Economic growth has strained the infrastructure of the world’s largest oil exporters, and left them struggling to supply enough power. The downturn has slowed growth, but power supplies remain tight.
“It’s an extremely important milestone for power security,” said Johannes Benigni, managing director at Vienna-based consultancy JBC Energy. “Especially when the market is short, this is very powerful.”
Saudi Arabia, Kuwait, Qatar and Bahrain could start seeing power flow across borders by the end of July. They signed a power trading agreement last week and have been testing grid links for months. Oman and the United Arab Emirates would be linked up later.
Cross-border trade on the $ 1.4bn grid project would initially be limited as only Qatar has spare power to sell.
The grid’s biggest immediate impact would be to lower surplus power capacity needed to guarantee supply, Benigni said.
Gulf Arab states have similar consumption patterns, with demand peaking in the summer as air conditioners run hard to counter scorching desert temperatures.
But each country’s pattern would differ slightly, so while one grid strains another could provide the capacity margin needed to keep working, Benigni said.
“This link is a structure that will allow the sharing of the reserve margin in its first phase,” Ali Saleh Al Barrak, chief executive of Saudi Electricity Co said.
“Everyone is suffering from shortage of capacity because of the great increase in demand and this includes Saudi Arabia.
