Power developers rethink funding

23 December 2015

Welcome to the Middle East Power guide, produced by MEED in association with HSBC

We are happy to be partners in bringing you market-leading analysis and insight into one of the most important sectors in not only the region but also the world.

As populations increase and economies develop, demand for electricity is growing at a rapid pace. While the Middle East has long been home to cheaper fossil fuels for power generation, governments are aware these resources will not last forever and every barrel of oil burned represents significant opportunity cost. Many countries in the region are also facing a race to secure gas feedstock to fire power plants.

Although low oil prices seem a boon to states relying on hydrocarbons to fuel power generation, governments remain committed to diversifying fuel supply to boost energy security and reduce emissions.

Governments are looking at alternative energy solutions to meet the sharp growth in demand for power. While renewable energy will form a key pillar in the region’s future energy plans, utility providers are looking to integrate other fuels, such as coal and nuclear, into their feedstock supply for power production.

With hydrocarbons income diminished since oil prices plummeted from more than $100 a barrel to only $40 as of December 2015 and for the foreseeable future, oil exporters must now find new ways to finance their power projects, both renewable and traditional.

This will inevitably require driving up private sector involvement. To achieve this, governments will need to ensure that adequate structures and legislation are in place to allow progress with independent power projects and feed-in-tariff programmes.

Record-low solar and wind tariffs achieved in the Middle East and North Africa in 2015 show that the private sector can deliver competitive prices while removing significant capital expenditure from government balance sheets.

In Cairo in December, we convened a round table, hosted by HSBC and MEED, of leading players in the regional power market. The international panel of experts tackled a variety of issues related to the development of the Egyptian power market: currency concerns, diversification and regulatory liberalisation.

HSBC is proud to be among the institutions helping to innovate funding in ways that can let renewable energy grow in the region. We are proud to be associated with this guide and with one of the most vital sectors in the Middle East today.

Selim Kervanci
Head of Capital Finance
Mena & Turkey
HSBC Bank Middle East

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