The heat is on for Kuwait

Kuwait City.

For a country that holds around eight percent of global oil reserves, it may be difficult to believe that Kuwait faces domestic power concerns, writes Oliver Cornock, Oxford Business Group's GCC regional editor.

Kuwaitis have been experiencing record temperatures in June, prompting power outages in a number of residential areas and bringing to light concerns over the country's pressing need for increased power generation capacity.

The nation has one of the world's highest per capita consumption rates of electricity, and during the summer months, when temperatures hover around 50°C, it is estimated that around 70 percent of energy is consumed by air conditioning units.

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At present output levels, Kuwait is capable of producing 11,200MW of electricity. Yet on June 13, with soaring temperatures in the low 50s, consumption reached a record 10,823MW (98.5 percent of grid capacity).

Analysts forecast demand to reach around 11,000MW during the coming few months, up 13.4 percent from last year's peak summer demand of 9961MW.

Considering that most countries strive to operate with a spare capacity of around 15 percent, authorities in Kuwait have been setting up emergency meetings and working out strategies to ensure summer outages do not become a regular occurrence.

Kuwait has not built new plants since 1998, and over that period has seen an annual average growth rate in power demand of eight percent. While new power plants are in the planning and construction stages, no new plants are set to come online until next summer at the earliest.

In September 2009 the government signed a US$2.7 billion deal with General Electric and Hyundai Heavy Industries of South Korea to build a 2000MW gas-fired plant at Subbiya in the north of the country. The plant is expected to be operational in June 2011 and produce 1320MW, with an additional 680MW to be produced by 2012.

In the meantime, it is believed that deteriorating cabling has caused up to 80 percent of the recent outages experienced, prompting calls for immediate efforts on maintenance and repairs.

"While the government is spending billions building new power plants, for far less money and with more immediate results, they should also invest in refurbishing and improving the efficiency and output of existing ones," says Walid K Al Hashash, the chairman of Aref Energy.

Existing power and desalination plants are owned and operated by the Ministry of Electricity and Water, and many believe improvements in quality and delivery could be made through privatisation.