Power project surge needed in GCC to guarantee bright future

With the construction industry boom predicted to continue for the next 20 years, demand for electricity to power the new developments is expected to reach record levels. Tim Wood explores whether the GCC states are prepared for the surge in energy levels.

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By  Tim Wood Published  June 3, 2006

With the construction industry boom predicted to continue for the next 20 years, demand for electricity to power the new developments is expected to reach record levels. Tim Wood explores whether the GCC states are prepared for the surge in energy levels. |~|801207Spencer-Platt200.jpg|~||~|With more than 1,800 construction projects being implemented in the GCC in 2005 alone, the region’s capacity will be under huge pressure to cope with increased demand. The acceleration in the number of projects, in particular the influx of mega-sized shopping malls, such as the 600,000m2 Mall of the Emirates, recently prompted the Emirates International Bank to carry out a survey to ascertain whether the UAE would be able to cope with the increased demand. Its conclusion, that in just four years the UAE’s capacity for electricity will have to increase by 60% to 26,000mW (more than treble the figure for 2001) means that a huge challenge lies ahead. “The UAE has the highest project increase in demand, which is expected to continue to grow at a minimum rate of 10% per annum until 2010,” reveals the report. “Dubai has the greatest demand potential and is growing at about 12 to 14% a year when compared with other areas such as Abu Dhabi and Sharjah.” Not that the growth in electricity demand in Abu Dhabi is sluggish either — the emirate is already preparing for a major expansion of its installed generating capacity to meet a projected surge in demand for real estate projects now entering the construction phase. “We expect Abu Dhabi’s electricity demand to double in the period 2008-2013,” says Keith Miller, head of planning and studies, Abu Dhabi Water & Electrical Company. “To give you an idea of the scale of these schemes, just one of the mega-projects planned, Al Raha Beach, will have the same population as the entire western region,” he adds. The news of the expected acceleration in electricity usage coincides with claims that shopping centre development in the GCC will grow by a massive 140% by 2011. “The growth in retail development alone is colossal, as is the growth of mixed-use developments,” says Franck Dailles, exhibition director, Retail City International. “Retail facilities will breathe an enhanced quality of life into these communities producing a win-win situation for the retailers, the investors and the residents.” But will the electricity companies in the UAE be able to cope with the amount of power required to cope with the projects of the future? And with the rest of the region in hot pursuit, is there any danger of an electrical meltdown? Not if the amount of money being ploughed into the electricity sector is any indication. Saudi Arabia has one of the largest per capita electricity consumption rates in the Middle East with a population of approximately 25.8 million, which is growing at a rate of 2.4% per year. Saudi Arabia’s Industry and Electricity Ministry estimates that the country will require up to 20 gigaWatts (gW) of additional power generating capacity by 2019 — nearly the same amount as today’s 26.6gW. But by investing some US$4.5 to $6 billion annually for the next 15 years, it should easily have the facilities in place to be able to cope with increased demand. Kuwait also appears ready and is investing $4 billion over the next decade. Demand for power has already peaked, but, as the country boasts one of the highest rates of per capita consumption of electricity in the world, that comes as no surprise. With the expectation that demand will continue to increase at the rate of 7-9% in the next few years, the construction of two new power plants — the 2400mW Al-Zour North plant and the 1000mW Al-Zour South II plant — should ease any worries about meeting targets. In Oman, new laws were passed last year to try and drive the privatisation of the power sector. Demand for electricity in Oman is also growing rapidly due to the growth of tourism in the country, therefore necessitating a large amount of construction, population growth and industrialisation. Research indicates that Omani consumption is now increasing at an average rate of 5% annually and the government is forecasting that demand for electricity will be 75% higher by 2015. Research also suggests that additional generation capacity of 60mW will need to be added between 2005 and 2009 in Oman, equating to an extra 30mW generating capacity every three to five years. In Bahrain, in addition to trying to increase supply, the government has continued its attempts to improve the nation’s transmission and distribution infrastructure. Installed capacity is barely able to meet current consumption, with the country’s population growth and economic development leading to rapid power demand increases. The individual GCC countries are arguably well prepared. And with work on a multi billion-dollar, GCC-wide power grid project to link the six states with an integrated electricity network by the year 2010 also underway, the future does indeed look bright. Once completed, the project will also significantly reduce the cost of power generation in the six GCC states of Saudi Arabia, Qatar, Bahrain, Kuwait, Oman and the UAE. Although discussions to integrate their transmission systems and make better use of their power-generating capacity began more than 20 years ago, the forward thinking of all the GCC states should ensure that electricity will never again be in short supply. And the blackout in the UAE that paralysed the financial and travel hub of the Gulf for several hours last October, will never be repeated again.||**||

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