The Arab Petroleum Investment Corporation (APICORP) announced that the Middle East and North Africa region will require nearly $209 billion in electricity investment over the next five years, 32% of which will be used for transmission and distribution.
In a recent report, APICORP said the region will need to add 88 GW of installed capacity by the end of 2023. Most of the capital needs in the energy sector in the Middle East and North Africa will be used in the power sector, with renewable energy accounting for 34%.
The Middle East and North Africa region will need to install 88 GW of generating capacity between 2019 and 2023, which is expected to translate into nearly $ 142 billion in investments in the power generation sector with nearly $ 142 billion in investment and transmission and distribution.
The report points out that the private sector, which is critical to risk management and financing, still relies heavily on reforms, as government investment still accounts for as much as 78%.
Demand slowdowns in countries such as Saudi Arabia and the consequent over-building are expected to continue, even as the Kingdom of Saudi Arabia is beginning to reform its power sector.
From 2007 to 2017, electricity consumption in the Middle East and North Africa increased by 5.6%. This is driven by rapid economic growth, industrialization, rising income levels, high population growth rates and urbanization, coupled with low electricity prices.
Gulf states are able to match this growth with scaled capacity, but countries outside the Gulf Cooperation Council have been struggling to keep up with growing demand.
Providing reliable and affordable electricity is still important to the government and is critical to the stability of nations. It is also important to improve energy efficiency and support the public with smarter, more responsible consumption while addressing infrastructure and regulatory barriers.
Therefore, APICORP expects that electricity demand growth will slow to around 3.8% in the next five years. APICORP estimates that in the next five years, there may be nearly $350 billion invested in the power sector in the Middle East and North Africa, with renewable energy accounting for 34% of electricity investment and 12% of total energy investment.
Jordan and Morocco lead the region through renewable energy initiatives. The proportion of renewable energy in Morocco to total power generation is planned to reach 42% by 2020.
By the end of 2018, Saudi Arabia had an installed capacity of 88.5 GW, equivalent to a quarter of the total capacity in the Middle East and North Africa. In 2017, the total peak demand was 70 GW, keeping the country's reserve margin at a healthy level of 21%. After decades of rapid growth, demand growth has slowed significantly. Slow population growth is a major factor, and lower-than-expected economic growth is also putting downward pressure on electricity demand.
The United Arab Emirates launched its 2050 energy strategy in 2017, aiming to double the contribution of clean energy to meeting electricity demand by 5050 by 5050. Solar power plays an important role in its plans, and once its $13.7 billion solar park is fully operational in 2030, it is expected to account for 25% of the power structure.
The UAE needs to invest at least $16.2 billion to meet the projected additional 8 GW capacity requirements for the medium term. The country is vigorously promoting its energy diversification in the energy mix. “We estimate that nearly 14 GW of capacity increase is already underway.”
As for Egypt, electricity demand growth rate was 4.6% between 2015 and 2017, and is expected to grow to 5.1% by 2023. “Egypt will need to invest $20 billion in power generation and further invest $10 billion in transmission and distribution infrastructure. By 2023, this will increase the capacity of the most populous countries in the Middle East and North Africa to 63 GW.”
APICORP estimates that Iraq will need to invest $21 billion over the next five years to increase its generation capacity to 30 GW.
Source: Cable Network