The resumption of Kurdish oil exports hinges on achieving consensus between Baghdad and Ankara, but a lasting solution can only be cemented through a trilateral agreement that includes Erbil.
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The term “Middle East” might be losing some ground to the less Eurocentric “West Asia,” but the region is in the middle of a tricontinental economy. Africa lies to the southwest, Europe to the northwest, Central and South Asia to the east and northeast. And in a future of much greater electricity interconnection, that could be very important.
International electricity trade today is minuscule, and 80% of the world total occurs within Europe, with a single market, dense geography, and long-established infrastructure. Most countries rely almost entirely on generation within their borders. That will have to be very different by mid-century.
Environmentalists like the mantra of “electrify everything” – the International Energy Agency’s net-zero scenario envisages more than 50% of final energy use coming in the form of electrons by 2050, versus 20% today. Electricity, which can be generated in low-carbon ways from renewables, nuclear reactors, or power plants with carbon capture and storage, is preferred to replace oil, gas, and coal in home heating, industrial processes, and ground vehicles.
Even if such scenarios are not fully realized, the share of electricity will rise substantially because it is clean at the point of use and efficient. The proportion of electricity coming from renewables – solar, wind, hydro, biomass, geothermal, and others – will also soar. The IEA’s scenario has total global renewable energy generation doubling, while the Abu Dhabi-based International Renewable Energy Agency projects the share of renewables in power generation growing from 25% to 85%.
That in turn creates the problem of balancing grids with input that varies seasonally, diurnally, and even over minutes as clouds obscure the sun or winds rise and drop. Storage systems such as batteries and hydroelectric dams running in reverse will help. But another key element will be electricity interconnections over long distances. These will move electricity from highly favored renewable locations (sunny, windy and wet, elevated places) to demand centers, smooth out local variations in weather, and time-shift electricity generation – moving solar power from a region still in sunlight to one where dusk has fallen.
These trends are apparent even in the petroleum-rich Middle East. Electricity made up 10% of final energy use in 1990, 13% in 2010, and 15% in 2019 (nearly all the rest was oil and gas). Solar generation remains small despite the sunny conditions, but it has grown on average nearly 60% annually since 2010.
All the Gulf Cooperation Council states and most Middle East and North Africa countries have renewable energy capacity or production targets, often quite ambitious. For example, Saudi Arabia wants to reach 58.7 gigawatts of renewable energy capacity by 2030, including 40 GW of solar photovoltaic, 2.7 GW of solar thermal, and 16 GW of wind. This compares to its current energy generation capacity, nearly all oil and gas fired, of 81 GW. Of this, installed renewable capacity in 2022 was just 0.4 GW, but several large projects are in construction, totaling 11.3 GW, and, in May, three major solar projects with a combined capacity of 4.55 GW were awarded. The Emirates Water and Electricity Company plans to increase solar capacity to 16 GW by 2035, while Dubai Electricity and Water Authority is close to having completed or awarded the full 5 GW capacity of its Mohammed bin Rashid Solar Park, and Dubai reached an additional 0.5 GW of “rooftop” solar capacity in 2022.
Air conditioning can account for up to 60% of peak summer demand in the Gulf states. This coincides well, but not perfectly, with maximum solar output. Lower temperatures mean the greatest solar energy surplus will come in spring. On a daily basis, the highest demand is often in the early evening in summer, as people return home from work, and lights, cooking appliances, and televisions go on, even while the weather stays hot and humid. So, batteries and other storage mechanisms, such as the pumped hydroelectric facility that Dubai Electricity and Water Authority is constructing in the UAE mountain town of Hatta, are required.
The greater penetration of solar power requires grid compensation, to keep voltage stable even while demand and renewable input fluctuate. This job was traditionally done by the inertia of rotating equipment (gas turbines), but as these are used less, other systems must be added. Local distribution networks need to be reinforced to accept greater flows of self-generation from rooftop panels, while, in the longer term, higher use of electric vehicles will require more charging capacity at certain points. Smart grids and time-of-day metering can help balance demand with fluctuating input and optimize the use of electricity storage, such as batteries and thermal storage linked to cooling.
Such measures address the local challenges, but balancing and optimizing the grid on a regional scale is a different problem. The GCC Interconnection Authority was established in 2001 and completed the connection between the six members in 2011, with a maximum capacity of 1.2 GW down its backbone. Most electricity exchange occurs in the summer when air-conditioning demand is high.
But of the six members, only Oman has a genuine market for electricity, launched in March 2022. In the others, there is at most a small amount of private generation, and this is usually sold to a single government buyer at regulated prices. So, the GCC Interconnection Authority serves mostly to share generating reserves and cover for emergency breakdowns, not as a means of large-scale, routine electricity trade on a commercial basis. In 2021, for example, 97% of trading was on an in-kind basis instead of being settled in cash, and the total exchange amounted to less than 0.2% of generation in the six member countries. In contrast, in 2022 the United Kingdom received nearly 5% of the electricity it consumed from international interconnectors.
The GCC grid is working on a link to Iraq through Kuwait, with initial 0.5 GW capacity, capable of increasing to 1.8 GW. Iraq’s summer peak demand, outside the autonomous Kurdistan region, is estimated at 34 GW, but its creaking grid can manage at best 26 GW. About 1 GW of this comes from Iran, when Tehran has the power to spare and Baghdad can manage the payments. Iran’s ambitions of being a major electricity exporter to many of its neighbors, such as Afghanistan and Pakistan, have fallen away as shortages have struck at home.
GCC countries are keen, with U.S. encouragement, to give Iraq other options. Jordan is also working on a link to Iraq of 0.15 GW increasing to 0.5 GW, and Turkey supplies small amounts into northern Iraq.
These are alternating current linkages, the normal way transmission grids operate. For long-distance connections, high-voltage direct current is preferred, as it has much lower losses en route, though it requires converter stations at each end and cannot serve intermediate points. But with high-voltage direct current, or even ultra-high voltage direct current, pioneered by China, the GCC and Middle East can realize hopes of exporting some of their energy resources as electrons.
A 3 GW link between Madinah in Saudi Arabia and Badr City in Egypt is under construction, with a plan to start operations in June 2025 after many years of development. A feasibility study is underway for the 2 GW EuroAfrica Interconnector, which would run from Egypt to Cyprus, Crete, and mainland Greece. The European Union-funded 1 GW EuroAsia Interconnector will start in Israel and follow the same route.
Further west, there are plans to connect Tunisia to Italy (0.6 GW) and Algeria to Italy (up to 2 GW), while Morocco is already linked to Spain (0.8 GW). Algiers has ambitions to raise its electricity exports to Europe to 8 GW, though given its long history of delays, this should be viewed critically. The most ambitious project, Xlinks, would bring 3.6 GW of solar and wind power from Morocco to the U.K., via a 2,300-mile subsea cable, meeting up to 8% of British demand. Northwest Europe, where dark, still, cold conditions can strike in winter for weeks at a time, too long for batteries alone to cover, needs to supplement its domestic solar and wind power with supplies from other geographies.
Another proposal, advanced by the International Solar Alliance, would link Oman to northwest India, exchanging electricity bidirectionally, taking advantage of the different daylight hours and seasonal patterns of demand. Ultimately that could use the hydro resources of states around the Himalayan belt – Tajikistan, Kyrgyzstan, Nepal, and Bhutan – as a kind of battery to balance the whole system.
Such ventures would ultimately tie the GCC, the eastern Mediterranean, and North Africa to Europe to the west and north, and south and central Asia to the east, in a transcontinental grid. This would form a major strand of the plans of the former chairman of China’s State Grid Corp, Liu Zhenya, for a global power grid costing $50 trillion. The Middle East would become the center of an electric spider’s web.
But such dreams face massive challenges. The Middle East connections mentioned serve only small portions of demand. Countries are not prepared to rely on potentially troublesome neighbors or tricky transit states for large portions of their electricity needs. Europe wants low-carbon electricity and diversification from Russia, but it too will be wary of entrusting too much of its energy security to North Africa.
North African states, meanwhile, have rapidly rising electricity needs of their own; Egypt is currently suffering gas and power shortfalls. They will not want to replicate a purely resource-extractive model. In the longer term, they have huge areas of available sunny and windy land and might not want too much competition from the GCC states as exporters of electricity, or indeed green hydrogen from the same inputs.
Electricity trade is high in the EU (and low almost everywhere else) because of secure legal and commercial systems and integrated markets. If trade even within the GCC is so low, and mostly on a nontransparent, in-kind basis, it is even harder elsewhere in the region. Better electricity links would support economic relations and improve reliability and cost, especially in the emerging renewable-heavy era. Mega-interconnections are all very well, but first the region needs to focus on the hard work of technical upgrades, market reform, integration, commerciality, and transparency.
is a non-resident fellow at the Arab Gulf States Institute in Washington. He is CEO of Qamar Energy and author of “The Myth of the Oil Crisis.”
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