Ali Bin Abdullah Al-Owais, deputy minister of energy for the electricity and water sector in the United Arab Emirates, sees a range of ways the UAE can meet its rising electricity procurement needs in years to come.
Central to these is the GCC interconnection grid, which will link the power grids of the six GCC states by 2010. Al-Owais, also one of the UAE's two board members on the interconnection authority overseeing the project, believes the grid can pave the way for the GCC to play its part on an intercontinental electricity stock exchange.
The UAE is footing 15.4% of the cost of the GCC grid project and will be able to take a maximum of 900 MW of power when the system is operational.
"The reserve capacity will be reduced from 38% to 18%," says Al-Owais. "In an emergency we can exchange power and also commercially we can exchange power. At normal times, some of the GCC countries have an excess [of power], so they can export to other countries. During an emergency it is very easy to supply an amount from, say, the north to the south."
With this in mind, Al-Owais says that the main objective of the grid at present is a strategic one, with revenue not the immediate goal. "We are not thinking of revenue now," he says. "We are thinking in terms of strategy between countries, in particular between GCC countries and Arab countries, not material gain."
But further down the line, Al-Owais is a firm advocate of the Pan-Arab grid, which he says is no dream, but a certainty in future. A Pan-Arab grid would see the GCC connected to, among many other countries, Algeria and Morocco, which both have access to Europe. It is then that Al-Owais believes the revenue could come.
"Maybe this will lead us to an electricity stock market," he continues. "This would be a stock market somewhere between Europe and Arab countries to exchange power.
Suppose I find power in Russia which is cheaper than electricity produced here, I can purchase from them directly."
The deputy minister forecasts the existence of such a stock market in 20-25 years' time and points out that the concept already exists in Europe. Examples are Nord Pool, the Nordic power exchange, jointly owned by the national grid companies of Norway and Sweden; and Powernext, a European power exchange based in Paris.
Key to energy trading with Europe will be the contrasting seasonal demands. "If we are connected to Europe, we can power the United Arab Emirates from France," says Al-Owais. "In the winter they need electricity but we do not because most of our power is used for air conditioning, as well as for desalination plants, which mostly use waste heat from the turbines.
"In the winter our peak is approximately one third of our summer peak, so most of our turbines are shut down. But we could run them and sell to Europe when the grid is in place. They need it for heating in winter. In turn, we can say to them we need electricity in the summer, so we can switch off our turbines and purchase from them.
"They have different sources, such as atomic fuel and hydroelectric power, which are much cheaper than using diesel and crude oil. Utilising the different climates in different countries is another good reason for the grid project."
But Al-Owais' sights are not only on Europe. He says that an extended grid could enable GCC countries to access cheap power from Africa.
"Another benefit for us would be if we connected to sub-Saharan Africa," he continues. "They are using very cheap sources of producing electricity. They have coal and are using waterfalls and rivers for hydroelectricity.
"If we are connected to Egypt and Sudan, Sudan will be connected to sub-Saharan Africa. If needed, we will be able to purchase cheap electricity from there in future."
As for developing alternative forms of energy within the UAE, Al-Owais thinks these should be studied, but doubts they could make a significant impact, even though the Masdar Initiative is planning a US $350 million solar plant.
"I do not think solar and wind power will help us. They would produce a very small amount of power, but we could use them to supplement our main sources. We have oil and gas reserves, so we are running on that, but we should study alternative means of power generation as a stand-by.
"In the GCC countries we do not have enough wind. We did a study in Fujairah but there was very little wind. The maximum would be 16-20 MW, which is nothing compared to the 18 000 MW installed in the rest of the UAE."
Al-Owais also pointed out that the GCC and the International Atomic Energy Agency (IAEA) were currently doing a feasibility study on using nuclear power in the region. The study will be presented to GCC leaders at a summit in Muscat later this year.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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