With about $30bn a year of capital spending on major projects, the power sector has long been one of the strongest and most reliable providers of business and investment opportunities in the Middle East and North Africa (Mena) region.
But over the past four years, the region has been embarked on a remarkable programme of energy reforms that are transforming the Mena power sector beyond recognition, and which are creating exciting new opportunities and challenges, for business and government alike.
Sustainability and energy efficiency have become the driving forces behind radical and controversial shifts in policy such as the removal of energy subsidies that have for decades kept energy and water tariffs artificially low.
The subsidy cuts are being introduced to reduce the financial burden on the state and also to encourage consumers to curb their usage, thereby lowering the speed at which new capacity needs to be built.
Procurement models are changing too, with renewed interest in privately developed utility projects in order to spread the capital cost of building new capacity over a longer period.
A much broader privatisation trend is also emerging, whereby governments are looking to sell off assets and unbundle generation, transmission and distribution. This will provide short-term windfalls for cash-strapped governments, but in the long term will lead to a more efficiently run power sector.
Perhaps the biggest transformation of all is the drive to diversify the region’s energy mix. Faced with a shortage of readily available gas supplies and attracted by the falling cost of technology, nearly all Mena countries are now procuring or planning solar and wind projects. They are also looking at other forms of renewable and alternative energy, from waste-to-energy to nuclear power.
Rapid population growth, coupled with industrial and economic expansion, is driving rising electricity consumption, making power capacity addition the need of the hour for regional governments. But satisfying the rise in demand is becoming increasingly challenging.
Few industries are as important to the sustainable development of the Middle East and North Africa (Mena) as the power sector. And few industries are undergoing such high levels investment and transformation.