Mubasher: The Middle East and North Africa (MENA) region will need $260 billion in investments to meet the rising electricity demand over the next five years, the Arab Petroleum Investments Corporation (APICORP) has forecast.
The GCC governments have kept pace well with the spiraling electricity demand, the multilateral development bank focused on the energy sector said, noting that Saudi Arabia's recent hikes in electricity prices will slash demand growth.
"In the Mashreq region, inadequate investment and political instability have weighed on the power sector, and persistent blackouts continue to put pressure on governments to take action," APICORP noted.
The MENA region's electricity demand and consumption have been growing rapidly on the back of rising population growth and urbanisation, higher income levels, industrialisation, and low electricity prices, APICORP highlighted in a report.
In a bid to address this rising demand, APICORP has expected that MENA power capacity will need to expand by an average of 6.4% each year between 2018 and 2022.
The report also showed that MENA region needs about $152 billion in investments to add 117 GW of generation capacity, in addition to $108 billion for transmission and distribution projects.
The GCC currently makes up 47%, or 151GW, of current MENA power generating capacity, APICORP cited.
APICORP projects that GCC nations will need to invest $55 billion to generate 43 GW of additional electricity capacity and another $34 billion in transmission and distribution projects over the next five years.
“On the investment side, the required additional generating capacity in the GCC will be found in traditional and renewable forms of power generation. Saudi Arabia will lead the way in both, with the country needing to invest around $21bn, which will increase capacity to 92GW. Saudi Arabia is also kick-starting its renewable-energy initiative, seeking to develop 10GW of solar and wind energy by 2023,” APICORP said.
While the UAE has to invest at least $33 billion to meet its expected additional 16GW capacity requirement over the medium term, the Saudi Arabia-based development bank explained.
As for other GCC countries, Kuwait needs around $15 billion to generate 24GW by 2022, followed by Qatar, which needs $9 billion to add 4.2 GW, and Oman’s rising electricity demand will require an additional 4GW, according to APICORP’s report.