Egypt Connection To Support GCC Electricity Trade
BMI View: A US$1.6bn deal to link Saudi Arabia and Egypt via a 3,000MW electricity cable will not only allow the pair to meet peak demand via load sharing, but will also benefit the wider Gulf region by enabling broader electricity trade between GCC members and Egypt. More options with regards to electricity trading partners will reduce the need for all interconnected countries to invest in reserve generating capacity - and could put an end to electricity shortages at peak times across the region.
Saudi Electricity Company (SEC) and state power company Egyptian Electric Holding will share the US$1.6bn cost of a 1,300km transmission cable, with a public tender to be launched as soon as the memorandum of u nderstanding ( MoU ) between the two countries is signed. Crucially , when the HVDC transmission line is completed in 2016, we believe it will compliment both Saudi Arabia and Egypt with respect to load sharing during times of peak power demand. B oth suffer from shortages at peak period s , but consumption in Saudi is greatest between noon and midnight (when air conditioning is needed most), while in Egypt peak time is after sunset.
Additionally, t he deal could certainly be part of a longer-term solution to Egypt's electricity supply problems, and h aving Saudi Arabia as an import partner will boost security of supply once the transmission line is installed . While Egypt has a relatively developed electricity supply system (the country already has connections to Jordan and Syria), strengthening the energy sector is certainly a priority for President Mohamed Morsi , especially in the aftermath of the Arab Spring. Furthermore, the 500kV electricity cable, which will run undersea for 20km, will create opportunities for infrastructure and power companies, enabling them to gain a foothold in two countries that between them generate 92% of the region's electricity (according to the Egyptian government) .
|Making A Connection|
|Saudi and Egypt Electricity Supply and Demand, 2010-2022|