Kuwait Sets Biggest Gulf Clean-Energy Goal to Boost Oil Exports

Sun-drenched Kuwait, a desert nation with no solar-power plants and electricity demand that’s growing about 8 percent a year, has set the most ambitious target for using renewable energy in the Gulf region.

OPEC’s fifth-biggest oil producer, whose air conditioners run cheaply off state-subsidized oil-fired power plants, aims to generate 10 percent of its electricity from sustainable sources by 2020, said Eyad Ali al-Falah, assistant undersecretary for technical services at the Ministry of Electricity and Water.

Kuwait is trying to free up oil for export and expand its generation capacity to support increased tourism, manufacturing and home building in a $112 billion development program. To meet its clean-energy target, which exceeds the 7 percent goal set by Abu Dhabi in the United Arab Emirates, Kuwait next must gather data on sunshine and wind speeds, al-Falah said.

“Renewable energy is a new subject for Kuwait,” al-Falah, who coordinates alternative energy for the ministry, said in an interview at its headquarters outside Kuwait City. “That’s why there’s a lack of information regarding the suitability of renewables for our weather.”

While analysts are skeptical Kuwait will meet its target, they don´t question the economic case that underpins it. The Arab country consumed 413,000 barrels a day of oil in 2010, about 16 percent of production, according to the BP Statistical Review of World Energy for 2011. That’s 66 percent more than in 2000, while production increased about 14 percent.

Summer Heat Waves

In a nation where summer temperatures can top 50 degrees Celsius (122 Fahrenheit), domestic consumption has more than doubled in the last 10 years. In comparison, world electricity demand is expected to grow 2.2 percent a year from 2008 to 2035, provided current government policies and targets are not scrapped, according to International Energy Agency forecasts.

In the Gulf, oil producing nations need to generate more electricity to meet demand that’s growing an average of 10 percent a year, Jarmo Kotilaine, chief economist at National Commercial Bank in Jeddah, Saudi Arabia, said in March.

“We definitely see solar potential in Kuwait,” said Rajit Nanda, chief financial officer for ACWA Power International, a Saudi Arabia-based company that develops electricity and water projects. While Kuwait hasn’t kick-started renewable energy projects, “there’s a lot of peak demand when solar resources are at their best.”

Kuwait could then export more fuel and generate higher revenue instead of pumping it into electricity plants, Nanda said. Oil contributed 95 percent of the 11.89 billion dinars ($43 billion) in revenue the country recorded for the five months through Aug. 31.

Beginning in 2014

The Ministry of Electricity and Water is “firmly” behind Kuwait’s renewable-energy plans, according to al-Falah. “It’s a long process but I’m expecting 2014 or 2015 may witness the inception of these solar projects, and the wind turbines. I think of solar as fuel saving, not as an alternative.”

The 10 percent renewable-energy goal by 2020 may be too optimistic, according to analysts.

“Kuwait is not going to come anywhere close to meeting that target,” said Robin Mills, head of consulting at Manaar Energy in Dubai. “The U.A.E. will come closer but will still miss its goal. Kuwait is taking its time deciding which technologies to use, and thereby delaying implementation.”

Kuwait subsidizes electricity for more than 1 million Kuwaiti citizens and about 2.5 million expatriates. They pay 2 fils (7 U.S. cents) a kilowatt-hour compared with more than 35 fils a kilowatt-hour for production, according to al-Falah.

Tenders for Construction

The country issued a tender in March to build the Al-Zour North power plant, one of Kuwait’s biggest projects to boost supplies, which could cost an estimated 750 million dinars.

The country imports liquefied natural gas to supply its power stations when demand peaks in the summer months. Kuwait is also planning to build a new oil refinery at a cost of at least 4 billion dinars to help meet domestic demand. Less than 1 percent of the power supply is from renewable sources.

Jutting 16 meters high (53 feet) along one of Kuwait’s busiest highways, the country’s only wind turbine generates five kilowatts of electricity to power lights in the garden of Mohammed al-Naki, a former engineer in the Kuwaiti army and an environmental activist.

“At least if I fix something in my house, it helps,” al- Naki said in an interview at his home. “If I can do it, you can do it, and pressure would ease on the government’s production of electricity by 10 percent.”

Though a more common site in other Middle East and North African countries, a wind turbine in the holder of the world’s sixth-largest oil reserves is novel.

Capacity Limit

The Kuwait Institute for Scientific Research is studying building wind turbines capable of adding 10 megawatts to the main electricity grid and which may be started this year, al- Falah said. Electricity consumption in the summer months of 2010 reached 99 percent of capacity.

Another project in Abdaliyah, southwest of Kuwait City, is planned to build a combined-cycle gas power plant, with a capacity of 220 megawatts, enhanced with solar radiation generating another 60 megawatts.

There is also a proposal to build a 50-megawatt power plant using photovoltaic panels, which convert sunlight directly to electricity, al-Falah said.

Other countries in the region already have their own plans for renewable energy and are turning them into action.

Masdar Example

Masdar, a $22 billion renewables company owned by Abu Dhabi, has solar plants already and started building a low carbon-emitting city. Dubai, the second-largest sheikhdom in the U.A.E., said last month it will soon announce plans for the emirate’s first utility-scale solar plant.

Qatar and the U.A.E. are among the first oil producers in the Middle East to seek United Nations credits for alternative- energy projects.

Al-Naki, the former army engineer, said aside from a wind turbine, he uses a rooftop solar panel to heat water used in three bathrooms in his house in Salwa, 16 kilometers south of Kuwait City.

“It’s also fun,” he said. “A culture for a new generation, and why not?”

To contact the reporters on this story: Fiona MacDonald in Kuwait at fmacdonald4@bloomberg.net

To contact the editors responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.