Gulf electricity trading goes live

Neighbours will be able to buy and sell power and take advantage of consumption variations.

All Gulf states except Qatar have problems with gas supplies, the principal feedstock for power stations.

The GCC will complete the final link in a four-nation power grid on Monday that will allow Gulf countries to trade electricity for the first time. With the connections between Bahrain, Kuwait, Qatar and Saudi Arabia, built at an estimated cost of US$1.4 billion (Dh5.1bn), national utilities will be able to take advantage of variations in consumption patterns and buy from neighbours when supplies run short.

The GCC Interconnection Authority (GCCIA), a regional organisation responsible for overseeing the grid, energised an undersea link between Bahrain and Saudi Arabia and now must synchronise it to complete the grid, said Yousef Janahi, the GCCIA chairman. The link between Qatar and Kuwait was completed earlier this week. "Qatar and Kuwait can now commercially exchange energy," Mr Janahi said. "Bahrain is scheduled to synchronise with Qatar and Kuwait next Sunday."

Electricity from all three states is synchronised with Saudi Arabia's system at a string of substations along the Saudi kingdom's Gulf coast. The electricity is converted into a high-voltage direct current, which reduces transmission losses on the 800km system. The Bahrain connection was to be finalised yesterday, but was delayed because of a holiday in Kuwait. GCCIA officials indicated that the grid would initially focus on providing unplanned supplies of energy for short periods of time as member states grew accustomed to the idea of an open electricity market.

All purchases are governed by a commercial agreement signed by member states earlier this month. "There is a commercial agreement, we have all the rules," Mr Janahi said. "Implementing this agreement is not going to take place today. I think it will take some time to gain confidence, because it is new." The UAE signed an agreement to join the grid in March, and will complete a link from Shuweihat, in Al Gharbia, to Salwa, in Saudi Arabia, by 2011.

Oman is connected to the UAE's electricity grid but has not yet confirmed it will join the regional grid. The grid would give Gulf states the option to trade electricity instead of natural gas, which has been held up in several cases by disputes over pipeline routes and gas prices. All GCC states except Qatar have wrestled with a shortage of accessible gas, the principal feedstock for power stations and industry. The supply crunch has led them to burn oil products and contemplate building nuclear reactors and solar power plants.

Kuwait, which has confronted power shortages every summer for years, had hoped to secure electricity supplies this summer from Qatar through the grid. But Qatar turned down Kuwait's request for electricity, saying it had no power to sell, the Kuwait News Agency reported earlier this month. The new electricity grid would serve as the foundation for a proposal for GCC states to invest together in building nuclear reactors to produce power for the entire region. The UAE is pursuing an independent nuclear programme, but has not ruled out co-operating with neighbours at a later date.