the country that pays feasible they are to be harnessed in "We are developing a number of most gets the right-of-way, if it is for bulk quantities and for this land is ideas through the Integrated Water non-emergency purposes. an absolute necessity. Resources Development Manage"No country can use the emergency "With the economic plans that the ment under a committee chaired by line for more than six hours and not country is currently undertaking, our Vice Chairman." more than three times a year." land is also an expensive commod"This committee studies both the ity." demand and supply side solutions ... But not over a long period According to Janahi, large-scale for Qatar. The latest forecast completed by KM solar projects, the only type of reover a vwe-year period to identify newable energy that makes sense for Rationalise water for all purposes the new projects, isn't wholey posithe Gulf region, are still years away "We are taking GCC plans into consid- tive. from being economically competi- eration, which is still on the planning "Power demand is expected to doutive. stage, says Janahi, We support the ble from about 4,000 MW in 2008 "Solar Energy can be harnessed GCC inter connection project since to about 9,000MW by 2013. Water when used along with gas. Wind we have no other alternative to fall demand is expected to increase from energy is not feasible as there is less back on and we need the security of about 200 MIGD in 2008 to about wind power that can be harnessed. supplies. Qatar and Bahrain have the 380 MIGD by 2013. Here again, there is the question of same issues of scarcity. Oman, Saudi "The total supply forecast for elececonomics. and UAE all have more resources of tricity from all the projects that will "All this can be feasible, only when seawater than we have. be functional at that time, say 2015, there are changes in the energy polA recent study recommended is 8,081MW and the forecast for waicy that will make us ignore the eco- Reverse Osmosis (RO) as the fu- ter supply during the same period, nomics and pursue unconventional ture water production technology 270MIGD. resources for purely environmental in Qatar. The intension is to verify "If we do not increase the supply reasons. Like the EU, this has subsi- this conclusion through an RO pilot with new projects, there will be a dised the renewable power like solar project. shortfall. This gure is without reand wind energy and thus made it serve, which is also to be added to the mandatory to use these resources." The going is good... gures to arrive at a perfect scenario. According to Janahi, there are no At that time, the shortfall for water Water Scarcity shortfalls in electricity and water supply is much more than expected With growing water consumption in production capacities foreseen in (131MIGD taking the reserves into the GCC states, analysts predict that account), so we will have to look into by 2015, the region's desalination more resources." capacity will have to double to meet A recent study recom"We are currently working on Faprojected demand. cility D (power and water projects mended Reverse "We do not have any gures avail- Osmosis (RO) as the together) and a pilot RO project to able on that but with the growth in meet the shortfall." future water produc"Once the power grid starts funcpopulation that we have been wittion technology in tioning, it will hopefully pave way to nessing in the current years; desaliQatar. We intend to more such sharing of resources that nation capacity will surely have to verify this conclusion will benet the countries that lack in increase." resources while giving the others a With a current rate of over 20 mil- through an RO pilot monetary benet from the dealings lion cubic metres per day of seawater, project."
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