New Energy market report from Business Monitor International: "Saudi Arabia Power Report Q1 2013"
Boston, MA -- (SBWIRE) -- 03/18/2013 -- BMI View: With domestic consumption remaining buoyant, a bright medium-term outlook for fixed investment and macroeconomic policy staying supportive, our outlook for the power sector remains sanguine. We anticipate that the thermal sector will continue to be the main beneficiary of hefty investment plans. Interest in nuclear and renewable sources is strengthening; however, regulatory and political risks (including uncertainty surrounding the royal succession) have the potential to temper progress in the short term, leading us to believe that developments on this front will be more pronounced over our 10-year forecast period. Saudi's macroeconomic performance and its demographics continue to impress, with a combination of factors including 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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For instance, power consumption rose by 9% in H112, with the peak demand in the summer up by 7%, according to Saudi Water and Electricity Minister Abdullah Al-Hussayen (quoted by Reuters). While more bearish than the Saudi government, BMI believes that these dynamics will underpin the government's attempts to improve on and enlarge the existing power infrastructure, continuing to support a healthy growth outlook for the country's power sector in the coming years. An outlook 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 to reach just over 72GW by 2014.
- The Kingdom appears committed to develop nuclear capacity, with plans to invest US$100bn to build 17 nuclear reactors over the coming two decades to produce electricity.
- BMI believes that the very strong track record in the development of power projects bodes well for nonhydro renewables expansion, especially since the Saudi government has long demonstrated a substantial commitment to social and economic infrastructure. Plans to tap renewable energy as a way to free more crude oil for export are progressively taking shape in the Kingdom, which now aims to channel US $109bn in investment to create a solar industry that generates a third of the nation's electricity by 2032.
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