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Thu 1 Jul 2010 06:28 AM

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Higher GCC power tariffs needed to cool peak demand

Frost & Sullivan energy chief says electricity prices need to rise for peak hours.

Higher GCC power tariffs needed to cool peak demand

The Middle East’s electricity providers have been urged to introduce variable tariff schemes that charge consumers more for usage during peak hours in an effort to ease demand.

“All GCC nations have the same times for their peak demands. The tariffs need to start reflecting the high price at peak times,” Abhay Bhargava, industry manager of energy and power systems in the Middle East and South Asia for global consultants Frost and Sullivan, said.

“The only correct answer is variable pricing. If you insist on using power at that time then [providers] have to charge you more money,” he added.

Variable time of usage tariffs, as Bhargava calls them, is when consumers are charged different rates at different times of the day that they consume electricity.

Dubai Electricity and Water Authority (DEWA) is currently running radio adverts stating that the peak daily usage hours in the emirate are between noon and 5pm each day and are encouraging consumers to be more environmental and frugal in their energy consumption.

At the Second Arabian Business Economic Forum this week, leading economist Dr Eckart Woertz, of the Gulf Research Center, said the low price of electricity meant that consumers in the region have little incentive to conserve energy and cut down on their usage.

“Electricity, like water, is subsidised here, and what costs nothing is worth nothing, so why save it? The region needs a completely different price scheme for these items,” Woertz said.

Last month, a report from research firm RNCOS, entitled “Middle East Power Sector Analysis”, said the Middle East power industry is one of the fastest growing electricity markets in the world and “rapid industrialisation and surging residential sector consumers will trigger electricity demand in UAE to grow at a compound annual growth rate (CAGR) of ten percent during 2010 to 2013.”

Bhargava said the only way to curb the growing demand and to encourage consumers to conserve electricity is to charge customers who opt to use electricity during the peak hours.

“The end customers is not going to run their washing machine if they know it is going to cost them more at 2pm, they are going to run it in the morning,” Bhargava believes.

In order for this to be implemented, DEWA needs to install smart metres and a smart grid so the tariffs can be managed correctly, he added.

DEWA CEO and managing director Saeed Mohammed Al Tayer said last month that smart metering will be rolled out in Dubai within six months.

“We have already started to look into smart metering. The commissioning will be within six months,” confirmed Al Tayer at the signing of a Memorandum of Understanding (MoU) with the Dubai Courts, designed to promote energy and water conservation amongst the department’s workers.

Smart metering devices give utilities and end users more information about consumption, and help utilities to bill consumers according to their use of power and water. Conversely, they help end users to keep track of and reduce their consumption.

Variable tariff systems for electricity are currently in place in the US and Bhargava believes this will be a solution to the growing demand for power in the Middle East and can be implemented for both residential and commercial clients.

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Dastagir 10 years ago

Conserving energy, by taking actions like insulating/weatherstripping your home and purchasing Energy Star certified (high efficiency) appliances, is usually the smartest, most economical and most potent environmental action you can take. Cleaner, greener energy supplies may provide the cleanest supplies of needed electricity, but minimizing the energy we need is still the first step to take before selecting the cleanest, greenest supplies. Whenever you save energy, you not only save money, you also reduce the demand for such fossil fuels as coal, oil, and natural gas. Less burning of fossil fuels also means lower emissions of carbon dioxide (CO2), the primary contributor to global warming, and other pollutants. You do not have to do without to achieve these savings. There is now an energy efficient alternative for almost every kind of appliance or light fixture. That means that consumers have a real choice and the power to change their energy use on a revolutionary scale. The buildings in UAE are not energy efficient, most of them require huge electricity to run, especially the malls. Even most apartments don't have ceiling fans, so the occupants have to rely on air conditioner for getting some cool.

Redders 10 years ago

Charging the same (if any) rate for fuel to ALL nationalities might go some way to having people think twice about economical use rather than abuse?

Hussain 10 years ago

Replying to redders...first of all not all GCC countries charge only expats. UAE might be a special case due to its fledgling almost non existant indiginous population. I think we should mandate solar panels for all major commercial and industrial facilities to ease the load on electrical generators and power grids. Infact the heat here should provide power generation even after the sun has since the panels havent yet dissipitated the heat. Power companies should provide incentives to people with solar panels in their homes such as discounts. In california... some people have power feeding into the grid from their homes... and they get electirc bills in the negative "powe companies pay them for their generated solar power" I need we need to seriously revisit solar energy here. we have more sun and heat than anyone else in the world.

Punky Brewster 10 years ago

Just wondering how the policies of DEWA change now, considering subsidies have been given to Nationals in Electricity or Water usage! One comes across so many forums, organised by govt bodies, but the main issue is always being sidelined. Put a flat rate of 15 fils or 20 fils, for Electricity, and 2 fils for water, blanket FLAT rate for ALL consumers. Conservation will not come automatically, yet educating the public to not misuse this resource hungry utility is of utter importance. Put incentives for LESS usage by any consumer, reward users who try save the environment, punish the worst offenders of Utility, by doubling the charges, if Education does not instill values favoring the environment! It's all upto the authorities to make a change, equally applicable to all living in the country.

John Durham 10 years ago

All this talk about saving energy in peak load periods between midday and 5 pm. We solved this problem with no cost 6 years ago but nobody takes any notice. Why? Very simple . To build a villa with our technology costs less than conventional so everybody makes less profit and therefore refuses to specify. We can reduce energy demand during peak period by 90% and still the occupants feel comfortable in their building. Until the Government steps in the tell the industry to use the technolgy nothing will happen. Always remeber money is the power driver in the Middle East. it always has been

Hussain 10 years ago

Again...why is everyone playing the racial card.... nationals in the GCC are not subsidised...at they are not in KSa... we all pay the same for power. maybe only the UAE.... Stop generalizing.... "these expats...they live among us...yet still ignorant"~ Me in my upcoming book, memoires of a rejected saudi

diarmuid 10 years ago

In Qatar nationals do not pay E&W charges as these are a gift from the Emir. So no one has much incentive to reduce their consumption. This is just as well in some cases as without street lights, only Qatari houses lit up like Festival trees allow the traveller to walk safely. Problem now is that the average Qatari House is approaching and exceeding the sizes of houses that the previous Emirs lived in! Cant continue obviously, jack up the charges for expats now to bridge the gap between present practice and reality.

Jack 10 years ago

I think the electricity peak during the day has a corelation to the temperature peak. Higher utilities will be yet another financial burden to the residents of Dubai.....

hARRY WINSTON 10 years ago

Building tenants in huge high rises do not pay for air conditioning. While they are away for the two months summer break the A/c's are blasting at maximum. Abudhabi nationals pay 5 files/Kw and Expats pay 15 fils/kw.Nationals make up less than 20% population but consume around 50% of all resedential electricity!! At same time we build Masdar city etc. But start basic conservation at home first.