The power market is set to grow significantly this year with a huge increase in the value of contracts to be awarded by the Kingdom of Saudi Arabia, says new report by Ventures Onsite
The recent ‘GCC Power Market’ report published by Ventures Onsite, on behalf of Middle East Electricity, forecasts GCC power construction contractor awards to increase from USD 22.381 billion in 2016 to USD 25.523 billion in 2017. KSA is expected to register the highest contractor awards in 2017, at around USD 12.349 billion, an increase of over 50 per cent from its 2016 awards. Elsewhere in the GCC, the report predicts the value of power construction contract awards will also significantly increase in Bahrain, Kuwait and Oman. The GCC countries are also set to invest USD 252 billion over the next five years in projects for setting up new power production plants, distribution systems, and supply grids.
The GCC currently represents 47 per cent, or 148 GW, of the current MENA power-generating capacity, according to the Arab Petroleum Investments Corporation. Recent years have seen a steady rise in levels of energy demand in the GCC due to factors such as population growth, urbanisation, improvements in income levels, industrialisation, and low electricity prices. This trend looks set to continue in the coming years.
In order to meet this demand, the GCC power capacity needs to expand at an average annual pace of 8 per cent between 2016 and 2020. This will require USD 85 billion for the addition of 69 GW of generating capacity and another USD 52 billion for Transmission and Distribution over the next five years. This is accompanied by reforms to the structure of the electricity market, which are gradually picking up throughout the GCC. Governments have increased water, electricity and fuel prices to ease the burden on state budgets, which are part of a broader programme that aims to liberalise domestic energy prices over the medium-term. Recently, there has also been a pressing need for a shift towards smart power grids, as smart grids can reduce the stress on the grid, defer the investments for upgrades, improve the power system efficiency, and reduce emissions.
To support this growth phase, the organisers of Middle East Electrcity have, for the first time ever, created a Consultants Arena, which will see engineering consultants discuss key concepts and regulations such as projects management tools and the UAE’s green guidelines and regulations.
Speakers include Holley Chant, Executive Director Corporate Sustainability at KEO International Consultants, who will be discussing zero carbon projects and Abdulmajid Karanouh, Director & Head of Innovation Design, Facades & Sustainability at Ramboll, speaking on context inspired innovation. The aim of this platform is to give exhibiting companies and attendees more opportunity to network with world-class consultants.
Ahead of her talk at Middle East Electricity, which is taking place at the Dubai World Trade Centre on February 14-16, Holley Chant highlighted the heavily subsidized unit cost of energy, and incentivising energy efficiency in design and construction; “The elephant in the room for energy efficiency is the heavily subsidized unit cost of energy within the GCC. The Abdullah Bin Hamad Al-Attiyah Foundation for Energy & Sustainable Development November 2015 report states that this is as much as 66% for some GCC countries. Given the promising development of low carbon infrastructural energy generation projects, the hidden costs of subsidized energy are reducing. Nonetheless, addressing this difference would be the strongest incentive. Since utility costs are rising, a clear road map of future financial impacts would further support this stimulus.”
Currently, GCC government organisations and businesses are also witnessing the benefits of renewables as a cost-effective and reliable power source. The GCC countries have all targeted that 10 per cent of the power production comes from renewable sources of energy by 2020 and are rapidly moving towards realising this target. The key to renewable energy development in the GCC region is solar power, as it is the single most abundant renewable source of energy available.
The topography of the region gives it immense solar energy potential throughout the year and benefits the space to develop large solar power plants. Almost 85 to 90 per cent of the money spent on renewable energy development is for solar energy. UAE, KSA, and Kuwait are the biggest solar markets in the MENA region.
Middle East Electricity 2017 and Solar Middle East 2017, hosted by the UAE Ministry of Energy, will be taking place February 14-16 at the Dubai World Trade Centre.
For more information, please visit – www.middleeastelectricity.com