Energy transition boosts investment in Mena power

28 November 2021
As demand recovers after being severely impacted by the pandemic, the outlook for the regional power projects market is incredibly strong
MEED Insight's latest report, Mena Power 2022, is a comprehensive analysis of power sector trends, project opportunities and challenges in the region. For more information and sample pages, click here

Population growth and industrial expansion are driving rising energy consumption across the Middle East and North Africa (Mena), putting electricity generation capacity among the highest priorities. 

As a result, the region will continue to see large-scale investments in new generation capacity and transmission and distribution networks. 

With about $30bn a year of capital spending on major projects, the power sector is one of the strongest and most reliable providers of business opportunities in the region. 

But the nature of investment is changing. In the energy transition era, it is not enough for governments to simply increase production capacity to meet rising demand. 

Policymakers are focused on decarbonising the economy and reducing greenhouse gas emissions. At the same time, strained public finances are forcing reforms aimed at reducing the cost of subsidising energy and reducing waste.

Policymakers are focused on decarbonising the economy and reducing greenhouse gas emissions

The biggest transformation is the drive to diversify the region’s energy mix. Faced with a shortage of readily available gas supplies and attracted by the falling cost of technology, nearly all Mena countries are now procuring or planning solar and wind projects. They are also looking at other forms of renewable and alternative energy, from waste-to-energy to nuclear power. 

Utilities are also investing in digital data technologies such as the internet of things, blockchain, smart grids, artificial intelligence and digital twins to improve efficiency and reduce waste.  

Sustainability and energy efficiency are driving radical shifts in policy, such as the removal of subsidies that have kept energy and water tariffs artificially low for decades. 

Subsidy cuts aim to reduce the financial burden on the state and encourage consumers to curb usage, thereby lowering the speed at which new capacity needs to be built.

Procurement models are changing too, with renewed interest in privately developed utility projects in order to spread the capital cost of building new capacity over a longer period. 

A much broader privatisation trend is also emerging, whereby governments are looking to sell off assets and unbundle generation, transmission and distribution. This will provide short-term windfalls for cash-strapped governments, but will lead to a more efficiently run power sector in the long term.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications