Gulf Countries to Save Minimum of $300m to $1bn Per Year with Smart Grid

PR Newswire

WASHINGTON, June 4, 2012 /PRNewswire/ -- The Middle East & North Africa (MENA) region is in the early stages of its smart grid development but stands to realize 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, according to a new study released today by Northeast Group, LLC.

The new study 'Middle East & North Africa Smart Grid: Market Forecast (2012-2022)' 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 United Arab Emirates are currently leading the way. 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 risk - but represent larger market sizes and also stand to realize 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 realizing they must incentivize 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."

Northeast Group forecasts 5 segments of the smart meter or advanced metering infrastructure (AMI) - market, including meter hardware, communications, IT, professional services, and installation services for 12 countries across the MENA region. In addition to smart meter market forecasts, the report covers distribution automation activity, wide area measurement initiatives and home energy management. The report also highlights the positioning of domestic and international smart grid vendors in the region. Countries profiled in the study include:

Algeria; Bahrain; Egypt; Jordan; Kuwait; Lebanon; Morocco; Oman; Qatar; Saudi Arabia; Tunisia; United Arab Emirates.

Northeast Group's report is 119 pages long and includes over 70 charts, tables and graphics. The report was completed using both primary and secondary sources in the MENA region. To order a copy of the report, please visit www.northeast-group.com or email Ben Gardner at: ben.gardner@northeast-group.com

ABOUT: Northeast Group, LLC is a Washington, DC-based smart grid market intelligence firm. Our research is focused on the smart grid opportunity in emerging market countries.

Key questions answered in this report:

How large will the smart meter market including 5 segments - in MENA become over the next decade? Which countries are developing smart grid regulatory frameworks and what do they look like? Which international vendors are already active in MENA? How will rules on local participation affect international investment in the smart grid market? Which communications technologies will be favored by utilities in the MENA region? How will the development of renewable sources of energy affect smart grid in the MENA region? What pilot projects are in place and what hurdles have they faced? How will recent political events in the region shape smart grid development?

Table of Contents

i. Executive Summary

1

ii.Methodology

8

1. Introduction

10

1.1 What is smart grid?

10

1.2 Smart grid's role in regional interconnection

17

1.3 How has smart grid been used elsewhere in the world?

21

2. MENA smart grid snapshot

25

2.1 The region in comparison

26

2.2 Regional drivers

29

2.3 Regional challenges

33

2.4 Most recent developments

35

3. Regional market forecast

37

4. United Arab Emirates

41

4.1 Electricity industry structure

41

4.2 Smart metering regulatory environment

43

4.3 Market forecast

46

4.4 Utility activity

48

5. Saudi Arabia

52

5.1 Electricity industry structure

52

5.2 Smart metering regulatory environment

56

5.3 Market forecast

58

5.4 Utility activity

60

6. Qatar

62

6.1 Electricity industry structure

62

6.2 Smart metering regulatory environment

65

6.3 Market forecast

66

6.4 Utility activity

68

7. Oman

70

7.1 Electricity industry structure

70

7.2 Smart metering regulatory environment

73

7.3 Market forecast

74

7.4 Utility activity

75

8. Kuwait

77

8.1 Electricity industry structure

77

8.2 Smart metering regulatory environment

80

8.3 Market forecast

80

8.4 Utility activity

81

9. Bahrain

83

9.1 Electricity industry structure

83

9.2 Smart metering regulatory environment

86

9.3 Market forecast

86

9.4 Utility activity

88

10. Beyond the Gulf

89

10.1 Market drivers and barriers

89

10.2 Jordan

92

10.3 Egypt

94

10.4 The rest of the region

95

11. Vendor activity

99

11.1 Domestic vendors

100

11.2 International vendors active in smart grid in MENA

102

11.3 International vendors poised to expand in MENA

105

12. Conclusion

107

13. Appendix

108

13.1 List of companies mentioned in this report

108

13.2 List of acronyms

109

List of Figures, Boxes, and Tables

MENA smart grid: key takeaways

2

Smart grid development in Gulf countries

6

AMI forecast by country

7

AMI forecast data by country

7

Figure 1.1: Smart grid value chain

10

Figure 1.2: Smart grid model highlighting focus in MENA

11

Table 1.1: Benefits of AMI in the Gulf

14

Table 1.2: Demand response options

16

Figure 1.3: GCC Interconnection

17

Figure 1.4: Proposed European "super grid"

19

Figure 1.5: Smart grid activity in emerging markets

22

Figure 2.1: Emerging markets smart meter potential

26

Figure 2.2: Per-capita electricity consumption

27

Figure 2.3: Per-capita CO2 emissions

27

Figure 2.4: GDP growth in MENA and the Gulf

28

Table 2.1: Smart grid market drivers and barriers in the Gulf

29

Figure 2.5: Per-capita consumption in MENA

30

Figure 2.6: Renewable sources of energy in MENA

31

Figure 2.7: Distribution losses in MENA

32

Figure 2.8: Electricity prices in MENA

34

Figure 3.1: Timeline of smart grid developments in MENA

37

Figure 3.2: AMI forecast by country

38

Table 3.1: AMI forecast data by country

38

Figure 3.3: MENA smart meter penetration rate

39

Figure 3.4: Gulf smart meter penetration rate

39

Figure 3.5: AMI cost breakdown

39

Figure 3.6: AMI forecast by segment

40

Table 3.2: AMI forecast data by segment

40

Figure 4.1: UAE AMI penetration rate

41

Table 4.1: Smart grid indicators in the UAE

42

Figure 4.2: Voluntary dynamic pricing in Abu Dhabi

44

Box 4.1 Political risk in the UAE

45

Figure 4.3: UAE AMI forecast

47

Table 4.2: UAE AMI forecast data

47

Box 4.2: Masdar Citya carbon neutral smart city

49

Figure 5.1: Saudi Arabia AMI penetration rate

52

Table 5.1: Smart grid indicators in Saudi Arabia

53

Box 5.1: Political risk in Saudi Arabia

55

Figure 5.2: Saudi Arabia AMI forecast

59

Table 5.2: Saudi Arabia AMI forecast data

59

Figure 6.1: Qatar AMI penetration rate

62

Table 6.1: Smart grid indicators in Qatar

63

Box 6.1: Political risk in Qatar

65

Figure 6.2: Qatar AMI forecast

67

Table 6.2: Qatar AMI forecast data

67

Box 6.2: The Pearl Qatar project

68

Figure 7.1: Oman AMI penetration rate

70

Table 7.1: Smart grid indicators in Oman

71

Box 7.1: Political risk in Oman

72

Figure 7.2: Oman AMI forecast

74

Table 7.2: Oman AMI forecast data

74

Figure 8.1: Kuwait AMI penetration rate

77

Table 8.1: Smart grid indicators in Kuwait

78

Box 8.1: Political risk in Kuwait

79

Figure 8.2: Kuwait AMI forecast

81

Table 8.2: Kuwait AMI forecast data

81

Figure 9.1: Bahrain AMI penetration rate

83

Table 9.1: Smart grid indicators in Bahrain

84

Box 9.1: Political risk in Bahrain

85

Figure 9.2: Peak demand in Bahrain

86

Figure 9.3: Bahrain AMI forecast

87

Table 9.2: Bahrain AMI forecast data

87

Figure 10.1: Distribution losses in MENA

90

Figure 10.2: Jordan AMI penetration rate

92

Figure 10.3: Jordan AMI forecast

93

Table 10.1: Jordan AMI forecast data

93

Figure 10.4: Egypt AMI penetration rate

94

Figure 10.5: Egypt AMI forecast

95

Table 10.2: Egypt AMI forecast data

95

Table 11.1: Vendors based in the Gulf

99

Figure 11.1: International AMI vendors in MENA

103

Table 12.1: The next steps and necessary actions

107

Companies covered in this report

ABB (Switzerland) Advanced Electronics Company (Saudi Arabia) ADWEA (UAE) Al Mostajed (UAE) Al Wataniya (Kuwait) Alstom (France) BPL Global (US) Consolidated Gulf Company (Qatar) Desertec (US) DEWA (UAE) Electricity Distribution Company (Jordan) Electricity Holding Company (Oman) Electricity and Water Authority (Bahrain) Elster (Germany) FEWA (UAE) GE (US) Global Energy Technologies (UAE) Gulf Investment Corporation (UAE) Irbid District Electricity Company (Jordan) Itron (US) Jordanian Electric Power Company (Jordan) Kahramaa (Qatar) Landis+Gyr (Switzerland) Larsen & Toubro's (India) Masdar (UAE) Mubadala (UAE) National Trading Company (Oman) Oracle (US) QEWC (Qatar) Petra Solar (US) Saudi Aramco (Saudi Arabia) Saudi Electricity Company (Saudi Arabia) SEWA (UAE) Siemens (Germany) Sonelgaz (Algeria) Suez-Tractebel (Belgium) SWCC (Saudi Arabia) Technology Partners (UAE) Tropos Networks (US)

SOURCE Northeast Group, LLC