Middle East governments will continue investing heavily in power projects while cutting back on other spending, says a new research report from MEED.

The MENA Power 2016 report, released this week by MEED’s research unit MEED Insight, says that governments in the Middle East & North Africa (Mena) region are committed to investing in new electricity generation, transmission and distribution capacity despite the sharp fall in oil prices since mid-2014 that has caused the scaling back or cancelling of many projects deemed nonessential.

Rapid population growth and economic expansion are driving substantial increases in electricity consumption and in many instances countries have struggled to meet the challenge in recent years.

According to research conducted by MEED, the installed generating capacity across the 14 countries analysed will have to rise by 143,221MW by 2020, an increase of about 50 per cent on today’s level, to meet demand forecasts.

Demand growth

Few issues are more pressing than the need to meet rising demand for power to keep air conditioning running and lights burning.

Across the GCC, peak demand growth averaged 8.4 per cent in 2014, while for the entire Mena region it was more than 9 per cent.

Using data from MEED’s project database MEED Projects, the report says that about $65.4bn of major power contracts were awarded between September 2014 and September 2015 in the Mena region.

Key markets

The largest requirement for new generation capacity is in Egypt, where an estimated 28GW of new capacity is needed as a result of its fast growing population.

While Saudi Arabia and Kuwait will require additional capacity of 20GW and 5,758MW respectively, the actual newbuild requirement will be much higher because of the need to replace or upgrade existing units on account of age.

The Mena Power 2016 report provides a comprehensive country-by-country review of the regional power sector with in-depth analysis on supply and demand, projected investment levels, the role of the private sector and the search for alternative energy.