Ri Insights

Renewing Renewables: Kuwait’s Energy Diversification

Dr. Shareefa Abdullah Al-Adwani

Rai Insights Contributor

 

Kuwait: In 1975, Kuwait began its first Renewable Energy Program, which involved planning and building several renewable energy facilities.  The program was never completed, as prices of materials were too high and national security issues took precedence. By 1988, the program was discontinued.  Thirty years later, in 2005, feasibility studies were conducted for energy diversification.  Today, under the Kuwait National Development Plan, Kuwait has dedicated itself to supplying 15% of its energy needs through renewable resources by 2030.

 

These plans should be taken very seriously, as Kuwait is among the top energy consumers per capita in the world – and we are using our natural resources and our main source of revenue to keep up with the demand.

 

Kuwait’s electricity consumption has almost doubled since 2005 and increases at a rate of 6 to 8 percent per year. In 2009, Kuwait imported natural gas to meet the growing demand.   In 2013, Kuwait’s energy consumption was at 43.4 billion kWh per year and required the use of almost 300,000 barrels of oil a day to meet the demand for electricity.  Today, our energy consumption is around 54 billion kWh.  With a recent 3-year average of about 50 dollars per barrel of oil, this consumption indicates a cost of USD 18.5 million per day minus the nominal amount the government pays for oil.  In other words, it costs Kuwait about KWD 5.5 million (minus the price of oil sold to the government) per day.

 

The majority of the cost is borne by the government, which operated at a budgetary deficit in 2017.  The government, having reduced the budget for fuel, oil, and power, has attempted to address the costliness by spreading awareness of energy conservation and increasing the price of electricity in public buildings.  Yet at the higher twenty-five fils per kWh for the public sector, and 2 fils per kWh for many residential consumers, electricity is still being subsidized for the public sector, as it costs 38 fils per kWh to produce.

 

Thus, it makes financial sense for the government to turn to low-cost renewables again.  Since 2010, the cost of solar installation has decreased by 50%, solar module prices have decreased 75% since 2009, and wind power costs may also decrease by 50%.  Renewables around the world are a simply less expensive option.  This has not gone unnoticed by the government, which has established many projects (Salmi, Shagaya, and Al Abdaliya) to take advantage of plentiful solar and wind resources and address the demand for energy.

 

By 2030, 15% of energy consumption may be around 19.5 billion kWh per year.  Considering three large solar and wind renewable energy projects, and assuming the projects will not be running at full capacity factor at all times, then by 2030, 4.45 billion kWh per year may be provided by renewables…about one-fourth of where we should be.

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Yet this is only a rough and highly conservative estimate.  First, the capacity factors may be higher than the estimated capacity factors.  Secondly, the sectors of use (public, commercial, and residential) may impact cost and coverage.  Thirdly, energy storage must be taken into consideration as the difference in concentrated solar thermal systems (which use the sun’s heat and may be stored) and photovoltaic solar panels (which use the sun’s light and is difficult to store) will certainly impact coverage, particularly during peak months in the summer.  Moreover, other projects already have plans in place, such as the 10 MW Umm Ghudair’s photovoltaic plant (5 of which will be for public use) and the 1-gigawatt Dibdibah solar power plant.

 

Along with these public and large-scale plans, individual consumers may be interested in renewable energy investment by placing their own solar panels on their residential rooftops.  However, residential solar panels do not yet yield a sound investment return.  Consider the following: The average 6-person household in Kuwait consumes 94,200 kWh in electricity per year (an electricity bill of KWD 188.400).  A 10 KW solar panel would provide around 10% of the household’s electricity.  The installation of just one 10KW panel would cost between KWD 7,000 to KWD 11,700.  The return on investment would take over 350 years.  It is still cheaper to pay for electricity from the grid.

 

On the state level, though, investment in renewables is critical for the budget.  One estimate suggests that without renewables, the cost of providing electricity through fossil fuels in 2030 would be use 20% of Kuwait’s oil production – revenue that could be used elsewhere.  Kuwait’s public sector should expand enthusiastically into renewables and take advantage of the costless sunlight, wind, and heat from the sun that may be used to generate electricity.  The expansion would create new jobs, reduce overall cost, reduce pollution, and maintain long-term energy stability – a most critical national interest for Kuwait.


**Dr. Shareefa Al-Adwani is an Assistant Professor of Political Science in the Department of International Relations at the American University of Kuwait.  She completed her PhD in Political Science at the University of California, Davis, focusing on the two fields of International Relations and Quantitative Methods.  She teaches courses related to Kuwaiti foreign policy, international law, international organizations, politics and women in the Middle East, and quantitative methods.  Her current research projects involve (1) the investigation of GCC socio-political phenomenon and changes over time using recently available government data and (2) using various new and existing cross-sectional time-series data to investigate the domestic factors for international cooperation, treaties, and agreements.


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