Kuwait is to broaden its energy production, launching the first step in an extensive renewable energy programme intended to ease reliance on hydrocarbons while at the same time building awareness of the commercial and investment opportunities offered by solar energy.
In mid-June, Kuwait called for expressions of interest in the development of the Al Abdaliyah Integrated Solar Combined Cycle Project, setting a preliminary deadline of July 23. Under the proposal outlined by the Partnerships Technical Bureau (PTB) and the Ministry of Electricity and Water (MEW), the plant will have a total generation capacity of 280 megawatts (MW), of which 60 MW will be solar, with the balance coming from gas and steam turbines. Initial estimates put the cost of the project at $3.27bn, although this will depend on the outcome of final bidding and the subsequent design and development process.
Kuwait is behind most of its neighbours in seeking to harness the power of the sun. All other Gulf states have made investments in solar energy, with Saudi Arabia having gone as far as setting the goal of generating 33% of its domestic power needs via solar within 20 years. Kuwait has outlined plans to generate 15% of its electricity requirements from renewable sources by 2030.
Kuwait is taking a different approach to its renewable energy programme from those of others in the region, allowing the public to buy into the scheme at an early stage. According to an announcement by the PTB on June 10, 40% of shares in the project will be reserved for foreign investors, 10% set aside for state agencies while the remaining 50% will be offered to the public, with the subscription to be opened by the end of the year.
By offering half the shares in the Al Abdaliyah project to the public, the government is looking to encourage Kuwaitis to become active investors in their own economy, as well as accepting renewable energy as a commercially attractive option.
Reducing reliance on hydrocarbons
Kuwait’s move to develop a solar energy capacity comes as the government is looking at ways to scale back the high level of subsidised services provided to the public. A recent Ministry of Finance report put the cost of subsidies for fuel, energy, water, construction materials, and food at $19.3bn, with energy accounting for almost half the total.
In mid-June, the Ministry of Energy and Water flagged increases in tariffs of electricity and water for the industrial sector and other segments of the economy, after studies said utility subsidies could rise to $23.8bn by 2030, more than double their present level.
The government also said around the same time that it had decided in principle to end subsidies on diesel fuel, a move estimated to save around $1bn a year. Aside from the impact on the automotive and transport sectors, such a move would affect the many companies and private citizens who operate diesel-fired generators as a backup to the national grid. If implemented, with the decision yet to be ratified, the higher cost of diesel could be an incentive for a shift towards solar power as an alternative option.
Another advantage in developing alternative energy resources would be the freeing up of oil output for export, allowing Kuwait to maximise value from its hydrocarbons sector, rather than committing higher production levels to domestic consumption, and to reduce its reliance on imported gas along with locally produced oil to fire electricity generation.
Solar energy could create a variety of trade opportunities. GlassPoint Solar, which provides solar technology to oil fields, announced in March it was setting up a branch in Kuwait, aiming to attract industry interest in the solar applications it had developed for enhanced oil recovery. With many of the Emirate’s fields starting to reach maturity, a number of enhanced recovery techniques are being deployed, with solar being an attractive option for powering steam injection technology, which is already in use elsewhere in the region.