The Arab Petroleum Investments Corporation (Apicorp) has issued a report that states that the Middle East North Africa (MENA) region will need to invest $209 billion in the power sector between 2019-2023. The MENA Power Investment Outlook 2019-2023 report estimates that investment in the MENA energy sector could reach $1 trillion, with the power sector accounting for the largest share at 36 per cent. The report said that this would be driven by growing electricity demand and greater momentum for renewable energy.
Dr Leila Benali, Chief Economist at Apicorp, said: “We have observed that a large share of the funding requirements in the MENA energy sector will go to the power sector, of which renewables account for a substantial share of around 34 per cent. We also estimate that MENA power capacity will need to expand by an average of 4 per cent each year between 2019 and 2023, which corresponds to 88GW by 2023 to meet rising demand. Highly-leveraged power projects in the region continue to be largely financed based on non- or limited-recourse structure, with debt-equity ratios in the 60:40 to 80:20 range, even 85:15 for lower risk profile projects backed by strong government payment guarantee.”
Apicorp said that it anticipated governments and central authorities to continue to remain involved, particularly in central generation and transmission, and that it has noticed some forays of private sector into distributed power through aggregating sites or clusters and leasing.
Benali said: “From a business model perspective, Jordan and Morocco have so far led the region with their renewable initiatives. Morocco’s target for renewable energy as a share of total generation is ambitious, standing at 42 per cent by 2020. However, across the region, the policy signals, change in business models, and investment/credit support required in grids and storage to accompany the introduction of renewables are yet to be seen.”