Kuwait Power Report Q2 2008

The new Kuwait Power Report from BMI forecasts that the country will account for 4.19% 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. Kuwait's thermal generation in 2007 is estimated at 43twh, or 4.31% of the regional total. By 2012, the country is expected to account for 4.81% of thermal generation.

For Kuwait, oil was in 2006 the dominant fuel, accounting for 54.6% of primary energy demand (PED), followed by gas at 45.4%. 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. Kuwait's estimated 2007 market share of 3.97% is set to climb to 4.85% by 2012.

Kuwait is ranked last, just behind Algeria, in BMI's newly-revised Power Business Environment Rating, thanks largely to its modest market size, state control of the power sector and particularly low proportion of renewables use. The power sector isn't competitive, with no appreciable progress towards privatisation. The regulatory environment is unattractive. While Kuwait is only a point behind Algeria at the foot of the regional league table, it seems unlikely to be able to catch its North African rival over the short-, medium- or long-term.

BMI is forecasting real GDP growth averaging 5.05% per annum between 2007 and 2012, with the 2008 forecast being 6.80%. Population is expected to expand from 2.99mn to 3.62mn over the period, with GDP per capita forecast to rise just 2.6% but power consumption per capita to increase by 13.1% from an already high base. The country's power consumption is expected to increase from an estimated 45.1twh in 2007 to 61.7twh by the end of the forecast period, resulting in a broadly balanced market that, at times of peak demand, will struggle to provide adequate supply without imports - assuming 8.6% annual growth in generating capacity.