New Energy research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 09/05/2013 -- With Saudi Arabia set to remain on a solid growth path in the coming quarters, as the non-oil sector continues to expand and the government's loose fiscal policy stance supports business activity in the private sector, the short-term picture for the power sector remains bright. Similarly, a bright outlook for fixed investment and a supportive macroeconomic policy underpin our sanguine expectations for the medium term. We anticipate that the thermal sector will continue to be the main beneficiary of hefty investment plans. However, interest in nuclear and renewable sources is strengthening.
In comparative terms, Saudi Arabia's macroeconomic performance and its demographics continue to impress, with a combination of factors, including its reliance on energy-intensive industries and poor levels of energy efficiency pushing up power consumption and putting significant pressure on Saudi Arabia's existing power generating capacity.
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Hence, while more bearish than the Saudi government, BMI remains of the opinion that these dynamics will underpin the government's attempts to improve on and enlarge existing power infrastructure, continuing to support a healthy growth outlook for the country's power sector in the coming years. This outlook is supported by the fact that:
- The country is already executing an extremely-ambitious US$80bn expansion plan for power projects, with the Kingdom's Ninth Development Plan (2010-2014) aiming to raise generating capacity by 20.4 gigawatts (GW) by 2014. Even if BMI adopts a conservative stance, and only 70% of the planned capacity comes online, our forecasts show that the country will be able to meet its commitments, with total installed capacity set to reach just over 72GW by 2014.
- The Kingdom appears committed to developing nuclear capacity, with plans to invest US$100bn to build a chain of at least 16 nuclear power stations, with the first operational by 2019. The aim is to achieve an electricity output of 110GW by 2032. BMI believes that the very strong track record in the development of power projects bodes well for non-hydro renewables expansion. The Government aims to produce 23,900 MW of electricity from renewable energy sources by 2020 and 54,000 MW by 2032. Under the plans unveiled in the country's first strategy paper, solar energy plants would produce 41GW within 20 years, while geothermal and waste-to-energy systems would together be providing 4GW.
- Most interestingly, and similarly to some of its neighbours such as the UAE, Saudi Arabia is also considering the use of renewables to support the desalination process. In October 2012, the Saline Water Conversion Corporation (SWCC) announced that three new solar-powered desalination plants are at the planning stage in Hagel, Dhuba and Farasan.
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