According to the latest industry report from MEED.com, in the first half of 2020, the new crown epidemic has severely affected the power sector in the Middle East and North Africa (MENA). The blockade implemented to prevent the spread of the virus has led to a downturn in commercial and industrial activities and consequently a sharp drop in electricity demand. In the first half of this year, the contract value of power projects in the MENA region fell to US$5.9 billion, a decrease of 9.9% from the same period in 2019.
With the economic recovery in the region in the second half of 2020, the prospects of the MENA power project market are expected to be strong.
Despite the severe impact of the epidemic, national power project activities in the MENA region rebounded rapidly in July, especially in the field of renewable energy. In recent years, the power industry in the MENA region has spent approximately US$30 billion in capital expenditures on major projects each year. It is considered to be one of the strongest and most reliable providers of business and investment opportunities in the MENA region.
In the past three years, the power sector in the MENA region has begun to implement a compelling reform plan, which has brought radical changes to the power sector in the MENA region and brought exciting new opportunities and challenges to enterprises and governments.
Sustainability and energy efficiency have become the driving forces behind radical (more controversial) changes in policy, such as the removal of energy subsidies, and the artificially lowering of energy and water charges for decades. The reduction in subsidies is to reduce the government's financial burden and to encourage consumers to control their use, thereby reducing the speed at which new capacity needs to be built.
At the same time, the procurement model is also changing, and people are re-interested in privately developed public utility projects in order to spread the capital cost of building new energy sources over a longer period. A broader trend of privatization is also emerging. Governments in the MENA region are seeking to sell assets to divest power generation, transmission and distribution businesses. This will provide short-term windfalls for the capital-strapped government, but in the long run, it will make the power industry more efficient. Perhaps the biggest change is to promote the diversification of the energy structure in the MENA region.
In recent years, attracted by the decline in technology costs, almost all countries in the MENA region are now purchasing or planning solar and wind energy projects. They are also focusing on other forms of renewable energy and alternative energy, from waste to nuclear energy. The rapid population growth, coupled with the expansion of industry and economy, is driving the rise of electricity consumption in the MENA region. However, meeting the growth in demand is becoming increasingly challenging.