Power investment demand in the Middle East and North Africa

It is understood that in 2021, the electricity investment demand in the Middle East and North Africa will be close to 180 billion U.S. dollars to meet the increasing demand for electricity.

According to the report, “Governments continue to respond to this challenge by accelerating new projects and upgrading infrastructure to meet increasing demand, while encouraging private sector and financial institutions to participate in power industry investment.” Power trade in the Middle East and North Africa is now Far behind the international market, but there is huge potential.

The report suggests that governments of various countries can cooperate with neighboring countries to further explore the potential of electricity trading as a supplement to their increased production capacity. Although some national power grids in the Middle East and North Africa have been interconnected, transactions are still low, and they often only occur during emergencies and power outages. Since 2011, the member states of the Gulf Cooperation Council have conducted regional power trade through the Gulf Cooperation Council Interconnection Program (GCCIA), which can strengthen energy security and increase the economic benefits of efficiency.

According to GCCIA data, the economic benefits of interconnected power grids exceeded US$400 million in 2016, most of which came from saved installed capacity. At the same time, grid interconnection will also help make more efficient use of existing power infrastructure. According to estimates by the World Bank, the region’s power generation capacity utilization rate (capacity factor) is only 42%, while the existing grid interconnection capacity is about 10%.

Although we hope to strengthen cooperation and improve regional power trading, many challenges hinder progress such as energy security. Other challenges include the lack of strong institutional capabilities and clear regulatory frameworks, as well as limited idle capacity, especially during peak demand periods.

The report concluded: “The Middle East and North Africa region will need to continue to invest heavily in power generation capacity and transmission infrastructure to meet growing demand and energy reforms. The diversification of fuel structure is an unsolved problem in the region.”

Post time: Jul-02-2021