Utilities in Kuwait and the UAE have made progress in reducing peak demand, but tariff reform would have an even bigger impact
The need to reduce peak power demand has never been as critical in the region as it was in Kuwait in the summer of 2007. The previous year had seen the state experience an energy crisis that resulted in outages of both electricity and water in the height of the summer.
To avoid another spell of blackouts, the state accelerated its investment programme to add new capacity and bought in temporary generators. But it also turned to consumers and asked them to lower their electricity usage, launching a scheme named Tarsheed – which means guidance.
The programme asked households and businesses to turn off air-conditioning and lights when they were not needed. In government offices, efficient lighting systems were installed and the optimum temperature was set to 25 degrees Celsius instead of 19 or 20 degrees C.
The campaign was relentless. Kuwaitis were reminded of the need for efficiency each time they turned on the television as a meter in the bottom right-hand corner of the screen told the viewer how close the country was to exceeding capacity. If the dial pointed to green, demand was low; if it rose to yellow, people were told to be careful with energy use; and if it got as high as red, they were instructed to turn off all non-essential electrical items.
The programme caused consternation among consumers. Local newspaper headlines screamed of power mismanagement and bemoaned how the world’s 10th largest oil producer could not keep its lights on. Nevertheless, people did consume less power and the state saw demand fall by 700MW, and blackouts were avoided.
Since 2007, Kuwait has continued to urge efficiency, but has also begun to test new demand management tools, including the use of remote controls to run building systems. In the summer of 2008, a trial was conducted on five types of buildings, including schools, government buildings, mosques and residential properties. It involved using an automated system to control temperatures in the most efficient way.
700MW: Fall in power demand after Kuwait launched its Tarsheed efficiency programme
10,500MW: Peak electricity demand projected for 2010 in Kuwait
9,961MW: Kuwait’s peak electricity usage in 2009
14,000MW: New capacity need in Kuwait by 2025
Source: Electricity & Water Ministry
The Kuwait Institute of Scientific Research (KISR), which worked with the Electricity and Water Ministry on the trials, concluded the tests were successful, and the government is now considering rolling out these systems across the country.
During the trials, peak load reductions varied from 74 per cent in government buildings and 71 per cent in schools, to 22.5 per cent in residential villas and zero per cent in mosques.
According to KISR, the country’s peak load would be reduced by 1,344MW if the systems were used in all appropriate school and government buildings, saving KD645m ($2.2bn) in new generating capacity.
Across the Gulf, governments are struggling to keep up with growth in electricity consumption
This financial saving is precisely the reason why demand management is a critical tool in reducing electricity loads.
“The aim of peak demand management is not necessarily to decrease total energy consumption, but rather to reduce the need for investments in networks and/or power plants,” says John Young, vice-president at UK energy consultancy CRA International.
Apart from the obvious cost savings, other advantages of demand management include improvements in supply reliability. The system load factor is also increased making the assets more economically efficient.
In 2010, peak demand in Kuwait is expected to hit 10,500MW, up 5 per cent from 9,961MW in the summer of 2009.
The government estimates it will need as much as 14,000MW of new capacity by 2025, to meet demand growth of up to 7 per cent a year. This is expected to cost the electricity and water ministry KD7bn in new capacity. So a reduction in peak demand, such as the automated system that could bring about a 13 per cent decrease, would be money well spent to the government.
Kuwait is not the only state struggling to meet peak demand. Across the Gulf, governments are racing to keep up with growth in electricity consumption, and some are turning to diesel-burning generators to fill the supply-gap. Oman recently tendered for 115MW of generators for summer 2010.
“Utilities are being forced to rent power for peak periods,” says Nomi Ahmad, regional director for Finland’s Wartsila. “Kuwait is currently tendering for 500MW of peak capacity to 2012 and Oman is seeking another 200MW for 2012.”
Utilities are being forced to rent power for peak periods … Kuwait is tendering for 500MW of peak capacity
Nomi Ahmad, Wartsila
Regional utilities are also trying to encourage users to rationalise their energy use at peak times. “Essentially, the utilities have got to convince people to use less,” says Bob Bryniak, chief executive officer and founder of UAE-based Golden Sands Management Consulting. “[It means doing] things such as turning down the thermostat. People tend to have it at 19-20 degrees C, but 23-25 degrees C works just as well.”
According to Bryniak, there are three essential steps to reduce peak demand. “The first is advertising. It is the cheapest and quickest way to make savings. The second is setting new standards, and states are heading that way by establishing standards committees. The third step is with outright incentives. Pay people to use energy-efficient lighting and make tariff changes in line with that,” he says.
To date, the Gulf states have mostly only taken the first two steps.
State-owned Dubai Electricity and Water Authority (Dewa) has issued a range of guidelines advising commercial, industrial and residential users how to reduce peak use. Through the introduction of new building codes, Dewa is also forcing stronger energy-efficiency measures on new buildings, such as the installation of energy meters, chilled-water systems to supply air-conditioning units and low-energy lighting.
|Kuwait peak power demand (MW)|
|Sources: MEED; Ministry of Electricity and Water|
“There will be more measures such as district cooling in government buildings – which can cut energy use by 25-40 per cent. Efficient fittings are good for new properties, but it is difficult for existing buildings to do the same,” says Bryniak.
At the same time, the UAE and Bahrain are establishing standards committees to regulate electrical equipment sold in the region to eventually force the sale of low-energy devices. “
This can be extremely effective and save thousands of megawatts. Efficient air-conditioning units use 30-40 per cent less energy than standard ones, efficient motors 20 per cent less, lighting 30 per cent less by using compact fluorescent and LEDs [light emitting diodes],” says Bryniak. All of this reduces the need to invest in new generation capacity and the figures speak for themselves.
Beyond efficiency measures, there are a host of other techniques that can help in management of peak demand loads.
CRA’s Young says the options open to the region include standby generation, where users with more than 250KW on-site capacity use their generators at peak time and receive a financial incentive to do so.
Another option is curtailable load generation, where large-scale users who able to reduce demand at short notice do so for a financial incentive. Both of these methods involve two forms of payments, one for availability and another if the measures are required.
Other methods include direct control of air-conditioning to allow small temperature increases at peak load times and power factor adjustments, which involves large users with inefficient equipment, paying higher tariffs to encourage the replacement of equipment and fittings. But adjusting tariffs would require a fundamental shift in philosophy in the region.
The subject of tariff increases is unpopular in the GCC, but some experts think this is the only way to make real progress in cutting demand. “Utilities have to get people to change their behavioural patterns and the only real way to do that is with economic disincentives. We see some countries using time-of-use tariffs, which would be appropriate,” says Ahmad of Wartsila.
Time-of-use tariffs would require utilities to define peak periods, such as a four-hour window during weekdays in the summer, then identify price structures for the different consumers depending on their energy usage. CRA advises implementing a revenue neutral system to minimise the financial impact to customers in the first instance.
Although Gulf utilities are acting to reduce demand, none have yet used tariffs to deter peak time usage. “They feel hamstrung over the tariff situation, but I don’t feel that is true. They do have the freedom to move to time-of-use tariffs,” says Young.
However, with demand for power and water continuing to rise throughout the GCC, utility firms might not be able to avoid the tariff issue for much longer.