Metering among measures to keep the lights on in the Middle East

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Dubai, U.A.E. — (METERING.COM) — December 17, 2008 – The Middle East will require investments of more than half a trillion US dollars in metering and other electricity infrastructure to facilitate economic growth in the coming years.

According to management consulting firm A.T. Kearney, growing demographics and wealth in the Middle East will lead to a constant increase of demand for electricity in the foreseeable future. However, while investments are estimated to be more than US$500 billion by 2030 for the region, forecasting of energy demand is not accurate and many countries are still behind in their infrastructure planning. In consequence customers may face increasing supply-demand imbalances, power outages and soaring electricity prices.

A further challenge is how to calculate the necessary energy efficiency increase, as utility companies in the Middle East face energy sector losses of more than 10 percent through for example, theft and faulty systems. A lack of metering and governance leads to situations where utility facilities are not aware of where they lose energy, and subsequently money.

“The structures within the electricity portfolios of the regional utility companies need to change significantly towards alternative energy sources like solar, wind and nuclear,” commented Goetz Wehberg, from the Global Utilities Practice of A.T. Kearney. “In addition to large scale solar farms, smaller local units such as photovoltaic home installations must evolve.”

Although many Middle East countries are discussing ambitious renewable targets, such as achieving a 20 percent share of renewables in 2020 like in the EU, the regulatory framework and funding of such investments are open in most cases.

Key growth areas for future electricity supply are tourist hubs, economic cities and industrial zones. The six new Economic Cities of Saudi Arabia for example, will have a future metro population of several million people and investment requirements for electricity generation of more than US$4 billion.

Industrial zones such as Jubail and Yanbu in Saudi Arabia are expected to double in size within the next five years, with investments in utilities infrastructure accordingly. Additionally, countries such as Bahrain are running out of oil and need to secure their energy supply for the future. Other nations such as Jordan extensively rely on energy imports already and want to decrease their dependency.

“A sound demand forecast, capacity planning and regulatory management will be key to avoid power outages in the future,” said Wehberg. “To better balance supply and demand within the region and prospectively with Europe, the transmission grids in the Middle East need to become more integrated.”