24/04/2017 05:35 AST
The launch of the first phase of Saudi Arabia’s 9.5GW National Renewable Energy Program (NREP) early this year provides the latest illustration of the major changes occurring in the Middle East and North African power sector.Energy reforms needed in Middle East, North Africa
This has led to a raft of alternative energy projects being planned or implemented in the region.
MENA Power 2017, a new research report from Middle East business intelligence service MEED, shows that governments across the MENA region are making increasing commitments to achieve diversification in their power sectors to improve energy security and reduce reliance on gas imports, including detailed analysis on more than 60GW of planned renewable energy projects.
The move towards integrating renewable energy into development programs has been facilitated by the sharp drop in photovoltaic (PV) solar technology costs in recent years.
The cost of installing PV solar has fallen by 80 percent since 2007, and the three major PV solar projects tendered in the UAE since 2015 have all achieved, at the time, word record low tariffs. In particular, the 2.99 $cents a kilowatt hour ($c/KWh) tariff selected for Dubai’s 800MW PV project in 2016 was the first time that the cost of renewables had fallen below conventional fossil fuel plants. In addition to renewables, state utilities are also moving forward with plans for alternative energy, from nuclear power to clean coal.
Another key shift in the region’s power sector is the move towards increased private investment and privatization in the generation of electricity as governments cut budgets in response to the lower oil price. Saudi Arabia, the largest utilities market, is the leading example of this, with Riyadh preparing to sell off the first 20GW of its generation assets to private investors in 2017. Egypt and Oman are also undertaking preparations to significantly restructure and privatize large parts of their electricity markets.
The power sector is one of the most active segments in the MENA projects market at present, with few issues more pressing than the need to meet rising demand for electricity. Rapid population growth coupled with industrial and economic expansion are driving a sharp increase in consumption, with peak demand growth averaging 5.2 percent across the region in 2015. The pressure on governments to deliver uninterrupted electricity for residents and businesses increased further following the political uprisings in 2011, so utilities cannot afford to allow supply to fall out of step with demand.
While the collapse in oil prices since mid-2014 has caused the scaling back or cancelling of many projects deemed nonessential, investments in the power sector have continued to move ahead.
In 2015, the total available capacity reached an estimated 289,861MW for the countries analyzed in the MENA Power 2017 report, which was 15 percent more than the peak demand of 246,742MW. While the total nameplate installed capacity for the 14 countries was 307,164MW, the actual available power was much lower due to out-of-operation plants in countries such as Iraq and Saudi Arabia.
With a minimum 15 percent recommended reserve margin, representing the amount of unused available capacity at peak load as a percentage of total capacity, the region as a whole is in a race to build new capacity to keep ahead of peak demand growth and maintain sufficient reserve margins.
In the GCC, all of the utilities were able to meet demand in 2015. However, some were in a less comfortable place than others. Abu Dhabi, Bahrain, Kuwait and Saudi Arabia all had reserve margins of less than 15 percent during peak periods. Kuwait in particular, with a reserve margin of less than 9 percent, is a race to ensure installed capacity remains ahead of demand.
In the rest of the MENA region, several utilities are facing financial
Saudi Gazette
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