Saudi Arabia's $209m power shortage

Saudi Arabia needs an energy boost

The Kingdom of Saudi Arabia's power need has been highlighted by the company's electric company, Saudi Electricity Co, seeing a loss of US$209 million in its first quarter due to it having to purchase power from external provider's to effectively meet the kingdom's energy demands.

In a statement, the company said its loss was "due to the increase in purchased energy from independent producers in order to meet the increased energy demands, as well as the increased costs resulting from new projects."

It is no surprise that if the company is making these sort of losses, that it wants to make some sort of expansion, but such a project is expected to cost upwards of US$1.87 billion. Currently though, the company is trying desperately to make sure it can meet Suadi Arabia's power demand, which is currently growing at a rate of eight percent per year.

It was recently estimated that if Saudi Arabia is to meet its rising domestic demand, then it needs to raise its investments in its power and water supplies industries by a third to at least US$266.7 billion through to 2025.

However, while the Kingdom has plans to spend more than US$400 billion over five years to upgrade infrastructure, such as airports, roads and power plants, its energy plans aren't as highly financed - only US$186.6 billion - US$79.9 billion on power generation, US$53.3 billion on water desalination projects and US$53.3 billion on sewerage.

According to a recent report from Banque Saud Fransi, this amount is "a step in the right direction - but at least a third more in funding would be required to bolster capacity in a way that comfortably cushions demand."

Additional energy plans

In order to meet the Kingdom's future energy demands, Saudi Arabia has said it is set up a scientific centre for civilian nuclear and renewable energy. Despite the country being the world's second highest producer of oil, domestic power demand has forced Saudi Arabia to look at other sources of energy to support their economy as well as the rest of the world's.

The country's investment in power generation is expected to see capacity increase from 46,000 MW now to 67,000 MW by 2020.Currently, the UAE is the first Gulf Arab country to take the nuclear route, in a bid to meet rising electricity demand for a fast-growing population.

Despite saying they intend to increase the use of crude oil for power generation to 2.5 million barrels of oil equivalent on a daily average by 2020 from 1.5 million BOE in 2009, Saudi Arabia's plans to invest in alternative, sustainable, reliable sources to produce electricity and desalinate water is a clear intent to reduce their reliance of their oil reserves.

Relevant articles:

Saudi Arabia's airport modernisation plans | Qatar's $1.17bn energy upgrade | Saudi Arabia puts $53bn into water projects

Timon Singh

Timon Singh is a graduate of Liverpool University where he received a degree in Social and Economic History. He has previously worked for BBC Magazines on BBC Who Do You Think You Are? Magazine, the publication for the popular genealogy show.

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