Middle East’s Energy Transition
Prospects for the Middle East and North Africa’s power sector has improved despite the slow pace of growth globally, uncertainty from geopolitical tensions, a global energy crisis, continued supply chain disruption and financial market volatility.
Global growth is forecast to slow from 6 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023, according to the IMF's World Economic Outlook report. However, forecasts for the GCC in 2023 are more upbeat. Oil prices are likely to sustain $75-95 per barrel levels enabling governments in the region to support the economy.
According to Apicorp, the total investments in the Mena energy sector would be more than $879 billion by 2026, with the power sector accounting for 28.4 percent share, spurred by growing electricity demand and greater momentum for renewable energy.
The ‘planned and committed’ investments in the Mena power sector between 2022 and 2026 is worth about $250 billion.
Governments are taking significant steps to reduce their reliance on fossil fuels and promote renewable energy. “The region continues to invest in decarbonization, renewables and clean energy as part of the long-term strategic vision for a low-carbon future underpinned by a greener, more balanced and sustainable energy mix,” said a senior energy specialist at Apicorp.
The recent UN meetings in the region are bringing the world’s attention to the region’s real progress towards energy transitions. New investment is going into solar, wind, nuclear, and other sources. About 98 GW of new renewables capacity is planned across the Middle East with 39 GW due to come on stream by 2025.
Apicorp’s analysis shows that blue and green hydrogen will dominate the emerging hydrogen markets in the near term across the region. Mena is well positioned to supply around 10 to 20 percent of the global hydrogen market by 2050.
Rising energy consumption due to the population growth and industrial expansion in the region, has put power generation among the highest priorities. Alongwith, significant ramp up in investments in renewable energy, power projects market is set to provide some large-scale opportunities in 2023 and ahead.