Political unrest in W. Asia likely to increase investment in power, water infrastructure

Recent political unrest in West Asia is likely to increase investment in power and water infrastructure as governments seek to maintain uninterrupted power and water supply to their growing population, a new report has revealed.

Political unrest in Bahrain and the wider West Asia has led several GCC governments to announce major investment programmes in housing and social infrastructure. Such measures will only serve to increase the already high demand on the regional power and water sectors, the MEED report said.

Saudi Arabia faces the biggest challenge. It had forecast that the demand would reach 75,000 MW by 2019, up from 46,000 MW in 2010.

However, the forecast does not take into account the February 2011 announcement by King Abdullah that some 500,000 new housing units would be built. This alone will add a further 5,000-6,000 MW to the demand forecast.

Similarly, Abu Dhabi has revised its 2020 power demand forecast upward by about 6,000 MW to 28,000 MW in light of the March 2011 announcement by the UAE President, Sheikh Khalifa Bin Zayed al-Nahyan, for increased investment in the Northern Emirates’ power and desalination sector.

In Saudi Arabia and Kuwait, liquid fuels — in the form of crude oil and diesel — have overtaken gas as the largest source of feedstock. However, this has come at a high price, with Riyadh alone burning an estimated 800,000 barrels per day in its power plants.

“Even before the announcements, demand for new power capacity was rising, 2010 peak power demand remained high across the GCC with both Qatar and Abu Dhabi each having to contend with a rate of 11 per cent, followed by Saudi Arabia at 10 per cent,” says Mr Angus Hindley, Research Director at MEED and the author of MEED Insight’s GCC Power & Desalination report series.

“In the GCC alone, some $65 billion will be required in increasing the generating capacity and at least the same amount in expanding the transmission and distribution network,” he said.

With some 11,000 MW of new capacity commissioned in 2010, utilities largely managed to accommodate the growth in peak demand, although in Bahrain and Sharjah, network and fuel issues led to some outages.

At the same time, the amount of new capacity contracted from the market in 2010 reached its highest level for four years at an estimated 14,000 MW. This was largely due to an unprecedented capacity programme launched by Saudi Arabia, which delivered contracts for 11,000 MW.

The increasingly high cost of burning liquid fuels and the environmental concerns over coal have left nuclear power as the favoured option in much of the GCC.

Although the Fukushima nuclear disaster in Japan is likely to delay some regional plans, there is a growing acknowledgement in the GCC that nuclear power will have to play a significant role in future if high power demand growth is to be met and electricity shortages are to be averted.

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