What’s behind Kuwait’s power cuts?

Kuwait implemented temporary power cuts in select industrial and agricultural areas this week as demand surged beyond available capacity. The power cut came as temperatures soared to nearly 38°, adding pressure to an already strained power grid. Summer temperatures in the Gulf country often exceed 50ºC.

But the cuts have started even before the scorching heat begins, highlighting the challenges facing one of the world’s wealthiest nations.

This is not the first time Kuwait has grappled with such electricity issues. Last summer, it resorted to rare scheduled outages as temperatures soared.

The country's dysfunctional political landscape is keeping the state in a cycle of instability, impeding long-term planning and execution, including within the power sector, said Jessica Obeid, energy policy consultant and founding partner at the UAE-based New Energy Consult. “This chronic crisis highlights how electricity reforms do not happen in a vacuum and are impacted by overall governance.”

The country has one of the most open political systems in the Gulf, with an elected parliament holding legislative power. However, tensions between the elected parliament and the government, appointed by the Emir and led by a member of the ruling family, often result in political and legislative gridlock, cabinet reshuffles and even parliamentary dissolutions.

Rising demand

Experts have long warned of an impending electricity crisis in Kuwait, citing indecision over the construction of new power stations to meet rising demand. Additionally, much of the country's power infrastructure is outdated and requires frequent maintenance.

The Ministry of Electricity, Water and Renewable Energy said on Wednesday that high loads and a need for maintenance to prepare power plants to run at full capacity this summer have prompted the temporary cuts to certain areas for limited hours.

Another key challenge in addressing the crisis is Kuwait’s subsidy-driven energy model. The government provides heavily subsidised electricity to residents, leading to high consumption as consumers have little financial incentive to reduce their usage.

While other Gulf nations, including Saudi Arabia, the UAE and Oman, have reformed subsidies to promote energy efficiency, Kuwait has been slower to implement reforms due to political resistance.

The country primarily relies on natural gas for electricity generation, but supply shortages have forced it to import liquefied natural gas (LNG) to bridge the gap. Qatar agreed last year to supply its neighbour with 3 million tonnes per annum (mtpa) of LNG for 15 years.

The government has also sought emergency electricity imports through the Gulf Co-operation Council’s Interconnection Authority, though such measures have limitations.

Analysts say Kuwait’s investment in the GCC's electricity grid has been vital in managing peak electricity demand, offering short-term relief, but it is not a long-term solution.

“This is not sustainable for Kuwait’s structural electricity issues, as it fails to address the root cause, and demand will continue to rise at unsustainable levels,” noted Ms Obeid. “Regional interconnections complement power sector reforms, but there is no substitute for robust energy planning and broader national reforms.”

Renewable energy

Kuwait has set a target of generating 15 per cent of its electricity from renewable sources by 2030, but progress has been slow.

Hefty fossil fuel subsidies have created obstacles by reducing the competitiveness of renewables, said Ms Obeid. “Also, the country's institutional framework lacks a dedicated authority to lead renewable energy development, creating regulatory uncertainty and reducing investor confidence. On the technical level, the grid weakness and limited flexibility compound the challenge of integrating renewable energy capacity. Achieving the renewable energy target will require institutional stability and immediate grid upgrades.”

In the 2024 Energy Transition Index, Kuwait ranked last among Gulf states and 104th globally, with a score of 48.6. For perspective, Sweden secured the top position with a score of 78.4.

"Unlike some of its Gulf neighbours such as the UAE, Qatar, and more recently Saudi Arabia, Kuwait has yet to significantly diversify its energy mix or invest in large-scale renewable energy projects,” Karim Elgendy, expert on energy transitions and climate policy and associate fellow at the Chatham House think tank, told The National.

"The cancellation of the 1.5GW Al Dabdaba solar plant project in 2020, for instance, has limited progress on this front and contributed to the crisis this year. Kuwait's structural lack of investment may also stem from a lack of long-term energy planning. Kuwait had 12 electricity ministers since early 2020,” he added.

Mr Elgendy believes the country's most sustainable path forward lies in accelerating energy diversification, particularly by tapping into its vast solar potential.

Beyond energy, Kuwait also lags behind its regional peers in economic diversification.

While Riyadh and Abu Dhabi have set ambitious diversification goals, investing heavily in everything from artificial intelligence to new cities, Kuwait remains largely dependent on oil revenue to sustain its expansive welfare state, with relatively little domestic investment in alternative sectors.

However, a policy shift took place last month when Kuwait passed a long-anticipated public debt law, allowing the government to borrow for the first time in eight years. Officials say this will help finance major projects, including a new port and airport terminal, while also laying the groundwork for diversifying government revenue streams beyond oil.