North Africa Needs to Invest $75bn in Power to 2020: Report
As governments in the Middle East and North Africa (Mena) ramp up investment in the power sector, a report* this month by the multilateral bank, Arab Petroleum Investments Corporation (Apicorp), estimates that the region will need to invest $334bn in power out to 2020.
Generation capacity will need to expand at an average 8%/year between 2016 and 2020 to meet greater urbanisation and a 2%/yr population growth, it estimates. Thus the $334bn figure corresponds to additional generation capacity of 147 gigawatts (GW) requiring $198bn investment, plus a further $136bn needed for transmission and distribution (T&D).
But Apicorp estimates that 96 GW of capacity additions are already being executed Mena-wide worth $117bn – of which 59% gas-fired, 28% renewable, but 13% coal – including several in Algeria.
Algeria, Egypt, Morocco and Tunisia will require some $75bn, or about 22% of the $334bn total, the report indicates.
Egypt will need to invest $28bn in power generation and a further $15bn in T&D in 2016-20, the report estimates. This would increase capacity in the region’s most populous country by 21 GW to reach 56 GW in 2020. It notes that the government last year announced plans to invest $43bn in the medium term but acknowledged a shortage of gas might constrain expansion of its generation capacity. Eni’s discovery of the giant Zohr field, plus new BP production, may allay that anxiety.
Apicorp says that, all told in Egypt, 20 GW of capacity is in execution and ready for commissioning by end-decade, noting that local firm Orascom with German giant Siemens are building three giant 4.8 GW gas-fired combined-cycle plants – Burullus, New Capital and Beni Suef – that will be among the largest in the world. The report notes that non-binding agreements (MoUs) signed by Egypt with firms to build 12GW of coal-fired plants could displace 1.3bn ft3/d (13.5bn m3/yr) of future demand. The report does not assess how many of these coal plants might get deferred, given Eni CEO Claudio Descalzi’s remark last month that Zohr will start up in late 2017 initially at 1bn ft3/d and rise in phases to 2.8bn ft3/d before this decade ends.
Across North Africa, the report says blackouts are “a serious issue for Egypt” and can occur there more three times a day. But they also persist in Libya where political instability and inadequate investment will continue to result in power shortages, frustrating their citizens. “In Sudan, much of the existing and future power is likely to be met through hydro, with 500MW expected from the planned Rumela and Burdana dams,” the report notes.
Algeria is among the few Mena countries with more generation capacity being built than is needed by Apicorp’s estimates. Required 2016-20 capacity is 7.5 GW, costing $19bn for plants and T&D, but the report says that 14 GW is in execution – of which the gas-fired Mostaganem (1.45 GW) and Nama (1.2 GW) plants are among the largest. State utility Sonelgaz will need foreign loans to bridge a $10bn funding gap for its overall capacity expansions, notes the report, adding: “Algeria is still struggling to kick-start its ambitious solar programme” of 12 GW by 2030.
Renewables will be at the fore in northwest African capacity additions, with 2.7 GW added by 2020 as Morocco and Tunisia move away from costly fuel imports. Overall, including fossil fuels, Morocco’s expected capacity need by 2020 is 12 GW (from 8.3 GW in 2015) and expansions will cost up to $9bn, while Tunisia will need $4bn to raise capacity from 4.6 GW in 2015 to 6.1 GW in 2020.
Apicorp was established in 1975 in Dammam, Saudi Arabia by the ten members of the Organisation of Arab Petroleum Exporting Countries (Oapec). Largest shareholders of Apicorp are Saudi Arabia, Kuwait, United Arab Emirates (UAE) and Libya. The report analysed prospects in the region from Mauritania through Sudan to Iraq, but also touched on planned nuclear plants in the UAE but also in non-Oapec member Iran.
Mark Smedley