United Arab Emirates Power Report Q2 2016
BMI View: Our forecast for the UAE power sector remains bullish over the next decade, driven by thegovernment's efforts to expand its power capacity. As corroborated by recent developments, we continue toexpect the UAE to focus on expanding its nascent nuclear and solar industries, which will result in thesetwo sectors making a much greater contribution to the country's electricity capacity and generation mixover our forecast period. While solar and nuclear gain traction, the role of natural gas in the power mixwill diminish, freeing up gas for export. Yet we remain sceptical about the ability of the country to meet itstargets with the anticipated speed.Key Trends And Developments
Nuclear power generation will be a key component of the UAE's power mix diversification strategy overthe next decade. We believe increasing natural gas imports, due to strong power consumption growth andheavy reliance on gas-fired power generation, will be the key driver of such efforts. The continuedgrowth in gas demand will reinforce government support for diversification, adding tailwinds to nuclearpower, as well as renewables, over the longer term. Despite the dominance of natural gas, nuclear andrenewables will grow significantly over our 10-year forecast period, as a strong project pipeline fornuclear reactors and solar power plants begins to go online.
The UAE's position as a GCC regional hotspot for solar development will remain unrivalled over our 10-year forecast period, as advantageous climatic conditions, the increasing cost competitiveness of solarpower and strong government commitment to power mix diversification drive growth. The strengtheningproject pipeline is testament to this view.
Inefficient consumption of electricity and a reliance on energy intensive water desalination plants supportour bullish outlook for power consumption in the UAE over the next decade. We expect the governmentto aim to curb such growth through boosting energy efficiency; efforts we believe will centre onimplementing measures that ensure smarter consumption of electricity and water. We expectopportunities to increasingly be on offer for companies that operate in this space, and in turn, this willpresent a downside risk to our power consumption forecast.
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