The GCC Grid: Well connected

The GCC is on the treshold of a regional energy market and grid connection to Europe.

Dr A. Majeed Karim, member of the board at the GCCIA, discusses the potential of the GCC Interconnection Grid.

As the name suggests, the GCC Interconnection Grid will connect the grids of the GCC member states, paving the way for emergency transfers of power and a regional energy market. The first phase, the linking up of Saudi Arabia, Qatar, Kuwait and Bahrain, was completed in 2009. By 2011, the UAE and Oman will have followed.

To facilitate the exchange of energy, all six member states have signed up to the Power Exchange & Trading Agreement (PETA). The agreement is divided into two pillars, emergency and planned exchanges.

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PETA is an important step towards a wholesale market, believes says Dr A. Majeed Karim, member of the board at the GCC Interconnection Agency (GCCIA): “Energy trading will initially be limited, one country will have to negotiate with another country on the price, and everything and once you come up with a solid proposal for energy trading, they will go to the GCC and tell them ‘we are going to trade this much’ and they reserve the capacity on the interconnector.

“This is not the ideal model for trading, it has to develop into a full wholesale market, similar to the European one,” adds Karim.

Such a market could develop within three to four years after complete grid integration, he believes. The development will be a step by step process. It includes competition at generation level between independent power projects (IPPs) and government owned plants, and open access to the transmission grid.

While market forces could reduce the price for power, the grid will also help alleviate the power shortages felt by GCC countries struggling to keep up with mushrooming demand. Summer peak loads, in particular, have been problematic for grids burdened with the increased consumption
of electricity.

GCC countries will be hard pressed to spare much power for its neighbours as their citizens are using their A/C units at full blast.

Fortunately, an interconnection of much bigger dimensions is looming on the horizon, as Saudi Arabia is currently in discussions with Egypt to link up their grids.

If those discussions reach a favourable conclusion, it will open up the prospect of linking the GCC to North Africa, and even to Europe. “If we reach Egypt, we are all the way to Europe,” says Karim.

With Desertec, the massive solar project being developed in North Africa, looking a distinct possibility, the link up with that region is exciting in its own right. Yet the connection to Europe offers more immediate rewards.

“There is the time difference between Europe and the GCC, there is also the season difference between Europe and the GCC, their peak demand is in winter, our peak demand is in summer, so there is a big potential for energy trading between the GCC and Europe through the various regional interconnections,” says Karim.

Another prospect of interconnection is that of megaprojects, as power sources will be able to cater for a much larger market. Karim mentions the UAE, who are the first to build up nuclear nuclear plants: “The possibility of the UAE becoming nuclear hub within the GCC and beyond the GCC is very much feasible.”

Benefits of the GCC Electricity Market
• Promotes participation from local & external investors
• Encourages the development of projects with access to other markets
• Provides opportunity to establish power plants close to abundant
resources (gas, hydro, etc.)
• Act as an alternative means of exporting energy as
opposed to exporting is as a feedstock
• Enables power exchanges with regions experiencing different peak
demand periods
Source: GCCIA