Cross-border electricity trading in the GCC countries, Egypt, Jordan and Iraq: Hourly market coupling or bilateral agreements?

Cross-border electricity trading in the Middle East and North Africa region can provide cost and environmental benefits. Several projects of interconnectors are on-going or under consideration in the region, and policymakers must develop the appropriate contractual scheme to trade electricity. Based on an economic dispatch model at the 2030 horizon, this paper investigates implications of the electricity trade in the Gulf Cooperation Council countries plus Egypt, Jordan, and Iraq. The model adopts an hourly resolution, accounting for time zone differences between countries, and considers current and future network interconnections. The results indicate that implementing an hourly market coupling, formulized as a regional cost-based power pool, can decrease the region's annual generation cost by 1.6 % on average, while avoiding 35 % of renewable curtailment and reducing carbon dioxide (CO 2 ) emissions by 8 million metric tons in 2030. Developing full-fledged regional markets in the region would require political commitment, time and financing. As an alternative compromise solution, we explore how bilateral long-term arrangements could support electricity trade. Specifically, we simulate and analyze physical contracts on the interconnector between Egypt and Saudi Arabia (the two largest power systems of the region), integrated to the rest of the region through volume coupling. The results show that the contracted volume profile of such contracts can significantly influence the benefits reached at the regional level. Among the volume profiles considered, the daily profile contract, which follows a daily pattern with an hourly timestep, provides the most benefits to the region. • Network-constrained economic dispatch for GCC countries, Egypt, Jordan and Iraq. • Simulations performed for 2030 with and without hourly electricity trading. • Annual variable generation cost decreases by 1.6 % with electricity trading. • The interconnection between Saudi Arabia and Egypt brings 20 % of the economic gain. • Quantitative analysis of contractual arrangements between Saudi Arabia and Egypt.