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Kuwait Power Report Q4 2011
Business Monitor International, Oct 2011, Pages: 42
BMI View: Nuclear energy may be on the distant horizon for Kuwait, but its near- to medium-term power future depends almost exclusively on oil and gas. Much of planned new generating capacity is gas-fired, with oil often as a back-up fuel. The aim is to make more of the country's oil available for export, even if this means a growing reliance on imported gas. Low power costs means that project economics are unlikely to attract foreign investors, so Kuwait looks set to go it alone in meeting its growing power demand.
During the period 2011-2015, Kuwait's overall power generation is expected to increase by an annual average of 4.28%, reaching 62.1TWh. Driving this growth is an annual 5.9% gain in gas-fired and a 3.5% rise in oil-fired generation.
Conventional thermal sources are expected to remain the dominant fuel for electricity generation in the coming years, with many power projects under construction or planned that will use gas in order to reduce domestic oil consumption and free up additional barrels for export. The electricity and water ministry wishes to more than double generating and desalination capacity by 2017. An estimated US$2.5bn is expected to be invested over the medium term to cater for the projected power demand until 2015.
Following an increase in 2011 real GDP of an estimated 6.1%, BMI forecasts average annual growth of 4.1% between 2011 and 2020. The population is expected to rise from the current level of 2.93mn to 3.18mn by 2015, and net power consumption looks set to increase from 46.2TWh to 54.8TWh by 2015, rising further to 67.2TWh by 2020. During the period 2011-2015, the average annual growth rate for electricity demand is forecast at 4.50%, but slowing later in the decade to an average 4.18% in 2016- 2020.
Thanks partly to the forecast rise in net generation, growth of which barely matches the underlying demand trend, Kuwait could end up having a growing power supply shortfall. A gradual decline in the percentage of transmission and distribution losses from around 12.4% will help balance the market. The theoretical net import requirement by 2015 is put at 0.2TWh, but this could increase to 1.2TWh by 2020.
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