Smart grid technology may have taken a while to make its mark in the Middle East but that could all be about to change. The next two years could prove to be a bonanza for companies engaged in the sector, as countries in the region make their move after a period of quiet assessment.
The global market for smart grid technology is growing rapidly and is expected to reach $125bn in 2017, according to a recent Frost & Sullivan report. But while 75% of Europe should be smart grid-enabled by the following year, adoption in the GCC has so far been sluggish.
Now, countries in this region must face up to the power grid challenges brought about by massive economic growth and industrial diversification. Regional integration of transmission grids and, especially, the expected rise of renewable energy will also be key drivers behind the widespread adoption of smart grid technology in the Middle East, experts say.
In the next five years, the GCC is expected to invest close to $73bn to boost power generation capacity by 36 GW and improve power transmission and distribution infrastructure. A significant portion of this sum is anticipated to be funnelled into smart grid solutions, Frost & Sullivan says.
A growing need
The term smart grids describes the technology used to provide a two-way flow of energy and real-time information between power generation, grid operators and consumers. They have the ability to enhance power transmission and distribution networks through information technology.
As the Middle East continues down the path of rapid economic development and diversification, the pressure on its power and water infrastructure becomes ever greater and more complex. This is not least because the region is one of the most energy intensive in the world, due to the near year-round need for airconditioning and the power demands of the water desalination process.
The primary driver behind the need for smart grid technology is the exponential growth in electricity demand and ability to manage the variability of that demand.
The capabilities of todays major networks and power-generation facilities are designed to cope with maximum levels of consumption rather than actual demand at any given time, says Rodolphe de Beaufort, Smart Grid Marketing Director at French energy powerhouse Alstom.
Through intelligent, predictive management of consumption levels, smart grids can adjust infrastructure performance in line with average consumption patterns as well as peaks, which can reduce investment costs by as much as 20%.
Rising demand is putting ever more financial strain on the governments that subsidise the cost of power and water, bringing the need for energy efficiency sharply into focus, and utilities can use the data provided by smart grids to deliver that efficiency and reduce costs.
In many of these countries the distribution grids are growing exponentially so right now they are focused on automating and getting transparency into their distribution grids, explains Sitaram Chodimella, Head of Smart Grid Division, Middle East at Siemens.
This helps to implement technologies that can reduce per capita consumption which is one of the highest in the world, so there is a lot of focus on utilities reducing consumption.
Smart grids enable utilities to reduce peak power demand, Chodimella says. They are building generation capacity for peak demand. If we are able to reduce per capita consumption during the summer by increasing energy efficiency across buildings and networks, they can reduce peak demand and this helps them to reduce the capex needed for new power generation.
As GCC economies develop, they are becoming increasingly interconnected, providing a further challenge for utilities. While connecting the networks of different countries in the region allows them the benefit of sharing excess power capacity, it also means that managing the network to prevent power blackouts becomes even more important, Chodimella says.
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