Engaging in Cross-Border Power Exchange and Trade via the Arab Gulf States Power Grid

25 November 2008
By Hamish Fraser with Hassan K. Al-Saad

In 1981, the Gulf Cooperation Council (GCC) nations of the United Arab Emirates, the Kingdom of Bahrain, the Kingdom of Saudi Arabia, the Sultanate of Oman, the State of Qatar, and the State of Kuwait embarked on what was to become a core initiative of social and economic cooperation, resulting in the formation of the GCC Interconnection Authority. Ever since, the Authority and its project to electrically interconnect the six countries has been a focus of public attention in the Gulf. The interconnector will enhance the GCC countries' electricity infrastructure and will increase their reliability and security of power supply. The interconnector will also facilitate cross-border trade. With the construction of the power grid on the brink of being complete in 2010, the vision of the GCC, which includes a "complete interlinking of the infrastructure networks among the GCC states, especially in the fields of electricity, transportation, communication and information," will have then made a tremendous step towards being fulfilled. NERA Economic Consulting acted as advisor to the Authority in the design of the trading arrangements. The purpose of this article is to provide an overall account of the interconnection and the mechanisms by which the member states will engage in the trade of electricity (energy, capacity, and ancillary services).