The Middle East Electricity Sector Analysis
Electricity consumption has been exponentially increasing in recent years, and if this current rate persists, the region will require several hundred billion US Dollars by 2025 to construct the necessary power infrastructure to keep pace with its future demand.
However, the current economic situation in the Middle East is limiting the governments’ capacity to single-handedly pour in the necessary investment towards the power sector. Thus, several countries in the region, including the UAE, Qatar and Saudi Arabia, have endeavored to unbundle their power sectors into separate segments (generation, transmission and distribution) in an attempt to streamline operations and encourage capital investment from the private sector.
A reliable power support is key
Many of the region’s governments and private sector investors have embarked on developing new cost-effective, reliable and sustainable sources of energy that have the potential to dramatically boost the region’s power generating capacity. For example, solar energy projects are rapidly progressing in the Middle East, most notably in the UAE, Saudi Arabia and Kuwait. In fact, industry insiders report that solar power generation receives up to 90% of all government and private sector funding on renewable energy. It is therefore not surprising that solar power is now approaching grid parity and is experiencing phenomenal growth in the Middle East.
An example of renewable energy initiatives in the region is Dubai Electricity and Water Authority’s (DEWA) concentrated solar power projects in the UAE, which are touted to generate 1,000 MW by 2030. Most celebrated of these projects is the Mohammed bin Rashid Al Maktoum solar park, which is expected to provide a dedicated supply of 100 MW of electricity to the World Expo.
In Saudi Arabia, King Abdullah City for Atomic and Renewable Energy (KACARE) has committed to construct up to 41 GW of solar power plants, and invest in an additional 21 GW of wind and geothermal power in the next two decades.
While in Kuwait, the country is looking to partner with international companies to add a power generating capacity of 2,000 MW of renewable energy by 2030.
But, in a region that is experiencing an unprecedented growth in population and in economic and industrial activities, a single source of alternative electricity may not be enough to secure its future power needs. Renewable energy technologies, like solar and wind, may hold a tremendous potential to provide the region with a reliable supplemental power, but as they are improved and optimized through the years with continuous technological research and development, these alternative power technologies may need the support of other sources of electricity.
In this time of economic challenges amidst a heightened urgency to supply additional power, the governments and the renewable energy investors will real benefits in turning to temporary power technologies. Rental power plants are able to supplement the existing power generated by traditional power plants and renewable sources of energy. They can act as an energy “safety net”, in that they are able to boost or take over the power load from renewable energy sources in times of intermittency, or from conventional power plants in times of power shortage. Rental power generation systems are equipped with state-of-the-art fast-start systems that allow them to supply the needed power at the shortest possible time, in cases of instability or insufficiency of other sources of electricity.
Temporary power plants represent a cost-effective solution to power supply challenges. Countries in the Middle East or private sector funders looking to manage their expenditure within the power sector will be happy to know that renting power do not require a huge initial investment. It can also protect the governments and private investors from unexpected associated expenditure, as temporary power plants come as a complete solution, with ancillaries, operation and maintenance integrated in the service. This way, the governments and private investors are able to better manage their financial resources.
Along this line, the power sector stakeholders will also welcome the fact that temporary power plants can be easily mobilized, installed and operated anywhere in the world, because they are modular and can be simply connected to the grid, even without a substation. At the end of the contract, they can also be easily demobilized, leaving no permanent facility unutilized or that will require constant maintenance and service.
With rental power plants on board, the limitations of traditional power plants and renewable energy sources can be overcome, and the additional electricity can be reliably supplied as long as it is needed. In this context, temporary power plants find their maximum benefit in being used as supplementary or back-up power while permanent other energy facilities are being constructed or refurbished, and while alternative energy sources are being improved and optimized through the years.
Looking to the future
Industry experts believe that independent power producers (IPP) and private sector investors have been instrumental in keeping the region’s power supply sufficient for its residents, businesses and industries in recent years. At present, IPPs and the private sector are responsible for a significant amount of new capacity, and independent power plants continue to supplement or, to an extent, take the load of old and outdated government power plants not only in the GCC but also in other countries in the Middle East. They, therefore, are expected to continue to play a vital role in the power generation initiatives of governments in the region.