Many countries within MENA have been struggling to meet fast-growing demand for electricity, a consequence of high population growth, fast expanding urban and industrial sectors, increasing needs for air conditioning, and heavily subsidized electricity tariffs. With ongoing turmoil in parts of the region, catching up with unmet demand may be perceived as socially and politically more desirable.

In the absence of active demand side management, this will entail a capacity growth of 7.8% per year, which translates into a five-year increment of 124GW above the 2012 level. Therefore, with current reference costs – reflecting prevailing prices of engineering, procurement and construction (EPC) and country investment climates – the capital required will be in the order of $148bn for 2013-17. As shown in the table below, the GCC area, which will continue to grow at the highest rate, accounts for 43% of MENA total and 53% of the Arab world total (expenditure for nuclear power generation is implicit for the UAE).

But power generation comes with T&D systems. This derives from the need to develop networks to supply electricity to industries, businesses and households. Transmission grids consist of high voltage lines designed to transfer bulk power from generation plants to large industrial customers and distribution centers, generally over long distances. In contrast, the function of low voltage distribution grids is to supply power to final consumers in urban and, whenever socio-economically desirable, in rural areas as well. Under this grid-based supply perspective, MENA T&D investment amounts to $103bn for 2013-17, with further breakdown given below.

Table MENA Investment In The Power Sector

2011 Installed Capacity (GW) 2011 Electricity Production (TWh) Medium-term annual growth (%) 2013-17 capacity addition (GW) 2013-17 Capital Requirements (G$)
Maghreb 32 112.8 7.4 14.6 17.6
Mashreq 60.7 294.1 7.6 29.1 36.8
GCC 104.8 461.6 8.5 57 63.1
Rest of Arab World 4.4 15.6 6.6 1.8 2.3
Iran 49.7 227 7 21.4 27.8
MENA Total 251.6 1111.1 7.8 123.9 147.6
Investment in $bn Generation (G) Transmission (T) Distribution (D) Total (T,D) Total (G,T,D)
Maghreb 17.6 3.9 9.7 13.6 31.2
Mashreq 36.8 6.3 18 24.3 61.1
GCC 63.1 10.7 30.9 41.6 104.7
Rest of Arab World 2.3 0.5 1.3 1.8 4.1
Iran 27.8 6.1 15.3 21.4 49.2
MENA Total 147.6 27.5 75.2 102.7 250.3