Brighter outlook for power consumption in MENA. A brighter outlook for power consumption will mean the Middle East and North African region (Mena) region will outperform Sub-Saharan African (SSA) in the form of investment opportunities, as the latter continues to battle with supply shortages, a new report has shown.
East Africa’s focus on power market integration, and Southern Africa’s focus on boosting coal power, highlight the resulting concerns over energy security, BMI has said. In Mena, diversification away from oil-fired power, and a push to boost solar power, highlights a strategy of power mix diversification. There are significant distinctions that differentiate the regional markets within BMI’s Mena power sector coverage. Mena, on the one hand, is a more mature regional power market, where the level of economic development and the availability of fossil fuel feedstock feed into progress in developing new power generation capacity.
In comparison, SSA power market is relatively underdeveloped, with governments struggling to field the investment necessary to boost electricity generation, in part due to the widespread issue of a failure to implement cost-reflective electricity tariffs.
“This has mostly led governments to focus on boosting cheap hydropower output, which in turn has rendered numerous countries vulnerable to hydrological fluctuations,” BMI said. BMI expects power consumption in the Mena region to outpace that of SSA over the next decade despite the significant differences in population (SSA’s current population stands at 1bn, whereas the Mena region has 363mn). SSA power consumption will grow by an annual average of 3.6% between 2017 and 2026, compared to 4.1% in Mena over the same timeframe, BMI said. Given that Mena’s growth will be from a higher base, net additions to regional consumption from end-2016 will be about 483TWh higher than what will be the case in SSA over our 10-year forecast period. This in turn leads to diverging prospects for investment into power generation infrastructure to support the power demand in each region.