Kuwait (2012)

Degree of reliance on imported energy: 

<p>
Kuwaiti net energy source imports (2007): 0 ktoe</p>
<p>
With proven reserves of crude oil amounting to 7% of the world&#39;s total reserve as of January 2011, Kuwait relies solely on indigenous energy sources for power generation.</p>
<p>
Kuwait has recently become a net importer of natural gas, leading the country to focus more on natural gas exploration and development for domestic consumption. In 2010, Kuwait produced 1.17 billion cubic feet per day (Bcf/d) of natural gas. This volume was an increase of around 8% compared with 2009. Given the predominance of associated natural gas in Kuwaiti production, domestic natural gas supplies decreased as a result of lower OPEC crude production quotas. Kuwait increasingly requires supplies of natural gas for the generation of electricity, water desalination, and petrochemicals, as well as increased use for enhanced oil recovery (EOR) techniques to boost oil production. Kuwait is shifting its exploration drive in order to focus on natural gas discoveries to mitigate imports of liquefied natural gas (LNG) and decrease the proportion of oil used domestically.</p>

Main sources of Energy: 

<p>
Total Installed Electricity Capacity (2010): 11,300 MW</p>
<p>
Total Primary Energy Supply (2009): 30,173 ktoe<br />
Oil: 66.5%<br />
Natural Gas: 33.5%</p>
<p>
In 2009, Kuwait generated 53216 GWh of electricity.</p>
<p>
Kuwait is a member of the Organization of Petroleum Exporting Countries (OPEC), exporting the fourth largest volume of oil among the group in 2010. Kuwait is a large exporter of refined products, as refining capacity is about three times the level of domestic demand for petroleum. In 2009, Kuwait exported 68,254,000 tonnes of crude oil.</p>

Country: 

Kuwait

Extent of the network: 

<p>
Access to electricity across Kuwait is nearly 100%.</p>
<p>
Electric generation comes from Kuwait&rsquo;s five existing power plants: Doha East, Doha West, Shuaiba North, al-Subiya, and al-Zour South.</p>
<p>
The Gulf Cooperation Council (GCC), of which Kuwait is a member, faces rapidly increasing demand growth in electricity. As a result, the six Gulf countries of UAE, Kuwait, Qatar, Bahrain, Saudi Arabia, and Oman began a region-wide power grid. Phase I of the GCC power grid is scheduled for completion by mid-2009 and will connect the power grids of Saudi Arabia, Kuwait, Bahrain and Qatar. Phase III of the GCC Grid will connect the Northern System &ndash; Kuwait, Bahrain, Saudi Arabia, Qatar &ndash; to the Southern System &ndash; UAE, and Oman by the end of 2011. Some analysts believe the GCC Grid has the potential to expand into North Africa and eventually link with Europe&rsquo;s power grids. Kuwait has already had to utilize regional electricity imports from the Northern System, as it has been plagued by electricity supply shortfalls. The integrated power grids will reduce power outages in the short-term and increase power exchange across seasons and time zones.</p>
<p>
Kuwait has also discussed co-operation with non-GCC neighbouring countries including Iran, increasing the need for grid linkage equipment and power generation plants.</p>

Capacity concerns: 

<p>
Rapid urbanisation and an expanding population have led to increases in energy demand. Kuwait has one of the highest per-capita energy consumptions in the world, and the country enjoys some of the world&#39;s lowest electricity prices. The country is also reliant on oil for power generation, a problem which is expected to be mitigated by the implementation of natural gas import plans from Qatar.</p>
<p>
The primary energy demand of Kuwait has been growing at a rate of 5-7% per year. It is estimated that the national peak load demand will reach 25,000 MW by the year 2025. The installed electric generation capacity of Kuwait was slightly above peak demand of 10,900 MW in the summer of 2010. Kuwait has come to embody the difficulties facing the region&rsquo;s electricity networks, with rapid demand growth causing rolling blackouts at times of peak energy demand. Slow implementation of developments plans, as well as a lack of feedstock, has served to create shortages in electricity supply during the hot summer months.</p>
<p>
In the past decade, the development of Kuwait&rsquo;s electric sector has stalled, despite consistent annual demand growth of 8%. Only one power plant was commissioned during that time, bringing a comfortable reserve margin to a shortage beginning in 2006.</p>
<p>
In 2010, Kuwait consumed approximately 529 Bcf of natural gas. Since 2008, Kuwait has consumed more natural gas than it has produced. This has compounded the problem of electricity outages. Kuwait has had to resort to imports of liquefied natural gas (LNG) to make up for this supply gap. In 2010, Kuwait imported 270 MMcf/d of LNG, largely from regional neighbors, Yemen and Oman. Kuwait&rsquo;s electricity demand, which is fueled increasingly by natural gas, has outpaced natural gas production during the summer months, resulting in the shutdown of refinery and petrochemical operations to meet the increased demand of electricity.</p>

Potential for Renewable Energy: 

<p>
<b>Solar energy</b><br />
Kuwait has an average insolation of 5.2 kWh/m2/day, and has a high potential for uptake of solar energy, with an estimated 73 ktoe of energy potential daily from utilising 10% of Kuwait&#39;s total land area for photovoltaics. A study assessing the economic feasibility and viability of implementing PV solar energy in the country found that under the present price of 5$/W and 15% efficiency, the levelised cost of electricity (LCOE) of a 1 MW station will be around $0.20/kWh. This LCOE can be feasible only when the cost of oil is around 100$/barrel. The Cost Benefit Analysis showed that when the value of saved energy resources used in producing traditional electricity, and the cost of lowering CO2 emissions are accounted for, the true economic cost of LCOE of a PV system will decline significantly.</p>
<p>
<b>Wind energy</b><br />
In Kuwait, the main prevailing wind is north-westerly, with an average wind speed of 5.5 m/s. The summer months are the time of the strongest winds. Some regions in the country are highly suitable for wind power generation because the average wind speed exceeds 5 m/s. The most attractive regions for wind energy applications are Al-Wafra and Al-Taweel. With an estimated 4.4 full-load wind hours per day, Kuwait has good wind energy potential. A co-operation agreement has been signed between the Kuwaiti Institute for Scientific Research (KISR) and the Dar Saleh Al Qallaf engineering consultancy for the design of sustainable buildings with integrated renewable energy systems, in particular, wind power.</p>
<p>
<b>Biomass energy</b><br />
The Kuwaiti climate is arid, with few natural aquifers, hence the low potential for biomass energy in the country. Experiments in hydroponics have proven successful in the country in the past, meaning the potential for future development is present, if costly.</p>
<p>
<b>Geothermal energy/Hydropower</b><br />
Kuwait has little to no potential for the utilisation of either of these technologies.</p>

Potential for Energy Efficiency: 

<p>
Over the last five decades, total consumption of electricity in Kuwait has increased drastically. Between 1960 and 2008, total consumption of electricity increased from 380 to 45,234 million kWh, and was largely due to increases in both per capita consumption and population.</p>
<p>
The accelerated rise in electricity consumption has been largely influenced by the government electricity and water subsidy program. Since 1966, the government has subsidized more than 95% of the cost of electricity; and citizens and residents pay only 2 Fills/kWh (less than $0.01 or 1 Cent) out of the actual cost of producing electricity 34 Fills/kWh ($0.12/kWh). In 2008, the total subsidy for electricity was estimated to be US $2.25 billion (US $653 per capita). There is also ineffective collection of electricity bills, where only 55% is collected in the past few years.</p>
<p>
With energy consumption per capita of 9.46 toe, one of the highest in the world, Kuwait has a high potential for energy efficiency. A high proportion of primary energy consumption is in the residential sector, caused by a high standard of living and harsh summer climatic conditions. For the country to maintain efficient energy production and consumption, modifications of existing power plants resulting in greater efficiency are highly needed. The average efficiency of Kuwaiti power plants was reported to be approximately 35% in 2008.</p>
<p>
The electricity loss due to transmission and distribution is increasing every year. The residential sector consumes most of the power plant energy that is produced, and the houses built by the public sector do not adhere to the building code of 65W/m2 for the maximum peak cooling load and 15W/m2 for lighting. It has been estimated that a better management of residential building lighting and A/C thermostat settings alone could save approximately 39% of the current annual electricity consumption. Moreover, the energy efficiency of government and commercial buildings is very low; therefore, many opportunities for energy conservation still exist.</p>
<p>
A trial of better peak load management of A/C and lighting systems has been undertaken in eight governmental buildings. A total reduction of 30% in the peak load demand was achieved. A nationwide implementation of this approach in all of the governmental and institutional buildings could reduce the national peak power demand by 154MW, which is equivalent to1.5% of the national energy consumption.</p>

Ownership: 

<p>
Kuwait&rsquo;s electric power system (KEPS) is vertically integrated and owned and operated by the <i><b>Ministry for Electricity and Water</b></i> (<i><b>MEW</b></i>, <a href="http://www.mew.gov.kw">www.mew.gov.kw</a>).<br />
&nbsp;<br />
The government of Kuwait owns and controls all development of the oil sector. The <i><b>Kuwait Petroleum Corporation</b></i> (<i><b>KPC</b></i>, <a href="http://www.kpc.com.kw/">www.kpc.com.kw/</a>) was established in 1980 as the state owned asset; and all other companies in Kuwait became KPC subsidiaries. KPC manages domestic and foreign oil investments.</p>
<p>
KPC subsidiaries include:<br />
The <i><b>Kuwait National Petroleum Company</b></i> (<b><i>KNPC</i></b>, <a href="http://www.knpc.com.kw/">www.knpc.com.kw/</a>), which operates a small number of storage and distribution systems for petrol and LPG. When KPC was established in 1980 as the state owned asset, KNPC became KPC subsidiary. KNPC became responsible for the refining and gas liquefaction industry in addition to the marketing of petroleum products, hence controls the downstream sector and export operations.</p>
<p>
<i><b>Petrochemical Industries Company</b></i> (<i><b>PIC</b></i>, <a href="http://www.pic.com.kw/">www.pic.com.kw/</a>)</p>
<p>
<i><b>Kuwait Oil Tanker Company</b></i> (<i><b>KOTC</b></i>, <a href="http://www.kotc.com.kw/">www.kotc.com.kw/</a>) has responsibility for the transportation sector of KPC.</p>
<p>
<i><b>Kuwait Foreign Petroleum Exploration Company</b></i> (<i><b>Kufpec</b></i>, <a href="http://www.kufpec.com/">www.kufpec.com/</a>) handles foreign interests of KPC and engages in exploration, development and production of crude oil and natural gas outside Kuwait.</p>
<p>
<i><b>Kuwait Energy Company</b></i> (<i><b>KEC</b></i>) is a privately-held company that has developed a number of foreign interests over the past decade, including interests in Yemen, Egypt, Russia, Pakistan, and Oman.</p>
<p>
All of the natural gas resources are owned by the KPC as in the oil sector.</p>

Structure / extent of competition: 

<p>
The entirety of Kuwait&#39;s energy market is solely owned by the government, meaning competition is practically non-existent. Some proposals for privatisation of some energy assets (but not oil and gas) have been discussed in parliament.</p>
<p>
Article 21 of the Kuwaiti constitution specifically allocates all natural resources and revenue they generate to the state. However, the Foreign Direct Capital Investment Law passed by the National Assembly in March 2001, has facilitated some foreign investment and development in those sectors, causing significant controversy in Kuwait.</p>
<p>
Given the rapidly increasing demand over the past decade, the Kuwaiti government has unveiled an extensive development plan for the electric grid. Kuwait plans to add 10,000 MW, nearly doubling its generation capacity by 2015. In order to achieve this, Kuwait will employ public-private projects (PPPs), as well as independent water and power projects (IWPP). Kuwait is the last Gulf country to incorporate the private sector into the development of its electric sector. This has caused some resistance, as it potentially leaves operation with foreign firms in a build own operate (BOO) structure, rather than the former engineering, procurement and construction (EPC) model that left operation in the hands of the government. The first evidence of private sector participation is the expansion of the al-Subiya complex built by General Electric (GE) and Hyundai Heavy Industries of South Korea. The GE power plant at al-Subiya is a 2000MW power plant that has an initial capacity of 1300MW, which started operations in June 2011.</p>

Existence of an energy framework and programmes to promote sustainable energy: 

<p>
The Ministry for Energy and Water, in conjunction with KISR, have proposed smart-operation strategies for public and government buildings in terms of lighting and air-conditioning. The aim is to extend to the residential sector in the near future to reduce the 85% contribution that air-conditioning and lighting have on residential consumption.</p>
<p>
Kuwait is set to issue tenders for a solar power plant, and aims for 5% of total electricity supply from renewable energy by 2020.</p>
<p>
A joint project has been proposed between KISR and Germany to generate electricity from wind power with 15 MW capacities and further project is in the pipeline for a solar-powered electricity station with a five to 10 MW capacity.</p>

Current energy debates or legislation: 

<p>
The current debates on the reform of the energy sector are ongoing, with several options being discussed, including the introduction of nuclear power for electricity generation and desalination, as well as the unbundling and privatisation of the electricity market, and the introduction of renewable energy sources.</p>
<p>
In March 2009, Kuwait announced its intention to establish a nuclear commission; subsequently, in January 2010, the head of the National Nuclear Energy Committee announced a 20-year cooperative deal with the French Atomic Energy Commission in the development of nuclear power in Kuwait. Kuwait announced that it is considering four nuclear power plants, set to become operational by 2022 and has agreed to allow International Atomic Energy Agency (IAEA) inspectors into any future nuclear sites.</p>
<p>
However, a nuclear option for Kuwait would face some difficulties, chief among which is that nuclear fuel is not available in Kuwait, in addition to the international politics involved. In addition, the storage of nuclear waste is a major problem. Furthermore, the lack of highly trained and technically skilled personnel and a manufacturing infrastructure of heavy equipment is another critical problem. Recently, the six gulf cooperation council (GCC) countries (Kuwait, Saudi Arabia, UAE, Qatar, Bahrain, and Oman) stated that they are interested in introducing a nuclear power plant in their electrical grid system to reduce their dependence on fossil fuel. They announced a plan to establish a joint nuclear program by 2025. The Energy Council estimates that the GCC countries will require 100,000MW of electricity to meet surging demands over the next ten years and more than an additional 200,000MW by 2030. The construction of a common electrical grid among the GCC countries will be important in allowing the countries to take advantage of variations in load demands in different time zones.</p>

Major energy studies: 

<p>
<i>Kuwait Power Market&nbsp; Outlook to 2020</i> <a href="http://www.bharatbook.com/detail.asp?id=133370&amp;rt=Kuwait-Power-Marke... />
&nbsp;</p>

Role of government: 

<p>
The <i><b>Ministry of Electricity and Water</b></i> (<a href="http://www.mew.gov.kw/">http://www.mew.gov.kw/</a>) is responsible for the provision of new tenders in the power sector, as well as the exploration of new energy sources and generation technologies. The cabinet as a whole takes energy policy decisions in the absence of a dedicated energy ministry, recently including the institution of a new national nuclear power authority to investigate utilisation of the technology in the country.</p>
<p>
The <i><b>Supreme Petroleum Council</b></i> (<i><b>SPC</b></i>) oversees Kuwait&rsquo;s oil sector and sets oil policy. The <b><i>Ministry of Oil</i></b> (<a href="http://www.moo.gov.kw/">www.moo.gov.kw/</a>) supervises all aspects of policy implementation in the upstream and downstream portions the oil and natural gas sectors.</p>

Government agencies in sustainable energy: 

<p>
The <b><i>Kuwait Institute for Scientific Research</i></b> (<a href="http://www.kisr.edu.kw/">www.kisr.edu.kw/</a>), established in 1967, is active in the fields of environmental research, advising the government on energy matters, including the uptake of sustainable power generation, as well as agricultural and water production concerns.</p>

Energy planning procedures: 

<p>
The UAE is connecting to the GCC power grid, with Oman to follow. The $1.4bn GCC interconnection project came to fruition in July 2009 when phase one saw the electricity grids of Bahrain, Kuwait, Saudi Arabia and Qatar connected to form the North Grid (MEES, 27 July 2009). First proposed in 1991, construction for the project began in 2004 following the creation of the GCC Interconnection Authority (GCCIA) in 2001.</p>

Energy regulator Date of creation: 

<p>
The <i><b>Ministry of Electricity and Water</b></i> is the regulatory authority for the electricity market, with the <i><b>Ministry for Oil</b></i> being responsible for petrochemical regulation.</p>
<p>
The <i><b>Supreme Petroleum Council</b></i> (<i><b>SPC</b></i>) oversees Kuwait&rsquo;s oil sector and sets oil policy. The <i><b>Ministry of Petroleum</b></i> supervises all aspects of policy implementation in the upstream and downstream portions of both the oil and natural gas sectors.</p>

Degree of independence: 

<p>
The SPC is headed by the Prime Minister. The rest of the council is made up of six ministers and six representatives from the private sector, all of whom serve three-year terms, and are selected by the Prime Minister. As the regulatory authorities are both government ministries, the degree of independence is limited.</p>

Regulatory framework for sustainable energy: 

<p>
Through funding from the Kuwaiti government and guidance from the UNDP, the Kuwait Sustainable Environmental Management Program was instituted in 2003, lasting until 2005. This included the establishment of an environmental database, and public education into sustainable energy sources and responsible energy use.</p>
<p>
As yet, no dedicated law on sustainable energy use or uptake exists in Kuwait.</p>

Regulatory roles: 

<p>
The MEW/MOO&rsquo;s roles include:</p>
<ol>
<li>
Proposing policy for the energy sector and following up implementation.</li>
<li>
Oil and gas - supervising the units operating in the field and the State&rsquo;s rights, managing the&nbsp;&nbsp; government&#39;s share in the companies, assisting the Supreme Petroleum Council.</li>
<li>
Establishing, managing and operating power generation installations and plants,</li>
<li>
Offering electric and water services and distributing them.</li>
<li>
Cooperating with government authorities and corporations in matters related to the energy sector.</li>
<li>
Undertaking geological researches, supervising the drilling for natural resources.</li>
<li>
Developing relations with international, Arab and foreign authorities and corporations in energy affairs.</li>
</ol>

Role of government department in energy regulation: 

<p>
The <i><b>Environmental Protection Authority of Kuwait</b></i>, established in 1995, is the public authority responsible for protection of Kuwait&#39;s environment, as well as management strategies for marine and land ecosystems, and the promotion of environmental awareness in the populace.</p>

Regulatory barriers: 

<p>
Further unbundling of the public electricity authority, as well as the formation of an independent regulator could help to open up the market.</p>
<p>
The heavy reliance on oil as a source of fuel and revenue for the country may also lead to a reduced emphasis on renewables.</p>

References: 

Alnaser, W. E. and Alnaser, N. W. (2011) &lsquo;The status of renewable energy in the GCC countries&rsquo;, Renewable and Sustainable Energy Reviews, 15: 3074-3098.<br />
<br />
Alotaibi, S. (2011) &lsquo;Energy consumption in Kuwait: Prospects and future approaches&rsquo;, Energy Policy, 39: 637-643.<br />
<br />
EIA (2011) &lsquo;Country Analysis Briefs: Kuwait&rsquo;, Last updated: July 2013, available at: <a href="http://www.eia.gov/countries/cab.cfm?fips=KU">http://www.eia.gov/countri... [Accessed 28 July 2013].<br />
<br />
Kuwait National Petroleum Company: <a href="http://www.knpc.com.kw/en/pages/default.aspx">http://www.knpc.com.kw/en/... 28 July 2013]<br />
<br />
Ramadhan, M. and Naseeb, A. (2011) &lsquo;The cost benefit analysis of implementing photovoltaic solar system in the state of Kuwait&rsquo;, Renewable Energy, 36: 1272-1276.<br />
<br />
IEA (2012) Country Information. Available at&nbsp;<a href="http://www.iea.org/stats/countryresults.asp?COUNTRY_CODE=KW&amp;Submit=S... 28 July 2013]<br />
<br />
Arab Times: &quot;Kuwait tops world in per-capita power usage&quot;. http://<a href="http://www.arabtimesonline.com/NewsDetails/tabid/96/smid/414/ArticleID/1... 30 July 2013]<br />
<br />
Arab Times: &quot;Kuwait should invest in recycling waste; Energy crisis spurs search for &#39;alternatives&#39;&quot;.&nbsp;<a href="http://www.arabtimesonline.com/NewsDetails/tabid/96/smid/414/ArticleId/1... 30 July 2013]<br />
<br />
Ministry of Oil Aims and Objectives:&nbsp;<a href="http://www.moo.gov.kw/About-Us/Aims---Objectives.aspx">http://www.moo.go... [Accessed 30 July 2013]<br />
<br />
Arabian Oil and Gas: &quot;Powering Kuwait&quot;, 15th March 2009.&nbsp;<a href="http://www.arabianoilandgas.com/article-5127-powering-kuwait/2/#.Uff3NW1... 30 July 2013]