$5b savings eyed as UAE connects to Gulf power grid

The second phase of the Dh5 billion ($1.4 billion) Gulf power grid became operational on Wednesday with the United Arab Emirates joining the grid, officials said. The electricity grid unifies those of six Gulf states with the first phase having become operational in early 2009 connecting Saudi Arabia, Kuwait, Bahrain and Qatar. “This would provide a platform for energy trade and exchange, while improving the reliability of existing energy systems and lowering electricity reserve requirements on GCC countries,” His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, said in a statement. After the National Anthem Shaikh Mohammed pressed the button for officially launching the project. The project will save up to $5 billion and will lay the foundation for a common energy market among the GCC countries, he said, adding it will provide the GCC states with sustainable energy supplies to support the national economies. The UAE has contributed Dh800 million to the project. Essa Al Kawari, chairman of the Gulf Cooperation Council Interconnection Authority (GCCIA), said studies were under way to connect the Gulf grid to the wider Arab region as well as to Europe. “The Arab League is conducting a study for the connection to the wider Arab region and Saudi Arabia along with the World Bank is conducting the study for connection to Europe,” he told reporters without giving a timeline. The total capacity of the Gulf grid is up to 1,200MW, the maximum power that can be transferred to any country at any time, said Kawari. Discussions are currently going on for selling power on a commercial basis. Currently each Gulf country can negotiate bilaterally with one another to agree on tariffs for purchase and sale of electricity, he said. “All countries have benefited from the grid,” Kawari said, adding there was a penalty for countries for not supplying their quota or spinning reserve to the grid. Oman had delayed joining the grid by two years, Kawari said. “Due to rapid growth in demand in Oman and the GCC they are expected to join in two years.” Gulf oil producers need to produce more electricity to sustain regional growth averaging about 10 per cent a year, Jarmo Kotilaine, chief economist at National Commercial Bank in Jeddah, Saudi Arabia, said last month. “If you look at the annual growth rate of electricity consumption in the Gulf, it is far ahead of the average increase elsewhere in the world,” UAE Oil Minister Mohamed Al Hamli told reporters on Wednesday. While domestic demand is high during summer, “in winter, we have a lot of spare capacity, we can even export”, he said. Saudi Arabia can give and receive 1,200 megawatts, the UAE 900 megawatts and Qatar 750 megawatts. Nations are now negotiating to sell power to each other starting from next year and will be penalised in future if they don’t maintain a minimum reserve level to support their neighbours in an emergency, Al Kuwari said. The inaugural ceremony of linking electricity between Al Sila station in the UAE and Salwa station in Saudi Arabia was attended by Shaikh Hamed bin Zayed Al Nahyan, President of the Diwan of the Crown Prince; Shaikh Nahyan bin Mubarak Al Nahyan, Minister of Higher Education and Scientific Research; Ahmed Jumaa Al Za’abi, Deputy Minister of Presidential Affairs; Lieutenant-General Misbah Rashid Al Fattan, Director of the Office of His Highness Vice-President and Prime Minister and Ruler of Dubai; and a number of Shaikhs and senior officials.