Trade Arabia reported that the recent political unrest in the Middle East is likely to increase investment in power and water infrastructure as governments seek to maintain uninterrupted power and water supply to a growing population.
The task facing GCC utilities has just got harder. Political unrest in the wider Middle East has led several GCC governments to announce major investment programs in housing and social infrastructure. Such measures will only serve to increase the already high demands on the regional power and water sectors.
The report said that Saudi Arabia faces the biggest challenge. It had forecast that demand would reach 75,000 MW by 2019 up from 46,000 MW in 2010. However, the forecast does not take into account the February 2011 announcement by King Abdullah that some 500,000 new housing units would be built. This alone will add a further 5,000-6,000MW to the demand forecast. Similarly, Abu Dhabi has revised up its 2020 power demand forecasts by about 6,000 MW to 28,000 MW in light of the March 2011 announcement by UAE President Sheikh Khalifa Bin Zayed al Nahyan for increased investment in the Northern Emirates’ power and desalination sector.
Mr Angus Hindley research director at Meed and author of Meed Insight’s GCC Power & Desalination report series said that “Even before the announcements, demand for new power capacity was rising, 2010 peak power demand remained high across the GCC with both Qatar and Abu Dhabi each having to contend with a rate of 11% followed by Saudi Arabia at 10%. In the GCC alone some USD 65 billion will be required in increasing generating capacity and at least the same amount in expanding the transmission and distribution network.”
With some 11,000 MW of new capacity commissioned in 2010 utilities largely managed to accommodate the growth in peak demand. At the same time, the amount of new capacity contracted from the market in 2010 reached its highest level for four years at an estimated 14,000 MW. This was largely due to an unprecedented capacity program launched by Saudi Arabia which delivered contracts for 11,000 MW.
Perhaps the biggest challenge facing utilities in the coming years will be how to secure the necessary feedstock to power the new capacity. With the exception of Qatar all GCC states are facing increasingly tight gas markets leaving governments with little option but to pursue alternative energy production. In Saudi Arabia and Kuwait, liquid fuels, in the form of crude oil and diesel have overtaken gas as the largest source of feedstock. However, this has come at a high price with Riyadh alone burning an estimated 800,000 barrels per day in its power plants.
The increasingly high cost of burning liquid fuels and the environmental concerns over coal have left nuclear power as the favored option in much of the GCC. Although the Fukushima nuclear disaster in Japan is likely to delay some regional plans, there is a growing acknowledgement in the GCC that nuclear power will have to play a significant role in future if the high power demand growth is to be met and electricity shortages are to be averted.
(Sourced from Trade Arabia)
