Smart Grid GCC brochure by Sia Partners

INSIGHT SMART GRID: THE ROAD TO SUCCESS FOR GCC COUNTRIES MARCH 2016 The current electricity grid was designed several decades ago, to manage the one-way flow of energy from the generation facilities to the consumer and to fulfil basic electricity needs. In the last few years, the electricity demand has risen considerably and is further expected to grow between 115% and 150% from 2010 to 2050. At the same time, countries are also under tremendous pressure to move to cleaner sources of energy. Smart Grids will play an important role in tackling some of these issues. Smart Grids are capable of better interfacing the electricity demands of consumers and the generating capacities of producers through increased availability of real time data and analytics. This allows the grid to optimize asset utilization and increase system reliability, while minimizing financial and environmental costs. Creating a smart grid is a formidable endeavour, with big challenges in the short term and benefits only incurring over the long term. Given the significant opportunities and benefits, almost all the developed countries around the globe are taking steps to push their grid to the next level.

Comparison of leading countries in smart meter penetration (Consolidated sources)

Smart Grid landscape of GCC countries The GCC as a whole lags behind developed countries in smart grid implementation. UAE leads the GCC in grid modernization, as well as deployment of smart technologies. Most GCC countries still need to upgrade their T&D grid infrastructure before using smart technologies.

Comparison of GCC countries (World Bank & Consolidated sources)

Saudi Arabia Saudi Electricity Company (SEC) is currently undertaking a large program to add T&D capacity, while also modernizing the grid. The smart grid implementation roadmap for the country defines four main steps over 8 years:  Phase 1 (Year 0): Creation of a smart grid planning governance framework involving all stakeholders  Phase 2 (Year 1): Smart meter trial, finalizing project schedule for the complete rollout  Phase 3 (Year 2-3): Pilots of DSM, HAN, and in-home display technologies and trials of TOU tariffs  Phase 4 (Year 4-8): Full-scale smart meter and smart grid rollouts using learnings from previous pilots Consumer smart meters have been successfully piloted. With a clear roadmap, and well-defined smart grid governance, Saudi Arabia is well-poised to launch a large scale consumer smart meter rollout. Large, modern urban areas like Riyadh, Jeddah and Dammam are good starting points for this rollout. A project to connect smart meters to transformers within the T&D grid of the Kingdom is ongoing. Further grid upgradation or modernization projects will enable large scale renewable projects, while adding to efficiency and reliability gains.

United Arab Emirates UAE has set ambitious smart grid programs defining general guidelines and targets with an estimated investment of around AED 52bn. Dubai and Abu Dhabi have tailored their own smart grid roadmaps around the general direction set by the UAE Supreme Council of Energy, which is as follows:   

Enable residents and property-owners to generate their own electricity by installing solar panels Transform existing electricity and water meters into smart meters, which will provide regular updates to customers on how much they consume each month. Construct electric vehicle charging stations

UAE leads the GCC in consumer smart meter rollout. Abu Dhabi has almost finished its rollout with more than 600,000 smart meters installed. Dubai has just started installing smart meters, with only 100,000 installed. Dubai has recently entered into a partnership with KEPCO (S. Korea) for sharing expertise on energy storage, HAN, and smart buildings.

Qatar Qatar has a large power surplus and a relatively robust grid. It is undergoing grid modernization and further capacity addition in anticipation of high demand in the 2022 World Cup. The first phase of smart meter rollouts has also been started and is expected to be completed by 2016. This will enable it to deploy additional consumer-facing smart technologies. Qatar has a conservative target of 2% power generation through renewables by 2020. Plans for an independent electricity regulator have recently been made, which will be key to implementing a successful smart grid roadmap.

Oman It is imperative that Oman focuses on further grid modernization to increase grid efficiency and reliability. This investment is justified for Oman since a reasonable reduction of network losses to 7% is the equivalent of creating 350MW of new generation capacity. Currently the Electricity Holding Company is still creating its smart meter plan. Muscat Distribution Company and DPC should be the first focus for rolling out smart meters. Most of the supporting infrastructure is already present in urban areas, which makes it cheaper to rollout smart meters. These smart meters will also allow power companies to make additional revenue on value added services to consumers, which can help fund further smart grid initiatives.

Kuwait and Bahrain Kuwait and Bahrain are both undertaking long term projects to add generation capacity and modernize their transmission system, with Kuwait also implementing asset management systems to improve distribution asset performance. Similar to Oman, Kuwait also has very high network losses which can be minimized through investments in the grid. Kuwait has also launched smart meter testing in many facilities before implementing them on a larger scale. Bahrain is in the initial stages of smart meter implementation. It is also upgrading its IT infrastructure to support the roadmap of smart grid and smart energy.

Challenges and Actions

To summarize, although significant investments are needed in smart grids, the long-term return on investment is very high. Countries can typically break-even on their investments in about 8-12 years, primarily through reduced operating costs and improved quality of services & losses. Apart from these direct benefits, there are other indirect benefits such as environmental benefits and increased oil availability for exports. Overall, it is imperative that GCC countries invest in smart grids as they will benefit tremendously in the long term through both direct tangible benefits and some indirect benefits.

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Contact Pierre-Louis Brenac

Vikram Sundarraj

Managing Partner, Middle East + 971 56 179 8074 pierre-louis.brenac@sia-partners.com

Manager, Middle East + 971 56 464 9026 | +966 053 381 4896 vikram.sundarraj@sia-partners.com

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