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 Middle East facing escalating peak demand for electricity

The energy challenges facing the Middle East today are significant due to the demographic and economic growth in the region.

Despite the financial crisis and the recent turmoil there, demand for electricity and utilities has not only remained intact but the region is facing rising peak demand of 10-15 per cent annually.

Sebastien Bernard is General Counsel Middle East, Turkey, Africa and India with Dalkia. Bernard will be a speaker at the marcus evans Contract Risk Management for the Utilities Power Generation Industry Conference taking place on 26-28 September in Amsterdam.

He says governments there need to act fast and put in place measures that will satisfy escalating demand.

“In the Middle East the demographic and economic growth means that the demand for electricity and all types of utilities is very high. One of the biggest challenges in the region is for the government to satisfy the growing demand in a timely manner.”

More and more power shortages are blighting the region, mainly in Saudi and Kuwait, he says, and governments continue to use public private partnership-type (PPP) schemes.

“Demand is not being satisfied especially in the summer time and peak demand is there. Power plants are not able to provide enough electricity. That is probably one of the biggest challenges to the region. Governments need to build new plants but this will take time and cost money. Although most of the governments are very rich they continue to work in a scheme that was used a few years ago before the crisis, which is a kind of private public partnership (PPP).”

Bernard says the availability of finance for energy projects is resurging.

“It is better today than it was a year ago so things are slightly improving but it depends on the nature of the projects and the credit worthiness of the counterpart. Also the banks will make a risk assessment to ensure the electricity that you produce will be sold to the grid.”

Electricity represents a good market for lenders in the region but they are proceeding cautiously, he adds.

“We see Asian banks coming to the region to offer finance mainly because more and more contractors are coming from Asia and China. The market is still very tight, unstable and people are still a bit anxious. It is difficult to predict what will arrive in the near future.”

When it comes to grand scale energy production OPEC countries will continue to rely on oil for their energy needs, he predicts.

However, he believes the market share of renewable energies will grow in the future.

“First, most of the current Gulf countries’ leaders are conscious that fossil energies may only be available for a limited period of time and need to start preparing their young and future generations for when they run out.

“Also, the Gulf countries are ready to stand at the cutting edge of renewable energy technologies and solutions. This explains partially Abu Dhabi’s project Masdar City (a zero emission urban development) and also the fact that they heavily fought for hosting the HQ of the International Renewable Energy Agency (IRENA).”

The marcus evans Contract Risk Management for the Utilities Power Generation Industry Conference takes place in Amsterdam on 26-28 September.



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