Electricity demand in the Gulf Cooperation Council (GCC) countries is expected to grow at between 7 percent and 8 percent annually over the coming years, and the member counties are expected to spend $45 billion until 2015 in order to add an additional 32,000 MW of capacity, Kuwait Financial Center (Markaz) said Sunday. Power consumption across the GCC has grown at an annual rate of about 9 percent from 2002; Saudi Arabia and the UAE account for a combined 75 percent of the total GCC consumption. The major power projects, completed across the GCC during the past decade, have now commenced operations; installed capacity has doubled from nearly 46,600 MW in 2002 to almost 98,000 MW in 2009: a CAGR of 10 percent. The year 2009 saw a massive 23 percent increase in capacity as several plants in Qatar and Saudi Arabia started operations. Currently, the GCC operates with a reserve margin of about 19 percent with an excess reserves mainly in Qatar and Abu Dhabi (43 percent and 30 percent, respectively). Saudi Arabia, which has the largest installed capacity, is rapidly streamlining and increasing the efficiency of its power sector in order to play a role in power exports, although the growth in demand hinders its ability to do so. If substantial increases in capacity are not made, the reserve margin could fall to 9 percent by 2014. The GCC $1.4 billion electricity grid project is aimed at meeting rapidly increasing power demand and avoiding shortages. As soon as it is completed, it will provide electricity across the GCC. The second phase (out of three) became operational in April 2011. The grid will provide a platform for energy trade and exchange; it will improve the reliability of existing energy systems and lower electricity reserve requirements. The members are now negotiating to sell power to each other and will be penalized if they do not maintain a minimum reserve level to support their neighbors during an emergency. Oman's joining is delayed and now expected to happen in two years, Markaz said. Furthermore, the GCC power grid has successfully passed through two phases and now entered its third and final phase: the inclusion of Oman. Saudi Arabia, with the largest installed capacity, is expected to be a major player in the selling of power and has begun studying the possibility of linking the grid to North Africa and even Europe. The GCC states have also begun exploring alternative sources of energy including solar power, nuclear, and natural gas in an effort to boost capacity and diversify the energy mix. It said that according to Meed Projects, there are currently 361 power projects (generation, transmission, substations, etc.) throughout the GCC with a total value of $277 billion. The majority of these projects are in Saudi Arabia and the UAE: a combined contribution of 70 percent of the total. Saudi Arabia has the highest number of projects at 161, followed by the UAE at 70 projects. One-third of the projects (with a value of $92 billion) are in the execution phase, and these are mainly based in Saudi Arabia (73), the report said. "The GCC is set to increase capacity due to ambitious growth … to satisfy fast-growing energy needs. The speed and quality of development are varied, and depend on a specific country's needs and approach." Kuwait has witnessed the slowest rate of annual growth in power consumption during the last decade at 6 percent whereas consumption in the UAE and Qatar has grown at around 15 percent.
