In its recent report, Frost & Sullivan (News - Alert) predicted that The Gulf Cooperation Council (GCC) region is expected to invest nearly $73 billion in Power Generation and T&D projects and add 36 GW of generation capacity in the next five years.

At a time when smart grid technology has started to change the Power Transmission and Distribution (T&D) industry landscape globally, the GCC countries are reportedly lagging behind in smart grid adoption. According to Frost & Sullivan, there have been indications that this is set to change in the near future.

An investment in Power Generation and T&D is essential for the GCC countries as the region is undergoing a rapid urbanization and modernization process, creating a huge power generation demands. The above mentioned investment is expected to support the development commitments by the GCC countries and supplement their efforts at the expansion and modernization of the T&D networks.

In a press release, Frost & Sullivan said that currently, no smart grids are under development in the GCC. Few countries are making exception by pursuing pilot projects. In some countries, smart grid adoption is in a planning stage, which according to the research firm will take five to seven years to accelerate.

Despite this bleak picture, the smart grid adoption will gear up in a few years time according to Frost & Sullivan. The factors that are expected to drive smart grid adoption in the GCC region are infrastructure expansion, upgradation of the T&D infrastructure, reducing demand, increasing reliability and stability, and flexible tariffs among others.

In its report, Frost & Sullivan maintained that to accelerate the adoption of smart grids, the region has to change the business models for utilities, which according to international standard are inappropriate. The GCC Utilities stand to lose due to decreasing energy consumption, especially given the stringent moderation of tariff structures by the governments and regulators.

This challenge can be overcome through new regulatory models and business incentives that can provide some form of compensation to offset the utilities loss of revenues, for example, tax exemptions. The various incentives should be structured in a way, so that the utilities feel encouraged to invest in new technologies, which in turn would increase efficiency, clean energy production, and reduced demand.

“Smart Grids might not be the exact solution for all utilities. However, each utility needs to gain absolute clarity on the performance optimisation required in its case and seek a solution that fits with its needs. Benchmarking is a great way to do so,” Frost & Sullivan Energy and Power Systems Industry Manager Abhay Bhargava noted in a statement.

Frost & Sullivan maintained that if the region really wants to realize its smart grid dreams, it has to first calk out a clear smart grid strategy. Also, investment in facilitating infrastructure and distributed sources of generation, including renewables, along with raising consumer awareness about energy efficiency, and new beyond-the-meter technology will help to develop Smart Grids in the region, the research firm explained.

Earlier, Frost & Sullivan released a new analysis, entitled Electricity Storage Technologies: Market Penetration and Roadmapping research, which showed that electric energy storage systems are inscribed in the development strategies of intermittent renewable energy and electric vehicle (EV) developers, grid operators and utility companies.