Sharing the Power Pie

Many residents and businesses that packed their bags and left the Middle East at the height of the crisis are now zipping their luggage for a completely polar reason. As the Middle East rises from the ashes of the recent financial downturn, a great number of companies and ex-residents that fled the region are now clawing to take the next flight in. The Middle Eastern governments, particularly in the GCC countries, have remained tenacious in the face of the downturn and strategically, albeit riskily, continued to disburse notable amounts to fund infrastructure, commercial and residential projects, which were then in danger of being either stalled or cancelled. Now, in light of the nascent regional upturn, these projects (in addition to new ones) are gaining traction, and the companies that used to shy away from them from fear of an unprecedented collapse are now optimistically tendering to win the rights to capitalize on the burgeoning GCC construction industry.

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However, the companies and the residents in the GCC will not only have the economic and financial rewards to share among themselves – each of them will also have to take a piece of the region’s energy supply, which may not be as rapidly expanding as the economy or as actively evolving as the industrial processes. A perennial issue in the developing economies, like the Middle East, is the observed discrepancy between the rate of economic and industrial expansion and of investments in power-related infrastructure. Economic activities in emerging markets are increasing at a remarkably fast pace while projects related to power generation or distribution are, most of the time, suffering notable delays.

That the demand for energy outstrips the supply may bring about serious repercussion in the foreseeable future. Most of the countries in the Middle East depend on natural gas – a finite resource – for electricity, and though the present demand may not result in its complete depletion, an occasional spike in energy requirements, like during the summer months or seasons of intense oil & gas or commercial production, may result in supply hiccups which are not to be underestimated.

When the demand overwhelms the supply channels, power outages may occur. Saudi Arabia has reportedly experienced several occurrences of massive power interruptions in recent years, said to be due to the demanding energy requirement during the hottest and peak production months. The emirate of Sharjah in the United Arab Emirates has also felt the economic effects of a sustained power interruption, with local industrial companies reporting cumulative losses between AED 70 million and AED 100 million.

To prevent the recurrence of power interruptions, governments in the Middle East are exploring the possibility of tapping other sources of energy to boost their respective countries’ electricity supply. Some countries in the GCC are keenly looking at harnessing the power of the sun to complement their traditional energy sources. Saudi Arabia has announced that it is looking to install 41 GW of solar power by 2032, predicted to yield enough energy to support 20% of its total electricity production. Kuwait is already mapping out plans to at least produce 5% of its electricity from solar means, while the UAE, Jordan and Qatar have also unveiled solar generation targets on the gigawatt scale.

Over the next few years, these objectives will translate into large-scale power-related infrastructure projects aimed at enhancing the overall electricity generation capabilities of the aforementioned Middle Eastern countries. There is however, an unaccounted arc that calls for a more heightened attention: What happens, then, between now and the time when these projects are finally fully operational? Will power interruptions continue to persist? Will load shedding be a regular solution so that power plants avert the possibility of a total shutdown? Will companies, factories, oil & gas facilities and mining sites in the Middle East continue to suffer financial loses when the power supply cannot support their operational demands?

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A power boost
Interim power generation plants could represent an immediate, viable, sustainable and cost-efficient solution to energy-related problems while the permanent electricity infrastructure is still being planned, evaluated or constructed. Rental power technologies, as the ones provided by Altaaqa Global CAT Rental Power, can provide cost-effective and environmentally friendly alternatives to traditional sources of power when situations call for a boost in power supply, like during the summer months or during the completion of large-scale activities. Gas, diesel or dual-fuel (70% gas and 30% diesel) generators are specifically developed to reduce fuel costs and encourage cost-savings on the part of the end-users.

Interim power station technologies also provide the most flexible power solution to support base load, intermediate, peaking or standby power generation. These solutions are adaptable enough to meet the exact requirements of different industries in the Middle East, such as utility, industrial manufacturing, oil & gas, mining, petrochemical, maritime and aviation to name a few.

Substation-free power plants have also been developed to cater to areas where there may not exist substations. These types of mobile power systems can directly hook up to the grid, thanks to a state-of-the-art packaged protection system.

Making supply meet demand
Rising from the ruins of the recent economic slump, the Middle East is now enjoying a market resurgence. The region has once again caught the attention of foreign and local investors alike, and is currently witnessing rapid growth in infrastructure-, utility- and construction-related activities. The current regional trend, however, is taking its toll on the region’s energy supply, thus the heightened urgency to find alternative sources of electrical power, both for short- and medium-term utilization. Renewable sources are gaining traction and gradual acceptance and application, but for immediate electricity requirements in any occasion, be it natural calamities, power plant shutdowns, grid instability, supply shortages or back-up, rental power systems still represent the foremost choice.

Utilities ME coverage cover

*The foregoing article is based on what was originally published in the October issue of Utilities Middle East magazine, published by ITP.*

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Robert Bagatsing
Altaaqa Global
Tel: +971 56 1749505
rbagatsing@altaaqaglobal.com

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Seize the Opportunity

During peak production seasons, it is not rare for utility companies to set ceiling caps for electricity consumption or to charge a premium during hours of heavy energy demand. They even warn some companies to taper their energy usage or they will be compelled to pay a hefty penalty.

In cases such as this, what choice do industrial companies have?

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Many companies, especially those in consumer goods and industrial production, only have a handful of months that they regard as their peak production season. During these months, the requirement for their products exponentially increase, hence they find the need to use their production machinery at full capacity and to extend their operational hours round-the-clock. As a result of intense production activities, their power consumption spikes.

Will they have to control their electricity usage and risk foregoing the opportunity of making double or triple their off-peak revenue? Will they have to go on with the feverish production pace and choose to pay the penalty, which could take a sizable amount off the profit that they will be making?

Hiring the services of temporary power providers to augment the existing power supply is an option that industrial companies can take in times of peak production. Using mobile power stations will allow these companies to avoid paying a considerable penalty imposed by utility companies, and to work around the ceiling cap for energy consumption if they require more electrical power. There is a real risk that the increased tariff rate during peak hours and the fine enforced by the utility companies may take out a substantial amount from a company’s peak season revenues. In times like this, it may be more cost-beneficial to run alternative power sources, like interim power plants.

Because temporary power stations are modular, flexible and adaptive, they can be easily installed in a variety of customer locations anywhere in the world. Modern gensets have the capability of producing electricity according to customer requirements, precluding over- or under-sizing. They also have a plug-and-play configuration that allows them to be installed, commissioned and activated in as little as days.

More importantly, as a temporary solution when power demand is heightened, mobile power plants bring more cost-efficiency compared to paying hefty fines or limiting production activities. Several studies conducted in different industries in different countries show that in short- or medium-term use, the price of procuring, running and maintaining power plants for hire is significantly lesser than the cost related to the effects of lost business opportunities, customers, production time and raw materials.

The negative effects of peak lopping can be countered by engaging the services of mobile generator providers. Temporary power plants are cost-beneficial and bring about invaluable paybacks to the operations of industrial entities. With interim power plants, companies can take full advantage of a peak production season onwards to raising a more sustainable and prolific business.

PowerWatch India October coverage cover

*The foregoing article is based on what was originally published in the October 2014 issue of Power Watch magazine, India.*

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Robert Bagatsing
Altaaqa Global
Tel: +971 56 1749505
rbagatsing@altaaqaglobal.com

Balanced Energy Mix

India’s energy situation was precarious. Energy experts estimated that about 300 million people in India had no access to electricity, and that the demand for energy in the country was consistently outstripping the supply. Energy authorities feared for the worst as electricity requirement during months of peak consumption was expected to exploit the country’s thin energy capacity.

Recognizing the situation’s need for an urgent resolution, the country has ventured into ambitious renewable energy generation projects that could potentially instill balance and reliability to India’s mix of energy sources. Now, India is said to have the fifth-largest power generation portfolio and is touted to be the fifth largest wind energy producer in the world. Power generation from renewable sources in the country is on the rise. In 2013, the share of renewable power in the country’s total energy mix accounted for 12.3%, up from 7.8% in 2012. Wind power accounts for 68% of the aforementioned percentage, with an installed capacity of 19.1 GW. India has also entered into small hydropower, biomass and solar energy generation.

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Drivers for growth of renewable energy generation
India’s economy is now enjoying an upturn, with growth rates predicted to peak at 6% in the coming years. With the expanding economy come the growth in urbanization and the rise in per capita energy consumption. As electricity requirements in the country increases, expenses from importing fossil fuel for power generation proportionally spikes. In this light, government authorities in India deemed to encourage the country’s transition from fossil-based energy options to renewable sources through offering various incentives, such as tax holidays and generation-based incentives (GBIs).
When technologies were gradually rolled out, renewable energy proved to be increasingly cost-competitive compared to fossil-based power. Renewable sources were also considered to be highly scalable and distributed, thus alternative power generation became justifiable in the electrification of remote areas, which may have deficiency in power grid and road infrastructure.

With renewable energy generation becoming an attractive endeavor for foreign and local investors alike, India’s government created a liberal environment for investment in renewable energy projects.

Some challenges ahead
India is now among the world leaders in renewable energy generation. While the process holds much potential, there are some observed challenges that are yet to be resolved by the country.

Experts on the ground reveal that one of the obstacles to the proliferation of renewable energy facilities, particularly that of wind and solar, is the perceived insufficiency in the strict employment of renewable purchase obligations (RPOs), which is said to be limiting the demand for power from renewable energy sources. Constraints in transmission infrastructure is also a salient hindrance, because, owing to this, only a limited amount of generated power reaches the grid. Economic factors, like a weak Indian Rupee and delays in payment, also put pressure on project financing and investor interest, respectively.

Perhaps the most striking disadvantage of utilizing renewable energy sources, say experts, is their unpredictability and apparent instability. As wind or solar power generation facilities depend on nature to run, it may be difficult to forecast its performance, which is of particular importance in critical applications. While highly sophisticated prediction equipment is available, it cannot be 100% reliable, and weather disturbances or aberrations can still happen. In cases when there is not enough natural “fuel” to run renewable generation facilities, the areas to which they supply could suffer from load shedding or rolling blackouts. Additionally, in peak summer months or in the coldest winter months when climate control systems are usually in full blast, renewable energy plants can potentially be overwhelmed by the demand if not enough impetus enters the systems.

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The need for an energy “safety net”
For a burgeoning country like India, the solution to sustaining economic growth and energy viability may not be simply ascribed to one single source of power. It has been documented that the country’s existing traditional permanent power infrastructure may encounter some difficulties in supporting India’s power demands in a variety of contexts, hence the effort that the country is exerting to make inroads into renewable energy generation. While the new technologies may hold water, total immersion into the new paradigm may take time, as shown by the range of legislative and economic considerations that still present themselves as impediments to alternative energy growth. Renewable technologies are on their way to progress and advancement, as research and development endeavors are well encouraged by the Indian powers that be. Improvement, however, may not happen overnight, and as it unravels, renewable energy facilities may find merit it taking in support from stable and tested technologies, like rental power systems.

Rental generators may be able to supplement the existing power generated by traditional and renewable sources of energy. They can act as an energy “safety net”, preventing electricity levels from falling beyond what is acceptable and productive. These rental generator sets are equipped with state-of-the-art fast-start systems that allows them to supply the needed power at the shortest possible time, in cases of instability from other sources of electricity.

Interim energy technologies also represents a cost-effective immediate solution to power supply shortages, as they do not require sizable initial capital to be acquired. India, as a country looking to increase its expenditure in renewable sources in years to come, may find benefit in this attribute, as renting power generators would not entail denting a country’s budget or restructuring financial resources allocated to other services.

Because they are modular and flexible, temporary generators can also be installed where renewable energy facilities find most appropriate applications. Rental power systems can be easily delivered from any point on Earth to another and, owing to its easy, plug-and-play configuration, can be started in as short as few days.

With rental power plants on board, the perceived limitations of traditional and renewable energy sources can be overcome, and the power can be bridged until the other sources regain their stability. In this context, temporary power plants find their maximum benefit in being used as supplementary or back-up power while permanent energy facilities are being constructed or refurbished, or when alternative energy sources are being advanced and improved.

The key to power is balance
Having a balanced energy mix may be the key to a sustained economic, political and social stability. As countries like India enjoy an economic upturn, growth industries, such as manufacturing, utilities and oil & gas, should be expected to consume large sums of energy. With limited resources, it may be difficult for a country to rein in energy consumption at the expense of economic opportunities. What developing countries need are support systems – like what rental power plants are for energy sustainability. As India maps its road to energy stability, temporary electricity generation facilities are available to support the country’s existing infrastructure to produce continuous and reliable electricity needed to power the country’s future.

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*The foregoing article is based on what was originally published in the September 2014 issue of EPC&I magazine, Northern Lights Communications, India.*

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Robert Bagatsing
Altaaqa Global
Tel: +971 56 1749505
rbagatsing@altaaqaglobal.com

Using Power to Change the Future

One of the great thinkers in the modern history of the world, Abraham Lincoln, once said that the best way to predict the future was to create it. Change is inevitable, and we, humans, are constantly faced with the options of either effecting the change ourselves or being subject to the result of some other factor’s change.

Lincoln’s world-famous quote asserts that we have a say in what the future will hold for us, and that proactivity, as opposed to reactivity, will offer us our desired results.

This citation holds true till this very day, and still finds application in almost all facets of life. Each and every day, we, our relatives, our companies and even our governments are confronted with the compulsion to make decisions, selecting one or the other, to move forward. Oftentimes, the decision of the greater elements of the society sets off a domino effect, trickling the repercussion down to the nucleus. There may also be instances when the effects of the choices of the citizens escalate to the powers that be. In most cases, the relationship between the components of a society may not linear – there may be a constant push-and-pull or imposition-and-retaliation, or, at best, demand-and-submission.

Let us contextualize the foregoing discussion and throw the spotlight on the present energy situation in the Middle East. Let us examine the scenario through the prism of “choices”, and study how a marginal shift in behavior, say, leads to encompassing and durative effects.

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Power at home
It may be hard to argue that it is the choice of the residents of the Middle East to raise the temperatures during summer to as high as 50°C, or more, at times. We may also consider that putting on air conditioners is a foregone conclusion, otherwise the living conditions will be utterly unbearable. We may say, however, that they have a choice in which AC unit to buy, or in considering the lifecycle cost of an electric product instead of its first cost. We could also be excused in saying that they also have a choice in how to take advantage of the power subsidy that they get from their governments, and on ascertaining how much electricity is essentially needed in their daily lives.

Studies cite that Saudis, for example, use nine times more electricity than the citizens of the four largest Arab countries. An individual in Saudi Arabia consumes around 8,200 kilowatt in an hour compared to an average 951 kilowatt an hour by an individual from Egypt, Algeria, Sudan or Morocco. Moreover, energy consumption per individual in Saudi Arabia was observed to have risen by three per cent in 2011 and by nine per cent in 2012. In the entire energy mix, the housing sector was estimated to be responsible for consuming 50% of the country’s total energy production.

To which, however, can one attribute this dizzying energy consumption average? Though not absolute, energy industry experts ascribe a large part the high electricity consumption to the poor energy efficiency of AC systems that the citizens of the region ultimately bring home. HVAC systems consume approximately 51% of all electricity production in the region, and this can reach up to 70% during the summer months. A considerable number of AC systems on offer are observed to have low energy efficiency ratios (EERs) despite the presence and promotion of energy efficiency standards in Middle Eastern countries. In most cases, air conditioners with low EERs are the cheapest, attracting buyers to give premium to the price they see on the tag than to the number of stars rating the performance of the unit.

What most users are not aware of is that, though units with higher EER are more expensive, they run more efficiently, reducing monthly power consumption, thus reflecting as less billed electricity. More technologically advanced units also operate longer without the need for repair or servicing, thereby cutting on maintenance costs.

Power in the country
To support the region’s daily electricity consumption, countries use an estimated millions of barrels of oil a day – notably one of the highest in the world.

Industry experts observe that the upward trend in the regional power demand is owing to the fact that most of the Middle Eastern countries’ development is based on energy-intensive industries, like construction, manufacturing, water desalination and oil & gas. The region’s economic conditions are also highly attractive to expatriates and foreign businesses, which causes the Middle East’s population to spike. Due to the region’s unique climate, residents in the Middle East live energy-intensive lifestyles in their homes, offices and means of transportation.

The energy situation in the region is predicted to take more challenging turns. In Saudi Arabia, for example, authorities are predicting that by the year 2020, the demand for electricity in the Kingdom would have increased by 30,000 MW. The World Energy Council supports this forecast and adds that the power consumption in the Middle East and North Africa can rise by as much as 80%-114% till 2050.

With over 50% of the world’s proven oil reserves and approximately 40% of the world’s gas, the foremost choice for the Middle East will be to rely on fossil fuels for decades to come. The challenge, however, is that fossil fuels are finite resources, and some countries in the region are already feeling the pressure of the current demand on power generation.

Just recently, industry experts in Iraq have reported that the country’s ability to generate electricity was being hampered by a shortage of gas supply to its power plants. Owing to this predicament, Iraq’s electricity supply is deficient by at least 3,000 MW, and major power plants, such as Nainawa, Al Mansurya and Rumaila remain idle. Experts say that the peak power demand in the country hits 16,000 MW compared to only 12,000 MW of available electricity.

According to industry studies, there may be real dangers looming in light of the observed depletion of the Middle East’s fossil fuel reserves, largely due to the continuous growth of the regional power demand. First, when the dedicated fossil fuel resource could no longer support the electricity requirement, power supply may become unstable and interruptions may ensure, resulting in myriad negative impacts to the region’s economy, business and people. A power interruption affecting critical facilities, like hospitals, airports, telecommunication towers, data centers and oil & gas installations, has the potential to put an entire country or region to a standstill, and in light of regional integration among Middle Eastern countries, consequences are sure to spill over national borders.

Second, market projections suggest that the persistence of the current energy requirement patterns in the region may render Middle Eastern countries vulnerable to economic and social instability. Let us take Saudi Arabia as an example: The unrestrained domestic fuel consumption in the Kingdom may hamper its ability to export oil within a decade, and considering that over 80% of the country’s government spending is dependent on oil, a downtrend in the Kingdom’s oil export activities may affect its capacity to provide for its residents’ needs in the future. On the other hand, a limited supply to other countries could lead to soaring prices of oil and other petroleum products, which will consequently distress all the industries that depend on it for production and operation.

With predicaments such as these, what choices are there to make?

At present, the governments of the Middle East have initiated tapping alternative sources of energy, like the sun, but designing, constructing, commissioning, testing and employing these technologies may take time and millions, if not billions, of Dollars in initial investment. Authorities have also launched conformity assessment schemes and energy efficiency & conservation programs aimed at modifying the attitude and the behavior of end-users towards energy consumption. Shifting the existing paradigm, however, may take decades, if not generations, and without curbing the present energy requirement, the region’s existing power resources may not be able to sustain it until the foreseeable future.

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Empowered choice
While the long-term solutions are underway, countries in the Middle East may take a proactive approach in dealing with the region’s energy situation by hiring the services of rental power companies.

Hiring temporary power generation plants to bridge the demand and the supply of electricity yields many advantages, particularly when there is a foreseeable delay in the completion of permanent electricity facilities or when a considerable amount of power is immediately needed. Interim power generators are essential, particularly in times when the electrical grid is unstable or when power distribution networks are unavailable. The technology is also vital in mitigating the effects of planned or unplanned facility shut down or of load shedding.

Temporary power plants also have tested and recognized benefits in times of emergency, natural calamities & weather disturbance or intense seasonal demand. Disasters, unanticipated weather shifts and peak power requirements put unpredicted pressure on the region’s energy reserves, and addressing these ad hoc cases could mean taking power resources already allocated for other functions. Utilizing interim power generators in times like these not only instantaneously resolves the deficiency in supply but also precludes untoward and long-term effects that reorganization of energy resources may have to a wide array of industries.

Interim power generation facilities are sustainable, efficient and cost-effective solutions to a gamut of energy-related challenges. They respond to the questions of immediacy, viability and affordability. They are highly practical especially for short- and medium-term hire, as building permanent facilities for provisional usage may not be the most economical and workable choice. Temporary power plants offer utmost flexibility, scalability and modularity to fit in any situation, for any requirement, and to every budget.

The future is what you make it
Fossil fuels are non-renewable and the Middle East’s reserves are observed to be gradually diminishing. Alternative sources of energy, like the sun, may be abundant, but projects that could launch them at the forefront of power generation will take decades and a huge amount of country’s resources. Governments and utility companies in the Middle East are now offered an alternative choice to respond to the region’s power challenges aside from venturing into multi-billion Dollar energy facilities or pushing for a shift in existing consumption standards. They now have an option to hire interim power plants to bridge the power gap where needed and when needed. Now, the onus is upon us to make good use of the resources on offer and take the choices that would lead us to a future that we have envisioned for us, for our children and our children’s children.

Technical Review Genset Special Cover

*The foregoing article is based on an article originally published in Issue 4 2014 of Technical Review Middle East, published by Alain Charles Publishers.*

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Robert Bagatsing
Altaaqa Global
Tel: +971 56 1749505
rbagatsing@altaaqaglobal.com