Powering the Gulf Powering the Gulf Utilities in the Gulf Cooperation Council ?;;!emkle]]lkgYjaf_\]eYf\o`ad] eYfY_af_[`Yf_af_j]_mdYlagfkYf\ hj]hYjaf_^gjl`]gfk]lg^[geh]lalagf& Christian von Tschirschky reports on `god]kkgfkd]Yjf]\^jgegl`]jj]_agfk eYq`]dhY\\j]kkl`][`Ydd]f_]k& Christian von Tschirschky, a partner in gmj<mZYag^Õ[]$`Ykegj]l`Yf)/q]YjkÌ experience in the utilities sector, the last six of which have been spent in the GCC. He says that the long-held operating eg\]dkg^l`]j]_agfÌkmladala]k$o`a[`Yj] ZYk]\gfklYl]%gof]\egfghgda]k$Yj] ^Y[af_k]n]jYdeYbgj[`Ydd]f_]k& Building new capacity will, of course, be gf]g^l`]k]kljYl]_a]kYkmladala]kj]\]Õf] their future generation portfolio. Nuclear ]f]j_qakafl`]eapÇl`]Mfal]\9jYZ =eajYl]kÌÕjklfm[d]YjhdYflkYj]\m]lg [ge]gfdaf]af*()/ÇYf\l`]\]n]dghe]fl of renewable energy, particularly solar, is set to increase. ?gn]jfe]flhj]kkmj]lgj]\m[]kmZka\a]k levels has led to the introduction of new pricing structures for nonresidential [mklge]jk$o`ad]j]ka\]flaYd[mklge]jk still pay relatively low tariffs for lower d]n]dkg^]d][lja[alq[gfkmehlagfYf\l`]f higher prices when they reach a certain usage level. Double capacity in less than a decade Reduce subsidies and increase ]^Õ[a]f[q The biggest of these, says Christian, is c]]haf_mhoal`kge]g^l`]ogjd\Ìk `a_`]kljYl]kg^]f]j_q\]eYf\_jgol`& :mlaf[j]Ykaf_kmhhdqemklZ]hYaj]\ oal`[mjZaf_\]eYf\$kYqk;`jaklaYf$a^ a sustainable energy balance is to be achieved. =f`Yf[af_]^Õ[a]f[qYdgf_l`]nYdm] [`YafoaddYdkg`]dhmladala]ke]]l\]eYf\ pressures, says Christian. É<]eYf\afl`]?;;[gmflja]kak_jgoaf_ at an average of 8% each year, driven by high industry and population growth,” he explains. ÉKge][gmflja]k$km[`YkKYm\a9jYZaY$ oaddf]]\lg\gmZd]l`]aj[YhY[alqÇ^jge Yjgmf\-(?Olg1(?OÇZq*(*(&ÌÌ ÉL`ak_jgol`e]Yfkmladala]kemklY[lfgo to develop strategies to better balance \]eYf\Yf\kmhhdq&Ê 2 | Powering the Gulf É?;;mladala]kf]]\lg\]n]dghkeYjloYqk lg[ml[gfkmehlagfl`jgm_`klja[l\]eYf\% ka\]eYfY_]e]flhjg_jYek$Ê`]kYqk& :ml`]Y\ealk_]llaf_[mklge]jklg mk]d]kk]f]j_qak\a^Õ[mdlo`]f`]Ynq kmZka\a]keYc]lYja^^kYjlaÕ[aYddqdgo& ÉL`]j]akYf]]\lgaf[j]Yk][mklge]j awareness of the real value of electricity – and that its current price is only so low because it is subsidized.” ÉMladala]kf]]\lgZ]f[`eYjcY_Yafkll`]aj h]]jkafgl`]jeYjc]lkYf\]phdgall`] ghhgjlmfala]kl`Yl[ge]^jgeYmlgeYlagf Yf\egj][mklge]j%[]flja[Y[lanala]k& “They also need to tackle reduction of technical losses along the value chain, l`jgm_`ghlaearYlagfYf\l`]YmlgeYlagf g^kqkl]ekYf\hjg[]kk]k&L`akeYqaf[dm\] l`]aehd]e]flYlagfg^keYjl_ja\k&Ê Regulatory changes herald competition ;`jaklaYfkYqkl`]ÕjkloYn]g^[geh]lalagf Christian says the biggest opportunities for eYq[ge]l`jgm_`_j]Yl]jmk]g^l`] f]oeYjc]l]fljYflkeYqda]afl`]k]jna[]k existing interconnection that links the around distributed generation. L`]hmk`lgaf[j]Yk]]^Õ[a]f[qakYdkg hgo]jkqkl]ekg^l`]?;;[gmflja]k& ÉA^o]l`afcYZgml$^gj]pYehd]$jgg^lgh \jan]fZqj]_mdYlagfl`Yloaddh]jeall`] ;mjj]fldqmk]\gfdqlgkmhhgjl]e]j_]f[q kgdYjafklYddYlagfk$qgmÌddk]]f]o afljg\m[lagfg^[geh]lalagfaflgl`]?;; k`gjlY_]k$l`]afl]j[gff][lagfeYq^gje players, including international energy utilities sector in the future. l`]ZYkakg^Y^mlmj]]f]j_qljY\af_eYjc]l$ k]jna[][gehYfa]k$[geh]laf_oal`dg[Yd While this process is in the early stages and, he says. [gehYfa]klghjgna\]l`]k]caf\kg^ according to Christian, “not a basis for new “But it will be up to the regulators of each services.” Zmkaf]kkeg\]dkja_`lfgo$Ê`]kYqkl`Yl [gmfljqlg\][a\]`goem[`[geh]lalagf Bright future l`]f]plÕn]q]Yjkoaddk]]l`]Z]_affaf_ they will allow, and utilities will need to g^Yf]o\Yof^gjl`]k][lgj&9ko]ddYk hj]hYj]^gjl`]\a^^]j]flghlagfkl`YleYq Despite the challenges, Christian is [geh]lalagf$l`][`Yf_]koadd\jan]l`] ]ngdn]afl`]ajkh][aÕ[eYjc]l&Ê ghlaeakla[l`Yll`]^gjl`[geaf_[`Yf_]klg ^mjl`]j\]n]dghe]flg^j]f]oYZd]]f]j_q$ the GCC utilities sector will bring positive Learning lessons from other the introduction of feed-in tariffs and the dgf_%l]jeZ]f]Õlk& jak]g^Éhjgkme]jkÊo`gZgl`[gfkme]Yf\ markets ÉL`]_j]Yl]kld]kkgfo][Yfd]Yjf^jge k]ddl`]aj`ge]%_]f]jYl]\]d][lja[alq& Christian says the GCC utilities have the gl`]jeYjc]lkak`gol`]hj]kkmj]gf “There is still a way to go but, once in place, ghhgjlmfalqlgd]Yjf^jgegl`]j_dgZYd mladala]k^jge[geh]lalagf[Yf\jYeYla[Yddq these changes will attract new players eYjc]lkl`YlYdj]Y\q]ph]ja]f[]\l`]k] ]f`Yf[]]^Õ[a]f[qYdgf_l`]nYdm][`Yaf$ lgl`]eYjc]lo`ghjgna\]f]ok]jna[]k challenges. af[dm\af_Z]ll]j[mklge]jk]jna[]&Ê lgl`]]f\[mklge]jkYf\Ydkglgl`] “One of the key lessons is that utilities often @]kYqk`]ak]fbgqaf_kmhhgjlaf_mladala]k existing utilities. mf\]j]klaeYl]l`]aehY[lg^[geh]lalagf oal`eYfY_af_l`]k][`Yf_]kYf\ “I expect we will see, as in other parts of the and the need to adopt their operating preparing for the future. “We are bringing ogjd\$l`Ylmladala]kfgdgf_]j[Yhlmj])(( eg\]dk]YjdqY`]Y\g^j]_mdYlgjq[`Yf_]k to the GCC the insights that we have of the value chain, but, especially on the lgkY^]_mYj\l`]ajeYj_afk& _Yl`]j]\gn]jl`]hYkl*(q]Yjk^jgegl`]j _]f]jYlagfka\]$f]oeYjc]l]fljYflkoadd eYjc]lko`]j][geh]lalagfoYk]ngdnaf_& É9fgl`]jYkh][lakl`]afljg\m[lagfg^ klYjllghdYqYeYbgjjgd]& ^]]\%aflYja^^kYf\gl`]jaf[]flan]k[`]e]k “By applying the global lessons learned, we ÉL`][`Ydd]f_]^gjl`]af[meZ]flmladala]k lgY[[]d]jYl]l`]aehd]e]flYlagfg^ `]dhmladala]k`]j]Ynga\l`]eaklYc]kl`Yl oaddZ]Õf\af_l`]ja_`lZmkaf]kkeg\]d renewable energy. GCC countries need `Yn]Z]]feY\]afgl`]j[gmflja]kYf\ lgkladd_]f]jYl]l`]eYj_afkl`]qf]]\af to get these right to incentivize the kmhhgjll`]eYkl`]qZmad\YZja_`l^mlmj] the future.” best technologies and avoid the kind of for the GCC countries.” mf^g[mk]\aehd]e]flYlagfo]`Yn]k]]faf gl`]jeYjc]lk&Ê Christian von Tschirschky HYjlf]j$E=F9Hgo]jMladala]kD]Y\]j [`jaklaYf&ngflk[`ajk[`cq8Y]&]q&[ge #1/)-.**./,0( ;`jaklaYfngfLk[`ajk[`cq`Ykegj]l`Yf)/q]Yjkg^k]fagj eYfY_]e]fl[gfkmdlaf_]ph]ja]f[]Y[jgkkYddYkh][lkg^l`] electricity and water value chain. For the past six years, Christian has supported the power and utilities industry in the GCC to prepare for the future, \]n]dghkmklYafYZd]Zmkaf]kkeg\]dkYf\ljYfk^gjel`]ajgh]jYlagfklgoYj\d]Y\af_ hjY[la[]k&@]`Ykkmhhgjl]\?;;_gn]jfe]flkaf\]n]dghaf_j]f]oYZd]Yf\fm[d]Yj ]f]j_q$Yko]ddYkkljYl]_a]kYjgmf\l`]keYjlY_]f\Y& 3 | Powering the Gulf How we can help =QÌkl]Yekafl`]?;;Yj]kmhhgjlaf_ mladala]klghj]hYj]Yf\eYfY_][mjj]fl Yf\^mlmj][`Ydd]f_]k^jgekljYl]_qlg aehd]e]flYlagf&=Q`]dhklg\]n]dgh l`]ja_`lgh]jYlaf_eg\]dk$\]Õf]l`] kmalYZd]_]f]jYlagfeap$aehd]e]fll`] keYjlY_]f\Y$eYfY_]\]eYf\%ka\] eYfY_]e]flhjg_jYek$Z]f[`eYjc gh]jYlagfk$aehjgn]]^Õ[a]f[qYdgf_l`] nYdm][`Yaf$]f`Yf[][mklge]j^g[mkYf\ support the introduction of enterprisejakceYfY_]e]flkgdmlagfk&O]Yj] Ydkgogjcaf_oal`mladala]klg`]dhl`]e j]na]o$ghlaear]Yf\eYfY_]l`]ajdYj_] [YhalYdhjg_jYek& EY t9kkmjYf[]tLYptLjYfkY[lagfkt9\nakgjq About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence afl`][YhalYdeYjc]lkYf\af][gfgea]kl`]ogjd\gn]j&O]\]n]dgh gmlklYf\af_d]Y\]jko`gl]Yelg\]dan]jgfgmjhjgeak]klgYddg^gmj stakeholders. In so doing, we play a critical role in building a better working ogjd\^gjgmjh]ghd]$^gjgmj[da]flkYf\^gjgmj[geemfala]k& =Qj]^]jklgl`]_dgZYdgj_YfarYlagf$Yf\eYqj]^]jlggf]gjegj]$g^l`] e]eZ]j^ajekg^=jfklQgmf_?dgZYdDaeal]\$]Y[`g^o`a[`akYk]hYjYl] d]_Yd]flalq&=jfklQgmf_?dgZYdDaeal]\$YMC[gehYfqdaeal]\Zq _mYjYfl]]$\g]kfglhjgna\]k]jna[]klg[da]flk&>gjegj]af^gjeYlagfYZgml gmjgj_YfarYlagf$hd]Yk]nakal]q&[ge& About EY’s Global Power & Utilities Center AfYogjd\g^mf[]jlYaflq$[`Yf_af_j]_mdYlgjq^jYe]ogjckYf\ ]fnajgfe]flYd[`Ydd]f_]k$mladalq[gehYfa]kf]]\lgeYaflYafYk][mj] and reliable supply, while anticipating change and reacting to it quickly. =QÌk?dgZYdHgo]jMladala]k;]fl]jZjaf_klg_]l`]jYogjd\oa\]l]Yeg^ hjg^]kkagfYdklg`]dhqgmkm[[]]\ÈYl]Yeoal`\]]hl][`fa[Yd]ph]ja]f[] in providing assurance, tax, transaction and advisory services. The Center ogjcklgYfla[ahYl]eYjc]llj]f\k$a\]fla^ql`]aehda[YlagfkYf\\]n]dgh hgaflkg^na]ogfj]d]nYflk][lgjakkm]k&MdlaeYl]dqal]fYZd]kmklg`]dhqgm e]]lqgmj_gYdkYf\[geh]l]egj]]^^][lan]dq& ¡*(),=Q?EDaeal]\& 9ddJa_`lkJ]k]jn]\& =Q?fg&<P(*,;K?'?K;*(),')+)/1)+ ED None Afdaf]oal`=QÌk[geeale]fllgeafaear]alkaehY[lgfl`]]fnajgfe]fl$l`ak\g[me]fl has been printed on paper with a high recycled content. L`akeYl]jaYd`YkZ]]fhj]hYj]\^gj_]f]jYdaf^gjeYlagfYdhmjhgk]kgfdqYf\akfglafl]f\]\lg be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com
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