Untangling the power gridlock

The Gulf region's hunger for electricity may be far from being satisfied, but plans for a common GCC power grid are beginning to take shape.

Answers do not come easily: countries in the Gulf region, where the world's largest oil and gas reserves can be found, have difficulty implementing short-term solutions to its growing power crisis.

As the Gulf's power crisis deepens, major industrial projects are starting to fall by the wayside, increasing the urgency of regional efforts to address the problem. In the UAE, the latest casualty is a US$5 billion (Dh18.4bn) aluminium smelter planned as an addition to the Ruwais industrial complex on Abu Dhabi's coast. Last month, Rio Tinto, the Anglo-Australian metals and mining company, declared its project with Abu Dhabi Basic Industries Corporation "dead" because the partners could not secure natural gas supplies to fuel power generation for the development. The project's cancellation was all the more shocking because the Abu Dhabi Water and Electricity Authority (Adwea) had been pulling out the stops to convince current and potential customers of the robustness of its plans to serve their power needs. Just two months earlier, accompanied by a laser show at the capital's five-star Intercontinental Hotel, the Government-owned utility had rolled out its five-year "strategic plan" for electricity development. Of necessity, Adwea's masterplan underpins Government efforts to diversify Abu Dhabi's economy as a hedge against lower oil prices. Help for the emirate's industrial diversification programme could come from an unlikely source: an almost unheralded project to link the separate electricity grids of each of the six GCC states into a single, more efficient power transmission network. Despite the lack of publicity, the $1.6bn project - the Gulf region's first business development to involve all six GCC countries - is already well advanced, and due for completion in 2010. "We are building substations as we speak," said Frank Duggan, the regional manager of ABB Group based in Dubai, the Swiss-Swedish power systems and engineering firm. The UAE joined the GCC grid project only in May, the same month that Adwea presented its five-year plan. Four other GCC countries - Saudi Arabia, Bahrain, Qatar and Kuwait - have been working on the project since 2005, when the GCC Interconnection Authority (GCCIA), created to oversee the development, awarded six contracts with a total value of $1.1bn to international firms. The grid project is being carried out in three phases. The first, to be completed next year, would create a north GCC power grid to include the four founding states. The second would connect the UAE and Omani transmission systems to create a south grid. Linking the north and south grids would complete the project. The development is important because it would halve the amount of reserve power capacity that each country would otherwise have to build to ensure an adequate electricity supply for peak demand periods and contingencies such as power station shutdowns. Efficiency gains would be realised because emergencies that take generating stations out of action are unlikely to strike neighbouring states simultaneously. In addition, climatic, cultural and time-zone differences throughout the region mean that peak demand periods are staggered across the GCC. The GCCIA estimates that Gulf states could save hundreds of millions of dollars annually by agreeing to share power supplies and building the infrastructure to do so. The payback period for the investment could be less than four years. More critically, by using their combined power generating capacity more efficiently, the GCC countries could ease their power crisis and gain breathing space in their race against time to build new power plants and secure alternative fuel sources for electricity production. They urgently need this because none except Qatar can develop gas resources fast enough to fuel all the new power stations that would otherwise be needed in the next few years. The only short-term alternative to gas-fuelled power generation for Gulf states is to burn oil - an expensive and dirty option that also reduces crude volumes available for export. In the longer term, some GCC countries such as Oman are considering building coal-fired plants, and Ajman last month signed an agreement for a project with the Malaysian conglomerate MCC. But coal-fired facilities take about four years to develop, and coal supplies for Ajman may have to be sourced from as far away as Indonesia or Australia and would be subject to a hefty risk premium for being shipped into the Gulf. The nuclear option, which the UAE and Saudi Arabia, among others, are considering, would take more than twice as long to implement. According to analysts, large-scale solar projects, the only type of renewable energy that makes sense for the Gulf region, are still years away from being economically competitive. Due to variable and unpredictable electricity output, depending on when and how hard the wind blows, desert wind farms would need to be connected to a large electricity grid to function effectively as part of the region's power supply. But for all its conceptual simplicity, linking national power grids over long distances and remote desert terrain presents formidable technical challenges. Fortunately, specialist contractors such as ABB think they have the answer with the latest in ultra-efficient power transmission technology. The company's technical experts believe high-voltage direct current (HVDC) transmission - technology ABB invented 50 years ago - is the key to transporting electricity over long distances. So far, the high cost of building conversion plants to switch DC power to alternating current (AC) for distribution to consumers has limited HVDC's usefulness. But ABB thinks that countries are becoming more reliant on power from remote sources and international power-trading schemes. HVDC is now economically viable over distances of more than 600 kilometres for overhead lines and 50 kilometres for underwater cables, it estimates. The basis for the long-distance cost savings is that power losses during transmission, due to resistance to the flow of electricity through power lines that causes them to heat up, are halved when HVDC lines replace conventional AC transmission. Additional environmental and cost benefits include reducing the need to clear land and erect steel pylons, because fewer cables are needed to transport the same amount of power and the cables can be buried. Lower electromagnetic emissions from power lines also reduce health and safety risks. Another significant advantage of HVDC is that, in contrast to AC transmission, the direction in which electricity flows through a given cable can readily be switched. This greatly increases the flexibility of electricity grids as power-sharing networks. As an example of increased efficiency, ABB calculates that several HVDC cables used to transport electricity about 1,000 kilometres to the city of Shanghai from China's Three Gorges hydropower station each save enough energy to supply more than 150,000 households. For the Gulf region's oil-based economies, even more power savings might be achieved by installing HVDC cables to carry electricity from central power stations to remote, even offshore, drilling rigs. ABB has already done this in the North Sea, eliminating the need for each oil platform to have its own generator. Beyond connecting electricity supplies for the six GCC states into a single grid, plans are afoot for further power links to North Africa, the Levant and eventually to the Mediterranean Ring Project, an ambitious plan to link the electricity resources of three continents by building a transmission network encircling the Mediterranean Sea. If that link-up comes to pass, Gulf states could supply surplus electricity to Europe during winter for heating, while Europe could return the favour in summer, powering Gulf-region air conditioners. A study of the feasibility of linking the Saudi and Egyptian grids is already under way. In Mr Duggan's opinion, just that limited project makes sense because Egyptian electricity demand peaks in the early evening, while the Saudi demand peak occurs at midday. In the long-run, widening and strengthening the region's power grids could be a useful, possibly necessary adjunct to nuclear power development in the Middle East. A problem with a nuclear unit, or even a planned maintenance shutdown, typically causes the curtailment of 1,000 megawatts of electricity generation - the approximate capacity of a coal-fired station or two large gas-fired plants. The more robust a nuclear plant's grid connections, the easier it would be to make up the power loss from other sources without major disruptions to local electricity supply. Completion of the GCC power grid well in advance of coal or nuclear plant construction could also pave the way for further GCC co-operative ventures in energy and other trade sectors.

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