ODD BEDFELLOWS: OIL RICH KUWAIT SEEKS ENERGY

UNCLAS SECTION 01 OF 02 KUWAIT 001037 SENSITIVE SIPDIS STATE FOR NEA/ARP, EEB/ESC/IEC/EPC, ENERGY FOR GEORGE PERSON E.O. 12958: N/A TAGS: ENRG EPET SENV KU SUBJECT: ODD BEDFELLOWS: OIL RICH KUWAIT SEEKS ENERGY EFFICIENCY REF: KUWAIT 823 ¶1. (SBU) SUMMARY: GCC nations have the highest per capita energy consumption rates in the world, leaving some Kuwaitis in search of more efficient energy sources or renewable ones to decrease its reliance on domestic crude oil. Although Kuwait has the fifth largest proven oil reserves in the world, it is using an ever-increasing amount of its oil and gas production domestically (reftel). According to the Ministry of Electricity and Water (MEW),Kuwait's maximum available generating capacity is 10.9 gigawatts per day. At peak demand Kuwait's Institute for Scientific Research (KISR),estimates that Kuwait uses roughly 10 gigawatts per day and projects a consumption increase of 6-7% per year. Rampant consumption is exacerbated by the fact that while, on average, the GoK pays 16 fils per kilowatt hour (6 cents per kilowatt hour) for electricity, citizens pay 2 fils per kilowatt hour (two-thirds of a cent per kilowatt hour). On Oct. 13, Econoff, with DOE official and consultants, met with officials from the Ministry of Electricity and Water (MEW), the Ministry of Public Works (MPW) and KISR scientists to discuss Kuwait's rampant electricity demand, long-term prospects for standardizing GCC codes that are compliant with U.S. business standards for green buildings and windows, and options for extending the life of oil through partnership with DOE's Middle Eastern Regional Energy Efficiency (MEREE) Initiative. END SUMMARY. MEW to DOE: HELP US DECREASE EXPENSES, PEAK LOAD DEMAND ¶2. (SBU) MEW officials, including Abdullah A. Sanqour, Assistant Undersecretary for the Power Transfer Network, listened intently to the DOE presentation on Oct. 13, about partnership and standardized codes, but asked only one question: "How can Kuwait immediately improve its electrical efficiency, particularly during peak load hours, to decrease the threat of blackouts and the cost of electricity to the government?" The GoK's heavily subsidized electricity industry leaves it with limited options. On average, the GoK pays 16 fils per kilowatt hour (6 cents per kilowatt hour) for electricity, while Kuwaitis pay 2 fils per kilowatt hour (two-thirds of a cent per kilowatt hour). GoK officials have noted that raising electricity rates is not an option politically. DOE consultants suggested improving building standards to increase energy efficiency and possibly to redirect the savings generated to other social welfare programs, which could address some of the public criticisms. DOE also suggested train the trainer workshops through the MEREE Initiative to help MEW energy auditors with addressing peak load issues. QUENCHING THE HOSPITAL DROUGHT, NEW ELECTRICITY DEMANDS ¶3. (SBU) Despite the skewed supply-demand curve for electricity, Husam Bader Al-Tahous, Assistant Undersecretary for Construction Projects for the Ministry of Public Works (MPW),said that his ministry has extensive construction plans including eight new hospitals to be constructed, to quench Kuwait's hospital drought. Al Tahous said that no public hospital has been built in the last 20 years. The largest of these new hospitals, Jaber Al-Ahmed Hospital, is currently under tender; with its 1100 beds, it will be the largest hospital in the Gulf. Al-Tahous admitted that the construction of Jaber Al-Ahmed Hospital had been delayed, asserting that rampant increases in building material costs had been worked into the price of the construction tenders, driving up the cost substantially. With the collapse in primary material costs, MPW realized that they could develop substantial savings by retendering. ¶4. (SBU) Al-Tahous asserted that Jaber Al-Ahmed Hospital, with a budget of KD 325 million (USD 1.1 billion) would need a new power plant substation built to protect it from blackouts similar to those in 2006 - 2007 (reftel). Al-Tahous also noted that MPW has 109 projects in its portfolio, 35 of which are currently under construction and 20 of which are in the tendering process. Al-Tahous said that he is keen on his consultants designing for maximum efficiency and he has asked them to consider how they can harvest the wind and sun for energy. DOE consultants suggested a pilot project engaging local building design consultants in best practices. This pilot initiative would serve as a teaching tool for domestic university students and as a capacity building tool in cooperation with the MEREE Hub project in Jordan. GOK'S INCREASING RELIANCE ON ITS OWN PRODUCT KUWAIT 00001037 002 OF 002 ¶5. (SBU) In conversations with Econoff and DOE representatives on Oct. 13, KISR scientists noted that Kuwait uses nearly 15% of its oil and gas production for local consumption. KISR projects that consumption will increase by around 6-7% per year. According to KISR's estimates, electricity and water generation requirements for MEW take up about 55% of the domestic primary energy use; transport another 19%; and petrochemical and other industries use a further 25%. Sixty percent of electricity generated is used by the residential sector, while 20% is dedicated to the industrial sector and 14% by the commercial sector. By contrast, the government uses about 5% of electricity generated. These consumption statistics are the driving force behind KISR's energy efficiency and conservation initiatives. KISR is reviving the GoK's interest in harvesting solar and wind energy technologies, primarily to enhance efficiency in air-conditioned buildings. However, a perceived bottleneck is the lack of government implementation of KISR recommendations. ¶6. (SBU) KISR recommended holding a GCC workshop by April 2010, administered by the USG and hosted by the GoK/KISR, to establish a uniform GCC energy agenda and a committee dedicated to deploying energy efficiency technologies in the desert region, as part of the MEREE Initiative. DOE agreed to send a letter of invitation to KISR for inclusion in the MEREE Initiative. THE WAY FORWARD: KISR, DOE AND STATE PARTNERING ¶7. (SBU) Additionally, KISR requested more interaction with U.S. laboratories to gain technical support and human capacity building opportunities. KISR officials reiterated their commitment to establish a window laboratory to support a National Fenestration Rating Council (NFRC)-like rating program. KISR agreed to review the opportunity to participate in the International Green Construction Code (IGCC),by following up with DOE and its consultants. Finally, KISR agreed to explore comparative analysis for the current Kuwait Energy Efficiency Code and the International Energy Conservation Code. BACKGROUND ¶8. (SBU) KISR and MEW's first energy conservation program was implemented in 1983. Program revisions began in 1995 and are still under consideration with MEW. KISR's suggested revisions include practice changes, energy audits, optimization of water consumption in cooling towers and the evaluation of district cooling viability in Kuwait. MEW enforces the current code by controlling the maximum power connection for the A/C system and lighting. According to KISR, energy conservation code revisions have saved the GoK over KD 3 billion (USD 10.4 billion). KISR is currently working to reduce peak power demand in government buildings. KISR noted that extensive pre-closing treatment (turning down the A/C an hour before the building closes and relying on existing coolant) and time of day controls (turning off the A/C during low traffic hours) in government buildings were very successful in reducing peak power demand, with limited expenditure. Between 2004-2007, the Kuwaitis reduced peak power demand by over 30% in 10 major buildings. KISR estimates a nationwide reduction initiative would reduce national peak power demand by 154 megawatts, with a capital savings of KD 62 million (USD 215.7 million dollars). The approach of peak power demand reduction received the Association of Energy Engineers "International AEE Award" for 2008 and the "Emirates Energy Award" for the same year. ¶9. (SBU) COMMENT: GoK officials' commitment to looking for both energy conservation and alternative supplies are welcome. However, absent a rational pricing mechanism, conservation is a hard sell- the incentive for Kuwaitis to change their attitudes toward energy consumption is not automatic. While an awareness campaign may produce temporary results, the default behavior is likely to be to continue to over consume energy. END COMMENT. ********************************************* ********* For more reporting from Embassy Kuwait, visit: visit Kuwait's Classified Website at: http://www.intelink.sgov.gov/wiki/Portal:Kuwa it ********************************************* ********* JONES