To meet a projected demand of 10 per cent a year for electricity and eight per cent a year for desalination, an estimated 60,000MW of new capacity - representing 80 per cent of current installed capacity - will be required by 2015 and desalination capacity will need to double to over 5 billion gallons a day (g/d).

According to a MEED Insight report, this has meant that, combined with a distinct lack of investment in the first half of the decade, reserve power capacity has fallen significantly across the Gulf - with the single exception of Abu Dhabi.

It raises the spectre of power shortages across the regi

on, particularly in Dubai, Kuwait and parts of Saudi Arabia, despite the fact that these areas are known around the world as sources of oil and energy wealth.

Unprecedented capacity additions are planned to deal with this; however, there are a number of challenges.

Contractors are in short supply, new build costs are spiralling and there are growing concerns over gas feedstock availability.

Far more attention will have to be placed on demand supply management in the coming years.

Conservation measures, such as energy efficient buildings, district cooling, metering and grid interconnections, are slowly moving up the agenda but will need to be pursued and enforced much more rigorously.

It is clear that utilities have enormous challenges to overcome in their quest to keep the lights on and the taps running.

Fast facts

• Dubai faces the biggest new-build programme, with both power and desalination capacity forecast to triple in size to 16,000MW and 800 million g/d by 2015.

• Based on 2007 unit costs, the GCC power sector will require about $50bn of investment in new power generating capacity and $20bn in desalination.

• The most pressing issue facing the GCC utility market is obtaining new and competitively priced gas allocations. The increase in competition is forcing utilities to consider new technology and alternative energy production, such as coal, nuclear and solar for the first time.

• Rising generation costs will increase pressure for a rise in customer tariffs, which are currently well below the cost of production and distribution in virtually all GCC states. With governments unlikely to sanction the raise in living costs on their own populations, non-national consumers are likely to bear the brunt of the increases.

This information is taken from MEED Insight’s power and water in the GCC report. To order a copy, download the order form (PDF), or email us quoting reference PW2, for more information.