By 2021, the demand for power investment in the Middle East and North Africa reaches 180 billion U.S. dollars
Arab oil investment company Apicorp recently released a report said that by 2021, the Middle East and North Africa, the demand for electricity investment close to 180 billion US dollars to meet the growing power demand.
Apicorp said in the report, "Governments continue to address this challenge by accelerating new projects, upgrading infrastructure to meet growing demand while encouraging the private sector and financial institutions to participate in the investment in the power industry."
The report said that the power trade in the Middle East and North Africa now lags far behind the international market, but there is great potential.
Demand for electricity in the Arab world has continued to grow rapidly since 1980, and its consumption has increased tenfold. This surge can be attributed to several factors, including population growth, urbanization, industrialization and tariff reductions by government subsidies.
The report suggests that governments can work with neighboring countries to further explore the potential of electricity trading as a supplement to their increased capacity. Although some of the national grids in the Middle East and North Africa have interconnected at present, the transactions are still low, often only in emergencies and grid blackouts. GCC member countries have adopted regional GCCIA power trading since 2011, which can enhance the economic benefits of energy security and increase efficiency.
According to the World Bank report, electricity trade can save 170-250 billion U.S. dollars in the Arab world and reduce the required production capacity by 2,000-3,000 MW by better utilizing each other's existing production capacity. The GCCIA estimates that by 2038, GCC electricity trade could save as much as 24 billion U.S. dollars. At the same time, long-standing technical, institutional and political obstacles are major obstacles to trade in the region and the network in the region is still expected to be the least utilized in the world.
At the same time, electricity trading can bring significant economic benefits as oil prices fall and GCC government revenue declines.
According to GCCIA, the economic benefits of the interconnected power grid in 2016 exceeded 400 million U.S. dollars, with most of the revenue coming from the saved installed capacity. In the meantime, grid interconnection will also help make more efficient use of the existing power infrastructure. According to estimates by the World Bank, the region's capacity utilization (capacity factor) is only 42%, while the existing grid capacity is about 10%.
Despite the desire to strengthen cooperation and improve regional electricity trading, many challenges have hampered progress such as energy security. Other challenges include the lack of a strong institutional capacity and a clear regulatory framework, as well as limited idle capacity, especially at the peak of demand.
The report concludes: "The Middle East and North Africa will need to continue investing heavily in power generation and transmission infrastructure to meet rising demand and energy reforms, and the diversification of fuel structures is not yet fully resolved in the region."