Saudi Arabia needs ambitious power growth, says NCB

• 12 years ago (2011-12-18)
• Junior Isles

Middle East 326

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Saudi Arabia needs to pursue large scale projects to expand its electricity production capacity if it is to meet its fast growing power demand, the Gulf Kingdom’s largest bank, National Commercial Bank (NCB), has said.

The bank warned that these kinds of projects are currently beset with challenges, such as low power tariffs and high domestic consumption.

Power generation capacity in the largest Arab economy reached 49 138 MW the the end of 2010, having risen at a 10- year compound annual growth rate (CAGR) of 6.7 per cent, NCB said in a study.

Unfortunately, overall consumption and peak load demand grew at 10-year CAGRs of 6.4 per cent and 7.7 per cent, respectively, amounting to 212 263 GW and 45 661 MW, each.

This rapid pace of consumption has diminished the Kingdom’s reserve generation capacity to a mere 7.6 per cent, well below the industry norm of 10–20 per cent.

“Saudi Arabia needs to expand its power capacity and networks to support the Kingdom’s ambitious industrialisation plan, as well as meet its growing population demand,” the study concluded.

Its estimates showed that actual generation capacity and peak load demand growth will maintain the same pace over the next 5 years, narrowing the reserve margin to around 2.3 per cent.

However, projects in the Execution and EPC phase between 2011–2015 will amount to a total of 28 369 MW, it reported.

“Assuming these projects materialize, this will bring total actual generation capacity to 76 487 MW. This would result in a feasible reserve generation capacity of 15.4 per cent, by 2015,” it said.