INDUSTRY TRENDS
16 Utilities Middle East / August 2019 http://www.utilities-me.com
O
ver the next fi ve years, the MENA
region will need to invest $209bn
in the power sector according to
the latest MENA Power Investment
Outlook 2019-2023 report issued by The Arab
Petroleum Investments Corporation (API-
CORP), a multilateral development fi nancial
institution.
“We have observed that a large share of the
funding requirements in MENA’s energy sector
will go to the power sector, of which renew-
ables account for a substantial share of around
34%,” said Dr. Leila Benali, chief economist at
APICORP.
Between 2019 and 2023, APICORP esti-
mates that investment in the MENA energy
sector could reach $1trn, with the power
sector accounting for the largest share at 36%,2019-
According to APICORP, the power sector con-
tinues to evolve throughout the MENA region,
driven by the need for countries to meet
demand growth, diversify their economies
and create effi ciencies. The MENA region will
require the addition of 88GW by the end of
2023 to meet demand growth. Governments
have been accelerating their investment plans
and APICORP estimates that 87GW of capacity
additions are already at execution stage. This
is expected to translate into $142bn for power
generation, and approximately $68bn for
transmission and distribution.PRIVATE SECTOR FINANCING
DEPENDENT ON SECTOR REFORMS
AND GOVERNMENT GUARANTEESspurred by growing electricity demand and
greater momentum for renewable energy,
noted the report.
“We also estimate that MENA power capac-
ity will need to expand by an average of 4%
each year between 2019 and 2023, which cor-
responds to 88GW by 2023, to meet rising con-
sumption and pent-up demand,” Benali con-
tinued.” Highly leveraged power projects in the
region continue to be largely fi nanced based
on non-recourse or limited recourse structure,
with debt-equity ratios in the 60:40 to 80:
range, even 85:15 for lower risk profi le projects
backed by strong government payment guar-
antee.”88GW OF GENERATION CAPACITY
NEEDS COULD BE INSTALLED OVERClose to 87GW of generation capacity is currently under execution, driven by the UAE (19%),
followed by Saudi Arabia (17%) and Egypt (16%)MENA POWER SECTOR NEEDS
$209BN INVESTMENTS UNTIL 2023