Private Power Outlook in MENA
The MENA region’s rapidly growing population and rising energy demand has driven authorities to implement more robust power sector programmes with substantial investment from private firms.
The growth rate for power in the MENA region is three times the global average. At the end of 2018, the region’s installed generation capacity stood at 365 GW; this is expected to increase 50% by 2025.
Arab Petroleum Investments Corporation (Apicorp) expects that MENA region will continue to invest greatly as it strengthens the global scope of its energy sector. As per the report, MENA requires a combined $209 billion worth of investment in electricity generation, transmission and distribution over the next five years. The GCC is driving investment in the region and is planning new electricity generation capacity of over 66 GW by 2025.
New strategies are being adopted in MENA to ensure success in power reform programmes in the coming years. Procurement models are changing, too. The public-private partnerships (PPP) model is likely to provide much of the investments in delivering additional power generation capacity in the coming years. By 2025, IPPs and IWPPs will deliver 58.3 GW of additional power generation capacity in the region.
IPPs offer several benefits like relieving governments of the burden of financing new plants and providing quick and on-time delivery of the projects. In many cases, IPP projects are more cost-effective and result in reduced costs for end-user.
Japanese and South Korean developers have bolstered top positions in the GCC’s private power market accounting for close to 40% of equity capacity. Marubeni Corporation, Mitsui, Sumitomo Corporation, Chubu Electric and Mitsubishi, all of Japan, are playing a key role in the region after having won a significant amount of work in power sector last year. South Korean contractors Samsung C&T and Korea Electric Power Corporation (Kepco) have been actively expanding their power portfolio in the GCC market.
French developer Engie is leading with over 8 GW capacity of power and water projects underway. Chinese firms Harbin Electric and Jinko Solar are also in race with the established private majors to break into the top 10.
Saudi Arabia’s Acwa Power establishes its key position among the GCC’s power developers after having won a number of IPPs/IWPPs with over 6 GW capacity.
IPPs inclusion in new build requirements and increasing competency of private developers will continue to bring success in the region’s market reform schemes in 2019 and beyond.