Saudi Arabia Power Report Q2 2008

The new Saudi Arabia Power Report from BMI forecasts that the country will account for 15.69% of Middle East and Africa (MEA) regional power generation by 2012. BMI's MEA power generation estimate for 2007 is 1,130 terawatt hours (twh), representing an increase of 5.2% over the previous year.

We are forecasting an increase in regional generation to 1,573twh by 2012, representing a rise of 39.3% between 2007 and the end of the period.

Thermal power generation in 2007 is estimated by BMI at 999twh, accounting for 88.4% of the total electricity supplied in the region. Our forecast for 2012 is 1,372twh, implying 37.4% growth that reduces slightly the market share of thermal generation to 87.2% - thanks in part to environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Saudi Arabia's thermal generation in 2007 is estimated at 198twh, or 19.84% of the regional total. By 2012, the country is expected to account for 18.00% of thermal generation.

For Saudi Arabia, oil was in 2006 the dominant fuel, accounting for 58.3% of primary energy demand (PED), followed by gas at 41.7%. Regional energy demand is forecast to reach 865.6mn tonnes of oil equivalent (toe) by 2012, representing 27.2% growth over the period since 2007. Saudi Arabia's estimated 2007 market share of 24.06% is set to fall to 22.46% by 2012.

Saudi is ranked equal fifth, alongside Qatar, in BMI's newly-revised 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 isn't competitive, with little progress towards privatisation. The regulatory environment remains relatively unattractive. While Saudi is currently keeping company with much smaller Gulf neighbour Qatar, it is likely to get left behind over the medium term.

BMI is forecasting real GDP growth averaging 4.07% per annum between 2007 and 2012, with the 2008 forecast being 4.30%. Population is expected to expand from 24.3mn to 28.0mn over the period, with GDP per capita forecast to rise by 14.6%, while electricity consumption per capita is forecast to rise by an estimated 18.9%. The country's power consumption is expected to increase from an estimated 174twh in 2007 to 239twh by the end of the forecast period, with surplus generating capacity falling steadily, assuming 4.5% annual growth in generating capacity.