Iraq’s Electricity Ministry has said that $4.5bn of investment is needed each year from 2011 to 2015 to build enough power generation capacity to meet demand and eliminate power blackouts.
Power demand is forecast to rise from 12,500MW in 2011 to 16,000MW by 2015 in Iraq (excluding Kurdistan). Iraq suffers from a huge power shortfall and currently generates about 5,200MW, so it would need to add roughly 10,800MW to the grid over the next five years to meet demand.
To achieve this, about $22bn will need to be invested in generation, transmission and distribution, $4.18bn for the independent power project (IPP) programme, $3.32 in imports and $1.2bn in barges.
The $22bn government investment figure is now expected to be higher, following the ministry’s recent decision to re-evaluate its IPP programme. It could possibly replace it with engineering, procurement & construction (EPC) projects, or create special-purpose vehicles with the potential for private sector investment.
Beyond 2015, power is anticipated to continue to grow steeply. Electricity Ministry’s adviser, New York-headquartered Parsons Brinckerhoff, says in a study it anticipates power to grow to about 20,000MW by 2019 under base case scenarios. This figure will rise to 24,000MW by 2024 and 32,000MW by 2029.
In terms of meeting future power demand, the Parsons Brinckerhoff study finds that a decisive move towards natural gas fuel is needed. Currently, heavy fuel oil (HFO) is the main fuel for generating electricity in Iraq.
About 32.7 per cent of the total energy mix comes from HFO, 27.8 per cent from crude oil and 13.3 per cent from gas oil. Natural gas fires only 26.6 per cent of Iraq’s power generation fleet.
By 2020, the study indicates that about 67 per cent of Iraq’s total power generation capacity is to be gas-fired. By 2030, this figure is to stand at roughly 90 per cent.
The anticipated hike in power demand over the next two decades along with the decision to focus on natural gas as a fuel, means that the amount of gas used by Iraq to generate electricity is set to expand exponentially.
The gas is to be secured from the Oil Ministry. By 2019, it says that it will have 6 billion cubic feet a day (cf/d) available. Based on this figure, the Electricity Ministry says that it would need 2.7 billion cf/d for electricity production. This depends on two things. First, that the Oil Ministry’s production enhancement plans progress as planned, and secondly, that that amount of gas will be made available to the Electricity Ministry. Neither are guaranteed.