Middle East Smart Grid Win-Win for $1 Billion Annual Savings and Boost to Hydrocarbon Exports

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--A recent study by Northeast Group (Washington D.C.) says that the Middle East and North African (MENA) region is a top emerging market for smart grid development. Smart grids have very strong potential in the Gulf states, where high incomes, high electricity consumption and small populations will drive smart meter deployment in the medium term. The technologies used and lessons learned from the Gulf states will then be diffused throughout the region, according to Northeast Group.

The market forecast projects that the smart metering market in the region will reach 16.1 million units by 2022, with a cumulative capital expenditure of $3.9 billion. The MENA region, which is now in the early stages of smart grid development, should see the Gulf countries saving a minimum of $300 million to $1 billion a year on oil and gas used for electrical power generation. The actual savings could be much higher, and countries could then turn these savings into increased oil and gas exports.

The study says that the 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 electricity system losses.

By 2022, 86% 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 risks, but represent larger market sizes and stand to realize strong benefits from smart grid technologies.

Ultimately, smart grid may prove to be a solution that can bridge the competing interests of Gulf countries. Governments can appeal to international investors by embracing modern technology and infrastructure, while also appealing to their own people through generous spending. This, says the report, is because smart grids can be tools to raise money for Gulf governments by reducing domestic demand for oil and gas, both through decreased overall demand and through the incorporation of renewable resources, thus freeing up more oil and natural gas for export.

Additionally, instituting some level of dynamic pricing mechanisms to the domestic electricity market will raise additional funds while reducing technical and non-technical losses, and will ease the cost to the government of electricity subsidies.

A number of MENA governments are looking at ways to curb their domestic consumption of fossil fuels, including renewable feed-in tariffs (FiT), and bring in electricity pricing that more closely reflect the costs of the electricity service, which regionally are currently amongst the lowest in the world.

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