Region must spend $150bn on 150GW by 2040

08 June 2015

Fossil fuels will continue to dominate energy mix

  • Region needs to spend $150bn on 150GW of new capacity from fossil fuels by 2040
  • Demand growing by 6 per cent a year
  • Renewables expected to account for 15 per cent of energy mix

The Middle East and North Africa will have to spend $150bn on electricity generation from fossil fuels until 2040, said Manuel Baritaud, senior energy analyst, IEA, speaking at MEED’s MENA Power Conference in Abu Dhabi on 8 June.

This will involve building 150GW of new capacity to keep up with demand, which is growing by an average of 6 per cent a year.

In addition, the region is expected to spend $25bn a year on renewables and a similar quantity on transmission and distribution.

Baritaud expects renewables to make up 15 per cent of the energy mix by 2040. Once the sector takes off after 2025, 6GW a year could be installed.

Nuclear will make up a significant part of the energy mix, while coal will remain a minor resource for electricity generation.

“Nuclear is a very promising source of power,” said Baritaud. “But it is very capital intensive. Abu Dhabi is an interesting example, and we expect to see more projects in the region.

“Nuclear takes time,” continued Baritaud. “Developing a nuclear strategy involves a strong commitment from government and policy makers. You have to set up the right institutions and regulators. It is also important to build a series of reactors. If you just build one reactor for each technology, there is a high risk of cost overruns. Projects with a series of reactors become more manageable thanks to the learning experience on the first.”

The share of oil produced in the region that is consumed by electricity generation will decline from 7 per cent to 3 per cent by 2040.

Gas will be the dominant feedstock, with 100 billion cubic metres used in electricity generation by 2040. However, the proportion of gas consumed on the domestic market, currently 35 per cent, will fall as production rises.

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