GCC requires $85bn to add 69GW in power generation
Currently, the GCC represents 47%, or 148GW, of the entire MENA power-generating capacity. Despite this large capacity, the GCC will require $85bn for the addition of 69GW of generating capacity and another $51bn for T&D over the next five years
The GCC continues to witness one of the highest growth rates in demand for electricity primarily due population growth and urbanisation, improvements in income levels, industrialisation, and low electricity prices, a new report by Apicorp Energy Research has revealed.
Currently, the GCC represents 47%, or 148GW, of the entire MENA power-generating capacity. Despite this large capacity, the GCC will require $85bn for the addition of 69GW of generating capacity and another $51bn for T&D over the next five years.
Saudi Arabia leads the drive to make the necessary capacity additions by 2020. Estimated capacity stood at around 80GW in 2015, with SEC representing around 60GW.
“We estimate that the country will need to invest $71bn to increase capacity to 114GW. The Kingdom will meet rising demand with 28GW of capacity already in the pipeline,” says the Apicorp report.
Major projects include the 3.1GW Yanbu 3 plant, expected on line in 2016, and the 2.6GW Shuqaiq plant. SEC secured a loan of $1.4bn from Japanese banks in January and raised $0.7bn in 2015 from local banks Samba and NCB to help with the expansion. The state utility has received government and capita l-markets funding for more than $34bn since it launched its first sukuk in 2007. SEC is also planning a $3.3bn back-up cred it facility.
The UAE needs to invest $34bn to meet the 17GW capacity addition needed over the medium term. The country experiences periodic blackouts and hopes to alleviate this by integrating the seven emirates’ natural gas-distribution networks. The UAE is pushing strongly to diversify its energy sources in the power mix.
“We estimate that 9.4GW of capacity additions are already in execution. The majority of power is generated using natural gas. However, Abu Dhabi’s Barakah nuclear-power plant will see four reactors come on line between 2017 and 2020 totalling 5.6GW. The project will cost approximately $20bn,” said the report.
Kuwait’s estimated capacity in 2015 was around 16GW but will need to reach 22GW by 2020, requiring $12bn of investment. In the medium term, the country has five power projects in the pipe line, which will add 5.8GW of capacity. They include Al-Zour North 1 and 2, each with a capacity of 1.5GW. Al-Khairan will add capacity of 2.5GW. The project is led by France’s Engie and represents Kuwait’s first public-private partnership. The Ministry of Electricity and Water will buy electricity supplied from the power plant for 40 years.
In Oman, rising demand will require generation capacity to grow at an annual rate of 9.6%. The country will need to add 4.8GW in the medium term, involving investment of $8bn. Current medium-term plans are for development of plants with combined capacity of 3.3GW. Two major pro jects are the 3.2GW Ibri & Sohar 3 independent-power producer (IPP) and the 445MW Salalah 2 IPP, both due on line towards the end of the decade.
The country also plans to integrate renewables in the power m ix; contracts have already been awarded for the 50MW Harweel wind farm.
Estimates suggest that Qatar will need to invest around $9bn to add 5.2GW to meet rising demand in the medium term: $6bn in generation and $3bn in T&D. Qatar has not built additional capacity over the past five years because it already boasts adequate capacity of 8.8GW.