5.6GW to come online soon at Abu Dhabi’s $20b Barakah plant.
The UAE needs to invest $34 billion to meet the 17GW power capacity addition needed over the medium term.
Parts of the country experience a shortfall and it is hoped that this will be alleviated 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,” says an Apicorp energy research themed “Mena power investment: finance and reform challenges”.
The majority of power in the UAE is generated using natural gas. Dubai is considering a $27 billion green-power fund to aid its 2050 target of 75 per cent power generation through clean energy.
Solar power features heavily in its plans and is expected to account for 25 per cent of the generation mix once a $13.7 billion (5GW) solar park is fully commissioned in 2030.
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 $20 billion. Mena governments are prioritising investments in the power sector to feed rapidly-rising electricity demand.
“We estimate that in the period 2016-20, the region will need to invest $334 billion in its power sector. Of this, $198 billion will be needed to add 147GW of generating capacity, while the rest should be invested in transmission and distribution,” the report said.
In the GCC, governments have coped well with rising electricity demand.
As well as adding capacity, some of these countries have recently introduced limited energy-reform programmes.
Electricity demand in the Mena region has been growing quickly, driven by factors such as population growth and urbanisation, improvements in income levels, industrialisation, and low electricity prices. Looking ahead, these factors will continue to place greater demand on electricity-generation capacities. Mena economic growth has slowed compared with historical highs, but the International Monetary Fund still expects expansion of 2.9 per cent in2016,rising to 3.7 per cent in 2020.
The region’s population is also expected to grow at an average annual pace of two per cent in that period. To meet rising demand, we estimate that Mena power capacity will need to expand at an average annual pace of eight per cent between 2016 and 2020, which corresponds to additional capacity of 147GW. This would require $198 billion of investment in generation capacity and a further $136 billion for transmission and distribution.
“Governments have been accelerating their plans and our estimates show that 96GW of capacity additions are already in execution, with a combined investment of $117 billion.”
The GCC represents 47 per cent, or 148 GW, of current Mena power-generating capacity. Despite this large capacity, the GCC will require $85 billion for the addition of 69GW of generating capacity and another $51 billion for transmission and distribution over the next five years.
But declining oil revenues mean that GCC governments can no longer continue to support the provision of cheap power. Subsidy reforms announced earlier this year are part of a programme that aims to liberalise domestic energy prices over the medium term.