Foreign companies cash in as Gulf turns to smart power grids

Saudi Arabia and the UAE are leading a push to transform their electricity grids into 'smart' networks

Saudi Arabia and the UAE are among the Gulf states investing billions to make their electricity grids “smart” using artificial intelligence, and increase their share of generation from solar and wind power.

That share is expected to almost double in the Middle East and North Africa over the next five years. It will rise to almost 10 percent by 2030, from less than 6 percent now, according to a report by Fitch Solutions’ research arm BMI.

Grids that use technology such as AI to manage fluctuating demand and absorb the ebbs and flows of wind and solar inputs are generally referred to as smart grids.

“The Mena region does not yet have a fully developed smart grid industry of its own,” Jose de la Maza, CEO of development consultancy Aninver Development Partners, told AGBI. “The early stages of this transition are largely being driven by international companies with established technologies and implementation experience.”

Saudi Arabia has automated 32 percent of its distribution grid and installed over 10 million smart meters in homes, according to Saqib Saeed, head of research at energy infrastructure consultancy PTR.

The Dubai Electricity and Water Authority (Dewa) started investing $2 billion in smart grid programmes in the second half of last year. Oman and Kuwait aim to roll out 1.2 million and 500,000 smart meters, respectively, to homes this year.

Smart meters typically record energy use in near real-time and report regularly. They also enable two-way communication between the meter and the central system.

Western companies – such as Germany’s Siemens, ABB and Schneider Electric – are reaping the benefit, offering technology around advanced grid automation, metering and control systems. 

The Chinese too are active. In February, battery maker BYD Energy Storage signed a deal with Saudi Electricity Company to supply batteries and equipment to the national grid with a capacity of 12.5 gigawatt hours, or enough to power 1,200 average US homes for a year.

Local companies are also carving out a niche, said PTR’s Saeed.

Saudi Arabia’s Alfanar is involved in manufacturing electricity and control systems, which are essential to grid upgrades, while Dewa is developing in-house digital capabilities.

“A co-development model is emerging, where global tech is implemented with growing local participation and supported by government mandates for local content and knowledge transfer,” said Saeed.