GCC can save $1bn with Smart Grid

The Middle East and North Africa (Mena) region is in the early stages of its smart grid development but stands to realise strong benefits, including minimum savings of $300 million to $1 billion per year for Gulf countries.

Smart grid is an opportunity for Mena countries to incorporate their vast solar and renewable resources, manage growing demand, reduce carbon emissions and cut down on electricity system losses, said a new study released today by Northeast Group.

The new study projects the smart metering market will reach 16.1 million units by 2022 with cumulative capital expenditure of $3.9 billion. The majority of near-term activity will be in the Gulf region, where Saudi Arabia and the UAE are currently leading the way. By 2022, 86 per cent of homes and businesses in the Gulf countries will have smart meters. Other Mena countries outside the Gulf will develop at a slower pace - due largely to political risk - but represent larger market sizes and also stand to realise strong benefits from smart grid technologies.

"All countries in the Mena region are facing high rates of electricity demand growth, and the Gulf countries have some of the highest levels of per capita electricity consumption and carbon emissions in the world. Demand side management is becoming increasingly important in these countries and smart meters will be an important tool in these efforts. By implementing smart metering, a conservative estimate is that Gulf countries could save a minimum of between $300 million to $1 billion per year on oil and natural gas used for electric generation. The actual savings could be much higher. Countries could then turn these savings into increased oil and gas exports," according to Northeast Group.

"Mena countries are also aggressively pursuing renewable sources of energy, highlighted by Saudi Arabia's recent announcement that it is aiming to spend $109 billion to develop 41 GW of solar capacity over the next 20 years. Smart grid technologies will be instrumental in helping these countries incorporate intermittent renewable resources," according to Northeast Group.

Governments of several Mena countries are experimenting with a number of policies to help curb domestic consumption of fossil fuels, including feed-in tariffs for renewables, conservation outreach campaigns, and electricity pricing mechanisms that more closely reflect the costs of electric service (regional electricity prices are currently among the lowest in the world). Several high profile transmission interconnection initiatives are also helping these countries to use their systems more efficiently.

"Smart grid regulatory frameworks are in the early stages of development but progress is being made," Northeast Group added.

"Governments are realising they must incentivise energy conservation and are beginning to invest in the technologies necessary to make their grids smarter. Smart city concepts such as Masdar City in the UAE and the Pearl-Qatar in Qatar show that smart grid technologies will be a feature of Gulf infrastructure investments over the next decade."

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