Trends in West Asian power projects in 2012
March 28, 2013 - The amount of power generation capacity under development in Asia fell markedly in 2012 compared with 2011, according to the annual survey carried in the last issue of Power in Asia (PiA 624/7). However West Asia, which was not included in that or previous annual surveys, saw a marked uptick in activity in 2012.
West Asia is here defined as Bahrain, Iran, Iraq, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates and Yemen.
Turkey is not included as a significant part of its power sector is oriented westwards towards the Mediterranean basin and Turkish projects are tracked in Power in Asia's sister publication Energy in East Europe.
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Increased activity at all stages
West Asia saw increased activity in 2012 at almost all stages of the project development pipeline, based on an analysis of the data contained in Power in Asia's monthly project tracker.
Detailed information about the provenance and interpretation of the data was given in the last issue of Power in Asia, but a key point to emphasize is that the tracker does not list all the projects under development in the region – only those which passed a significant development milestone during the period in question.
Only the amount of capacity included in the announced category was lower in 2012 than in 2011 for West Asia. Projects securing approval, signing contracts and starting construction in all cases involved more capacity in 2012 than in 2011.
The dip in the amount of capacity represented by announced projects may in part reflect the subdued global economic environment, but other factors appear to be in play. For instance, in some countries, such as Iran, the current stage of the project cycle involves completing the construction of implemented projects rather than embarking on new ones.
The West Asian figures are dominated by trends in Saudi Arabia, which accounts for a large part of the region's installed capacity and demand growth prospects.
Official Saudi Arabian projections indicate that by 2032 about 120,000 MW of installed capacity will be needed, compared with the 51,148 MW installed at the end of 2011.
Marked increase in regional capacity due to burgeoning demand
Most other countries in the region are also projecting a marked increase in capacity as a result of burgeoning demand, albeit with highly subsidized sales to the residential sector forecast to be a significant driver of the high rate of demand growth in many jurisdictions.
For instance in Kuwait it has been reported that electricity sales revenues cover little more than 5% of the overall cost of supply, with the average retail tariff being equivalent to $7/MWh against the $134/MWh cost of supply.
While the rate of increase in electricity demand may thus be unsustainable in some respects, the region is still expected to register substantial growth in demand.
Population growth and urbanization rates in much of the region are high, while in several countries oil and gas revenues are being used to build energy-intensive infrastructure and industrial facilities for long-term development and diversification of their economies.
One of the key differences between West Asia and much of the rest of Asia is the very limited amount of coal-fired or hydroelectric plant and the preponderance of gas and oil-fired capacity.
The integration of West Asian power plants into projects including desalination facilities also differs from the generating and cogeneration plants common in most of the rest of Asia.
Gas-fired capacity dominates the list, although oil-fueled plant forms a substantial component of capacity in Saudi Arabia in particular. And while the development of oil-fueled plants in much of Asia is predicated on their conversion to gas use once the fuel is available, in Saudi Arabia in particular oil-fired plants are premised on the continued use of oil rather than gas, with the latter fuel being reserved for higher value applications such as petrochemicals.
While West Asian power plants have traditionally been fueled by domestic energy resources, the emergence of a regional gas grid and LNG facilities has resulted in more gas-fueled plants involving the use of cross-border fuel.
Conversely, the use of indigenous energy resources in the form of solar power in particular is expected to grow strongly in the region from the current very low levels.
The ownership of generating assets in West Asia was dominated by state agencies and companies until recently, contrasting with the position in large parts of Asia, but the differences are now less marked.
Independent power producer projects using the single buyer model are now established in much of West Asia, although IPPs wholly owned by private investors are less common than plants in which state-owned entities own some of the equity.
Additional West Asian power trends data:
West Asian power trends in 2011
West Asian power trends in 2012
All Asia power trends in 2011 by fuel, MW
All Asia power trends in 2012 by fuel, MW