Finding solutions

Abhay Bhargava, industry manager at Frost & Sullivan.
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Faced with an ever rising demand for electricity, GCC governments have to adapt their policies to ensure sufficient power generation.

Demand for electricity in the region is closely linked to the need to provide cooling to its inhabitants. In the hot summer months, electricity consumption spikes to a yearly high. Similarly, daytime use of energy far outstrips nighttime use, as air conditioners battle it out with the scorching heat.

It is thus unsurprising that peak loads is a key consideration to anyone analysing the regional power sector. Abhay Bhargava, who is industry manager for energy and power systems at Frost & Sullivan, sees a constant struggle to keep power generation capacity ahead of peak demand.

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“Peak demand will be increasing until 2020, and you see megawatt generation trying to follow up,” he says.

“The question that comes to mind: Whatever the government invests in generation, are they really just chasing peak loads? And is that the right way to handle your investments, or is there something else you can do? “

To underline his point, Bhargava points out that European and US power companies typically try and have a margin of around 25 percent between peak demand and installed capacity.

In comparison, demand in Kuwait reached 99 percent of capacity in July. Saudi Arabia experienced blackouts this summer as peak demand exceeded capacity. In Sharjah, power outages have become a common feature in the summer, as the emirate is unable to secure sufficient gas feedstock after a delivery arrangement with Iran failed to materialise.

Sharjah serves as a good example for an overreliance on gas, a problem that is not going to go away any time soon. “Lets look to the future: In 2020, were still talking about an excessive reliance on gas, and if you start looking at wind and other renewables that’s a really small percentage of the total,” says Bhargava.

It is not that there have been no efforts made to diversify away from gas. Abu Dhabi has taken the lead on the nuclear front, with a four nuclear reactors coming online from 2017. Saudi Arabia, and Kuwait are amongst the other countries looking into the nuclear option.

Both countries have commissioned studies looking into the feasibility of nuclear power, and Kuwait has signed a Memorandum of Understanding (MoU) with France for cooperation in developing the nuclear sector.

Yet nuclear is no easy fix. One of the big hurdles is creating adequate regulation, something that cannot be put into place overnight. “There are still a lot of regulatory constraints that impact the nuclear option, and it does take long to go down that path,” says Bhargava.

Furthermore, a rush to building up nuclear power capacity across the region could lead to shortages in the supply of fuel, and technical expertise, especially as the interest in this form of energy generation is not constrained to the GCC, but to the entire Middle East.