S3-3. Impacts of grid integration on electricity production in the GCC

Transcription

1 S3-3 Impacts of grid integration on electricity production in the GCC David WOGAN APERC Annual Conference May 218

2 The GCC energy systems are in the early stages of liberalization Degree of liberalization/market contestability Vertical integration Vertical integration with IPPs Unbundling Wholesale market Retail market Combined functions under state ownership Vertically integrated utility along with private sector participation in generation Separation of competition and supply from monopoly transmission and distribution (different forms possible) Increased competition in generation Introduction of competition in retail markets Sharjah Ras al Khaimah Fujairah Umm al Quwain Ajman Bahrain Dubai Kuwait Qatar Saudi Arabia Oman Abu Dhabi Single Buyer Model 2

3 The GCC Interconnector is established but currently underutilized as a medium of exchange 12 MW 6 MW 12 MW 12 MW 4 MW 3

4 Study: overview of GCC analysis The objective of this study is to explore the potential utilization of energy exchanges in the Gulf Cooperation Council (GCC) and quantify costs and benefits to member states. Coordination among member states could result in lower system costs through avoided capacity investment; reduced fuel consumption, and lower CO 2 emissions. The GCC Interconnector is modeled as the medium of exchange between the five countries (excluding Qatar). The KAPSARC Energy Model (KEM) is used for this analysis. Study available online at 4

5 Electricity production and consumption are heavily subsidized through price controls Industrial fuels are subsidized at (e.g., Saudi Arabia as of Jan 218): Natural gas $1.25/MMBtu Crude oil $6.35/bbl Diesel $14./bbl Heavy fuel oil $4.25/bbl Electricity demand increasing ~ 11% CAGR ( ) Transitions are underway to restructure and decarbonize power production: 2 GW of solar PV by 23 (Saudi Arabia) 5.6 GW of nuclear (U.A.E.), 3.3 GW (Saudi Arabia) Liberalization and market creation 5

6 Scenarios Reference replicate energy system of 215 (fuel subsidies and no electricity exchange) Subsidy exports keep fuel subsidies and allow electricity exchange Exchange we couple subsidy removal with electricity exchange All scenarios are a static analysis of 215 using reported electricity and water demand; fuel production; and fuel subsidies. 6

7 Presently, a substantial amount of power capacity co-produces water 8 5 Capacity (GW) Total GCC capacity: Power: 144 GW Water: 17 mcm/d Fuel consumption (QBtu) Total GCC consumption: Gas: 4.7 QBtu Oil: 177 MMbbl HFO: 23 MMt Diesel: 9 MMt Bahrain Kuwait Oman Qatar KSA UAE Steam turbine Gas turbine CCGT PV Thermal cogeneration Bahrain Kuwait Oman Qatar KSA UAE Natural gas Crude oil HFO Diesel 7

8 Relative cost of production affects flow of electricity Subsidy Export Exchange 3 TWh 3 TWh Bahrain Kuwait Oman Qatar UAE 1 Saudi Arabia -1 Saudi Arabia -1 Bahrain Kuwait Oman Qatar UAE Bahrain Kuwait Oman Bahrain Kuwait Oman Qatar Saudi Arabia UAE Qatar Saudi Arabia UAE About 5% of electricity production would be exchanged. Saudi Arabia would export $2.2 billion in subsidies without reform. 8

9 Subsidy removal and exchange incentives investment in new capacity 6 Power capacity additions GW Reverse osmosis capacity additions MMcm/d Thermal desalination PV Gas turbine conversion CCGT Steam turbine Subsidy Export Exchange Bahrain Kuwait Oman Qatar KSA UAE Bahrain Kuwait Oman Qatar KSA UAE Utility scale PV and reverse osmosis water desalination become cost-effective 9

10 Desalination by reverse osmosis increases electricity demand 4 TWh Reference Subsidy Export Exchange 1 5 Bahrain Kuwait Oman Qatar KSA UAE Steam turbine Gas turbine CCGT PV Thermal cogeneration but electricity production is more efficient and flexible because power and water production are decoupled 1

11 Exchange and investment in more efficient capacity lead to lower aggregate fuel consumption 4 QBtu 3 2 Reference Subsidy Export Exchange 1 Bahrain Kuwait Oman Qatar KSA UAE Gas Crude oil HFO Diesel However, Saudi Arabia increases fuel consumption when exporting subsidies 11

12 All countries must experience economic gain for exchange to be feasible Economic gain = export revenue - capital investments - O&M - fuel imports Relative to Reference: Subsidy removal is a necessary prerequisite for equitable electricity exchange. Furthermore, subsidy removal delivers 98% of economic gain All values: 215 U.S. dollars 12

13 Thank you David WOGAN