Saudi Arabia Power Report Q3 2009

The new Saudi Arabia Power Report from BMI forecasts that the country will account for 16.84% of Middle East and Africa (MEA) regional power generation by 2013. BMI's Middle East/Africa power generation estimate for 2008 is 1,200 terawatt hours (TWh), representing an increase of 6.1% over the previous year. We are forecasting an increase in regional generation to 1,566TWh by 2013, representing a rise of 30.5% between 2008 and the end of the period.

MEA thermal power generation in 2008 is estimated by BMI at 1,135TWh, accounting for 94.6% of the total electricity supplied in the region. Our forecast for 2013 is 1,460TWh, implying 38.3% growth that reduces slightly the market share of thermal generation to 93.2% - thanks in part to environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Saudi Arabia's thermal generation in 2008 was an estimated 194TWh, or 17.07% of the regional total. By 2013, the country is expected to account for 18.06% of thermal generation.

For Saudi Arabia, in 2008 oil was the dominant fuel, accounting for 59.7% of primary energy demand (PED), followed by gas at 40.3%. Regional energy demand is forecast to reach 871.0mn tonnes of oil equivalent (toe) by 2013, representing 18.5% growth over the period since 2008. Saudi Arabia's 2008 market share of 23.73% is set to rise to 24.42% by 2013.

Saudi Arabia now shares fourth place with South Africa in BMI's updated Power Business Environment rating, thanks largely to its considerable market size, low level of energy import dependency and particularly low proportion of renewables use. The power sector is not competitive, with little progress towards privatisation. The regulatory environment remains relatively unattractive. Saudi Arabia has already been left behind by Qatar, and is only a point ahead of Iran, although there should be little nearterm risk from below.

BMI is now forecasting real GDP growth averaging 3.48% per annum between 2008 and 2013, with the 2009 estimate being 0.90%. The population is expected to expand from 24.4mn to 26.5mn over the period, with GDP per capita and electricity consumption per capita forecast to rise by 3% and 28% respectively. The country's power consumption is expected to increase from an estimated 183TWh in 2008 to 255TWh by the end of the forecast period, with a broadly balanced market, assuming 6.0% annual growth in electricity generation.

Between 2008 and 2018, we are forecasting an increase in Saudi electricity generation of 91.8%, which is near the top of the range for the MEA region. This equates to 40.9% in the 2013-2018 period, up from 36.1% in 2008-2013. PED growth is set to decrease from 21.9% in 2008-2013 to 15.1%, representing 40.3/% for the entire forecast period. Thermal power generation is forecast to rise by 91.8% between 2008 and 2018. More details of the longer-term BMI power forecasts can be found later in this report