How artificial intelligence can revolutionize the Middle East energy sector

How artificial intelligence can revolutionize the Middle East energy sector
Global electric demand is expected to double by 2050, which experts like Dr Scott Nowson, AI lead at PwC Middle East, believe will require AI to help expand energy supply challenges. (Shutterstock)
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Updated 24 February 2020

How artificial intelligence can revolutionize the Middle East energy sector

How artificial intelligence can revolutionize the Middle East energy sector
  • Artificial intelligence will play a key role in the utilization of energy resources, says a new report
  • AI could potentially create value of up to $5.8 trillion annually in 19 different energy industries

ABU DHABI: Artificial intelligence (AI) will play a key role in the near future in the utilization of energy resources — including renewables such as solar and wind power — according to a report that draws on research conducted by the American management consulting firm McKinsey & Company.

The report, entitled “Artificial Intelligence: Transforming the Future of Energy and Sustainability,” highlights the potential for AI applications in the Middle East energy sector amid a flurry of investments in renewables such as solar and wind.

The study cites McKinsey’s estimates that AI technologies have the potential to create value ranging from $3.5 trillion to $5.8 trillion annually across 19 different energy industries. 

“We see AI and the full power of digital analytics coming up in all parts of the energy system, whether in oil or gas,” said Rachid Majiti, a senior partner at McKinsey & Company.

“It has been a tech-heavy industry. It is now, more than ever, cheaper to capture, process and store data, which means you can use much more complex and advanced algorithms to optimize your oil and gas operations, translating into more production output and lower costs.”

Majiti foresees AI and digital-analytics applications across the spectrum of energy sources, specifically renewables, given the intermittency of wind and solar-power generation and the consequent need for continuous grid stabilization on the basis of production output.

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$5.8 trillion

Value creation potential of AI across energy industries

He said there are significant opportunities for AI in the management of renewable energy generation as users will need to understand, monitor and adjust output patterns.

“If you cannot deal with the intermittency, you cannot count on it, which defies its purpose,” Majiti said.

“As consumers start playing a role as producers of electricity at home in the future, AI can help in managing demand and supply between the network and the source.”

Globally, electricity demand is forecast to double by 2050. The hope is that renewable energy will account for more than 50 percent of the power supply in the post-2035 period.

In the Middle East, energy demand is expected to grow by 10 to 15 percent by 2035 — and by 20 percent by 2050.

The energy scenarios are partly grounded on the alternative energy ambitions of Abu Dhabi and Saudi Arabia.

“The region has great potential,” Majiti told Arab News. “It has one of the best solar irradiance globally, and this high solar intensity allows to produce solar power at very competitive costs.

“Given the ambitious plans and competitiveness of its renewable energy, the region has an opportunity to continue maintaining its global energy leadership by combining its oil and gas leadership with its (expanding) renewables (portfolio).”

This will also allow regional governments to maintain the cost of energy low for consumers — both residential and industry — thus supporting an energy-intensive industry in the future.

Incidentally, several countries in the Arab region are introducing smart meters, which are designed to help utilities monitor power demand more closely — and both utilities and consumers to better understand consumption patterns.

This is an area in which Saudi Arabia is a pace setter: It recently awarded a $30 million contract for supplying and installing 120,000 smart meters in the Northern and West Northern regions of the Kingdom.

Once implemented, the scheme will effectively reduce operational costs and water waste and boost the accuracy of water use data, establishing in the process the infrastructure for further AI-based innovations.

Looking ahead, “Transforming the Future of Energy and Sustainability” underscores Saudi Arabia’s efforts to meet its goal of becoming the largest smart-grid developer in the Middle East and North Africa region.

The Kingdom has launched the process of establishing an advanced billing infrastructure comprised of 8.3 million smart meters, expected to be installed over the next seven years.

“The overall Saudi smart grid market is predicted to reach a value of $3.6 billion before 2030,” the study said.

Referring to the $500 billion Neom project, the new report says Saudi Arabia’s objective is to power the mega-city entirely through AI-based solutions using 100 percent renewable energy.

Such a plan will enhance AI’s influence on how the Arab region finds solutions to its urban energy challenges.

Dr. Scott Nowson, AI lead at PwC Middle East, describes AI’s potential for disrupting the Middle East’s renewable energy sector as enormous.

Take demand prediction, which is a significant consideration in any energy market. “With a dependency on ever-changing environmental factors — like weather — being able to accurately model supply from renewable sources is very important,” Nowson said.

“Another application of AI would be machine learning to determine the best locations for new solar-panel placements.”

Nowson says the transition to a sustainable energy model is particularly important for the Gulf Cooperation Council as the region represents some of the largest producers of oil per capita in the world.

“It’s in the global interest that we explore alternatives,” he told Arab News. “But our latest CEO survey tells us we still have some way to go when it comes to renewables.”

The 2020 Global PwC CEO survey, launched in Davos, found that while recognition of opportunities from climate change initiatives has more than doubled in the last decade, the region is still playing catch up when compared to global peers.

“But no place in the world is going through the change and initiatives we are witnessing here in the region,” Nowson said.

“Neom is a case in point. That is why I strongly believe in the potential of AI to support and help accelerate both production and consumption of renewable energy and enable the region to become a world leader on that front.”

In the near future, Nowson anticipates increasing investments in AI application in renewable energy, not just for deployment but also in research and development.

“This could be through material science for more efficient solar cells, exploration of biofuels, or using complex simulations to understand how to run our cities in the most environmentally efficient manner,” he said.

A second report by McKinsey, “Global Annual Energy Perspective,” which offers a detailed outlook across 146 countries, provides more proof that energy systems around the world are going through rapid transitions.

The study anticipates a significant rise in energy demand in the Middle East due to population increase, economic expansion and industrial development.

“The region also has one of the highest energy intensities, both on a per capita basis as well as a per unit of GDP basis,” Majiti said.

“This results in a higher potential for savings from energy efficiency from households in the Middle East.”

To meet the projected higher energy demand, significant capital investments have been made by Middle East governments and the private sector.

More attention is now being given to energy efficiency as governments take action through efficiency programs, prompting consumers to use different appliances.

“Consumers are becoming more aware of energy efficiency to help reduce their bills,” Majiti said. “The good news is that energy demand will still grow, and energy is a key ingredient of economic growth.”

Nevertheless, “Global Annual Energy Perspective” estimates lower future growth rates for energy in the Middle East, compared with historical data. This suggests that conservation efforts are leading to changes in energy-use behavior that are resulting in a positive impact on energy demand.

“On the supply side, the biggest evolution we are seeing is the increasing role of renewables in the energy mix in the Middle East,” Majiti said.

“Globally, renewables have already started to accelerate, contributing to a significant share of the energy mix.”


Big banks see more than half of staff in office in Q3

Big banks see more than half of staff in office in Q3
Updated 26 February 2021

Big banks see more than half of staff in office in Q3

Big banks see more than half of staff in office in Q3

COPENHAGEN: Global financial institutions plan to have more than half of staff back in offices during the third quarter, up from 10 percent-15 percent now, but none are envisaging a full return anytime soon, the head of Danish services group ISS said on Thursday.

ISS provides services ranging from call centers to office cleaning, catering and security to more than 200,000 companies in 60 countries, including UBS and Deutsche Telekom.

“Many of our customers in banking, consulting and service industries are now very eager to get employees back to the office,” Chief Executive Jacob Aarup-Andersen said in an interview.

“They tell us about lack of innovation, less engagement among employees working from home and the corporate culture suffering,” he said.

But while global banking customers in general expect to have more than 50 percent of employees back on site during the third quarter, none of ISS’ customers are yet speaking about returning 100 percent of the workforce to offices, Aarup-Andersen said.

HSBC said this week it planned to nearly halve its office space globally in a sign the pandemic could mean permanent changes to working patterns, as companies prepare to reduce office space and allow employees more flexibility in working from home.

Aarup-Andersen said earlier he expected office space globally to shrink by 10 percent-15 percent over the next three years.

ISS on Thursday said sales fell 10 percent last year to 69.8 billion Danish crowns ($11.5 billion), hit by weakness in catering, retail and hotel services.


Aston Martin says it is back on the road to profitability

Aston Martin says it is back on the road to profitability
Updated 26 February 2021

Aston Martin says it is back on the road to profitability

Aston Martin says it is back on the road to profitability
  • British carmaker expects ‘to see the first steps toward improved profitability’

LONDON: Aston Martin expects to almost double sales and move back toward profitability this year after sinking deeper into the red in 2020, when the luxury carmaker was hit by the pandemic, changed its boss and was forced to raise cash.

The British company’s shares jumped 9 percent in early Thursday trading after it kept a forecast for around 6,000 sales to dealers this year as new management turns around its performance.

The carmaker of choice for fictional secret agent James Bond has had a tough time since floating in 2018, as it failed to meet expectations and burned through cash, prompting it to seek fresh investment from billionaire Executive Chairman Lawrence Stroll.

The firm made a 466-million pound ($660 million) loss last year, compared with a 120 million pound loss in 2019, as sales to dealers fell by 42 percent to 3,394 vehicles, hit by the closure of showrooms and factories due to COVID-19.

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Aston said demand for its first sport utility vehicle, the DBX, which rolled off the production line at its Welsh plant in 2020, was strong in a lucrative segment of the market it entered to widen its appeal.

For 2021, it expects “to see the first steps toward improved profitability” but is still likely to post a pre-tax loss, the carmaker said.

“I am extremely pleased with the progress to date despite operating in these most challenging of times,” Stroll said.

Aston said demand for its first sport utility vehicle, the DBX, which rolled off the production line at its Welsh plant in 2020, was strong in a lucrative segment of the market it entered to widen its appeal.

The model accounted for 1,516 of deliveries to dealers last year and the company expects further growth in its first full-year of sales, including in the key market of China, where rivals such as Bentley are also seeing high demand.

“We had not even a half-year DBX production in wholesome so probably we are going to see over-proportional growth in China,” Chief Executive Tobias Moers, who took over in August, told Reuters.


Diamond tycoon Modi loses bid to avoid extradition to India

Diamond tycoon Modi loses bid to avoid extradition to India
Updated 26 February 2021

Diamond tycoon Modi loses bid to avoid extradition to India

Diamond tycoon Modi loses bid to avoid extradition to India
  • District Judge Samuel Goozee ruled in London that the fugitive jeweler has a case to answer before the Indian courts

LONDON: Diamond tycoon Nirav Modi lost his bid Thursday to avoid extradition from Britain to India to face allegations he was involved in a $1.8 billion bank fraud.

District Judge Samuel Goozee ruled in London that the fugitive jeweler has a case to answer before the Indian courts. Modi, whose jewels once adorned stars from Bollywood to Hollywood, has been held without bail in London since he was arrested in the capital in 2019.

Goozee ruled that there was enough evidence to prosecute him in his homeland, and dismissed Modi’s argument that he would not be treated fairly in India.

Indian authorities have sought Modi’s arrest since February 2018, when they alleged companies he controlled defrauded the state-owned Punjab National Bank by using fake financial documents to get loans to buy and import jewels.

Modi is also accused of witness intimidation and destroying evidence. Police in India later raided the homes and offices of Modi and business partner Mehul Choksi, seizing nearly $800 million in jewels and gold.

Modi, 49, has refused to submit to extradition to India and denies the fraud allegations. He sought political asylum in the UK

The extradition matter now goes to the UK Home Office, which will make the final decision. Modi has 14 days from that decision to appeal.

Modi, who wore a dark suit for Thursday’s hearing, showed little emotion as he appeared by video link from Wandsworth Prison in southwest London.

Amit Malviya, a spokesman for India’s governing Bharatiya Janata Party, said Thursday’s ruling was “a shot in the arm for the agencies pursuing the fugitive,” adding that the Indian government is committed to “bring all economic offenders to book.”

The son of a diamond merchant, Modi built an international jewelry empire that stretched from India to New York and Hong Kong. Bollywood star Priyanka Chopra became the face of his eponymous brand and Hollywood actress Naomi Watts appeared with Modi at the opening of his first US boutique in 2015.

Forbes magazine estimated Modi’s wealth at $1.8 billion in 2017, but he was removed from the publication’s billionaires’ list after the fraud allegations.


Oil hovers near 13-month highs as storm dents US output

Oil hovers near 13-month  highs as storm dents US output
Updated 26 February 2021

Oil hovers near 13-month highs as storm dents US output

Oil hovers near 13-month  highs as storm dents US output
  • Severe winter storm in Texas caused US crude production to drop by more than 10 percent

LONDON: Oil prices extended gains for a fourth session on Thursday to reach the highest levels in more than 13 months, underpinned by an assurance that US interest rates will stay low, and a sharp drop in US crude output last week due to the storm in Texas.

Brent crude futures for April gained 33 cents, 0.49 percent, to $67.37 a barrel by 0925 GMT, while US West Texas Intermediate crude for April was at $63.45 a barrel, up 23 cents, 0.36 percent.

Both contracts hit their highest since Jan. 8, 2020, earlier in the session with Brent at $67.70 and WTI at $63.79. The April Brent contract expires on Friday.

An assurance from the US Federal Reserve that interest rates would stay low for a while weakened the US dollar, while boosting investors’ risk appetite and global equity markets.

A severe winter storm in Texas has caused US crude production to drop by more than 10 percent, or 1 million barrels per day (bpd) last week, the Energy Information Administration said on Wednesday.

“Combined with a dovish Jerome Powell and an already tight physical market, oil prices exploded higher,” Jeffrey Halley, senior market analyst for Asia Pacific at OANDA said.

Combined with a dovish Jerome Powell and an already tight physical market, oil prices exploded higher.

Jeffrey Halle, senior market analyst at OANDA

Fuel supplies in the world’s largest oil consumer could also tighten as its refinery crude inputs had dropped to the lowest since September 2008, EIA’s data showed.

ING analysts said US crude stocks could rise in weeks ahead as production has recovered fairly quickly while refinery capacity is expected to take longer to return to normal.

Barclays, which raised its oil price forecasts on Thursday, said it is seeing staying power in the recent oil price rally on a weaker-than-expected supply response by US tight oil operators to higher prices.

“However, we remain cautious over the near term on easing OPEC+ support, risks from more transmissible COVID-19 variants and elevated positioning,” Barclays said.

The Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, is due to meet on March 4.

The group will discuss a modest easing of oil supply curbs from April given a recovery in prices, OPEC+ sources said, although some suggest holding steady for now given the risk of new setbacks in the battle against the pandemic.

Extra voluntary cuts by Saudi Arabia in February and March have tightened global supplies and supported prices.


Experts discuss WhatsApp’s new privacy update

Experts discuss WhatsApp’s new privacy update
Updated 26 February 2021

Experts discuss WhatsApp’s new privacy update

Experts discuss WhatsApp’s new privacy update
  • “People have made this into a bigger issue than it really is”: cybersecurity expert

JEDDAH: As WhatsApp launches a new in-app banner in response to the backlash over its privacy issue, Saudi experts and users weigh in on the company’s strategy.

“Harvesting user data is part of Facebook’s strategy,” Abdullah Al-Gumaijan, cybersecurity expert, told Arab News.

“It seems this will never change, even if it costs them millions of users, like what happened to WhatsApp last month when they updated their policy,” he said. “Today, WhatsApp will force their users to accept a similar policy. However, this time around they made it very clear they will not share users’ actual conversations.”

As long as WhatsApp remains a free app, he added, Facebook will make sure to get what it can from its users’ data.

Fahd Naseem, a WhatsApp user, said: “People have made this into a bigger issue than it really is. Facebook and other social media platforms are already using the data; there’s nothing wrong in WhatsApp using it too.”

He told Arab News that this data helps the apps deliver better and more personalized ads to their users.

Fatimah Al-Maddah, owner of Labothecaire, said that the privacy issue does not concern her and her team. “We use services like Dropbox for sensitive matters, and if we need to discuss something, we normally call. So, we don’t risk our information to begin with.”

WhatsApp will allow users to review its privacy policy, and users will have to agree to the new terms or risk losing access to the app. The firm said that it was facing issues because of “misinformation” regarding the changes, which led users to believe that their information was accessible by WhatsApp’s parent firm, Facebook.

However, WhatsApp said that it would never allow that to happen and that its end-to-end encryption ensures that people on both ends of the conversation are the only ones who can read those texts; not even the company has the access to them.

In a blog post, the company clarified that it would be working hard to clear up confusion and that it would be sharing the updated plan for how it will ask users to review the terms of service and privacy policy.

“In the coming weeks, we’ll display a banner in WhatsApp providing more information that people can read at their own pace,” the blog post read.

The company also faced backlash because of the poorly worded terms in the previous update, which caused confusion and concern and resulted in users abandoning the app entirely and moving onto other platforms.