Exploring the T&D Megatrends in the Middle East
, April 4th, 2012
Abhay Bhargava, Industry Manager, Energy & Power Systems Practice, MENA at Frost & Sullivan explores the emerging trends you need to be aware of
Power Transmission and Distribution (T&D) infrastructure is a critical backbone for any nation’s sustainability and development. While GCC nations had achieved sufficiency in terms of network requirements around 2000, the aggressive industrialisation and rapid urbanisation witnessed by the Gulf States in the last five years has put a considerable further demand on T&D networks.
This has led to a move to not only enhance existing networks, but to also increase geographic reach. As a result, the Power T&D sector in the GCC is expected to witness rapid growth, with investments totalling c.$60 Billion in the next five years, to add 18,000 circuit km of network.
However, planned investments in Power T&D are expected to be impacted by certain Mega Trends, which will significantly influence this specific sector.
Here, in conjunction with Utilities Middle East, Frost and Sullivan expert Abhay Bhargava outlines the top five mega trends for the sector and impact of mega trends on the sector.
Energy efficiency and “Innovating To Zero” will be the most significant Mega Trend. GCC nations are expected to aggressively increase their adoption of energy efficiency, and this “revolution” will impact the Power T&D network in several ways.
Firstly, losses on the T&D network are expected to be significantly reduced, through improved infrastructure and increased control.
Power consumption is expected to be reduced, owing to the advent of direct control devices coupled to smart metres and a smart grid infrastructure.
Peak shaving mechanisms are expected to become the rule rather than the exception, giving utilities greater control over demand fluctuations.
Over the next five years it can be expected that power services will witness a significant increase in demand, especially those aimed towards integration and increasing Remnant Life and overall Asset Integrity.
The sector will witness liberalisation, through emergence of Energy Service companies and the further privatisation of utilities and utility assets.
Rapid urbanisation is another key Mega Trend, which will significantly impact the GCC nations, leading to the eventual development of Smart cities, Mega cities and even Mega corridors of cities – all expected to significantly impact the Power T&D sector.
These developments mean there will be a requirement for High Voltage networks to cater to the emerging corridors/megacities spread across vast tracts of land.
Smart cities will require a complete revamp of the existing distribution networks to cater to “smart” commercial, industrial and residential customers.
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3 Clean & Green
The availability of commercialised and affordable “clean and green technology” will impact the Power T&D industry in the GCC nations. With thin film photovoltaic, green buildings and advanced energy storage becoming increasingly commercialised and cost effective, we expect widespread adoption by GCC countries to meet energy needs.
The availability of energy storage technologies would allow for the evolution of distributed islands of power, all of which could provide for redundancy (back-up), and peaking solutions, taking pressure off the grid itself.
Also, there has been a constant technological evolution of thin film photovoltaic, which has resulted declining costs – a trend that will only accelerate moving forward. This in turn is expected to lead to an increase in distributed sources of generation, which would call for smart grids that could integrate them into the grid for greater efficiency and reliability.
In the coming years green buildings and, potentially, communities, are expected to evolve significantly over the next decade, and would assist in reducing the load on existing networks.
The broader MENA region is expected to invest significantly in Infrastructure Development, especially in the aftermath of recent political unrest.
An increased focus on infrastructure development would lead to the evolution of power trading at a mega scale, through the interconnection of grids across countries, similar to the GCC Interconnection grid and other African regional grids. This would in turn imply a move towards High-Voltage (HV) technologies, as well as an increased need for synchronisation and billing software.
5 Profit watching
The evolution of the other four Mega Trends will force utilities in the region to adopt New Business Models, another Mega Trend that Frost & Sullivan visualises as evolving in the next decade.
New technologies and services can only be embraced given a change in the existing way of doing business. For example, currently power utilities in the GCC work on a model that allows them to increase profit by increasing consumption.
However, the adoption of new technologies and solutions would eventually lead to a reduction in power consumption, which would negatively impact the earnings of the distribution companies. Some examples of such technologies and solutions are demand response management, Feed-in-tariffs, smart meters and distributed generation.
Preparing for change: your Roadmap to 2017
The power T&D sector can prepare itself for change through the adoption of proven best practices. Some key strategic actions that can be adopted are listed below:
• Benchmarking (by both the Government and Private sector)
• Partnerships (for technology transfer, skills attainment, access to products)
• New product/ technology adoption
• Development of a facilitating services sector (Engineering, Design, Installation and Integration, Maintenance)
• Set up a conducive investment climate, to attract financing and investments into the countries
• Skills development of native workforce
• Enhance the regulatory framework to strike the right balance between quality assurance and technology adoption
• Influence societal change, with an aim to encourage energy efficiency across all levels of consumption
Change is inevitable for the power T&D industry, on account of the emerging mega trends. To ensure a smooth transition, it is critical that the end users and supply chain work together towards a common goal. While the supply chain would have to extend support to the utilities, in the form of R&D activities, alliances and thought leadership, the utilities would need to operationally restructure themselves to align with the emerging Mega Trends.