With record economic and population growth, demand for power and water has never been greater, and GCC utilities are facing the most challenging time in their history.
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.
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.
About MEED Insight
Thanks to its own projects tracker, MEED Projects, MEED Insight has access to unparalleled, up-to-date information on the region’s $3 trillion projects market. We can provide companies with:
- Details of all major projects within a given market or sector, including their scope
- Contacts for clients, contractors and suppliers
- Information on key clients and their tendering processes
- Information on how to register with clients and prequalify for projects
- Forecasting of future projects
MEED Insight has access to a wealth of regional data ranging from broad macroeconomic statistics to sector-specific information. We can obtain and analyse data on a specific market or industry to help companies gain an insight on market size and potential
MEED Insight also offers a series of off-the-shelf reports on a range of different sectors and industries. The information compiled for these reports comes from a variety of sources, including MEED magazine, MEED.com, MEED Events and MEED Projects, as well as primary and secondary research.
Our current off-the-shelf reports include:
- GCC ICT Projects Outlook & Review
- GCC Projects Forecast & Review 2010
- Power & Water in the GCC 2010
- Libya Power & Desalination
- Middle East Steel 2009
- GCC Cement 2009
- MENA Mining 2009
- MENA Aluminium 2009
- GCC Wastewater 2009
- GCC District Cooling
- GCC Economic Outlook
For further information, or to discuss how MEED Insight can assist your organisation achieve its information objectives, please email