Emerging countries need huge investment to meet power demand

New York City, July 5, 2012 — The growing economies and population of emerging nations mean that huge investment is needed for these power markets to meet demand, according to a new report by energy sector analysts GBI Research.

The report states that countries across South East Asia, Africa and the Middle East have been amending regulatory frameworks and embarking on privatization, as many of them are in serious need of external funding to ensure that their respective electricity industries are capable of dealing with the inevitable surge in demand.

The cumulative installed power capacity for these regions, according to 2012 estimates, will be 212 GW. However, GBI Research expects this figure to shoot up to 349 GW by 2020, climbing at a Compound Annual Growth Rate of 6.4 percent.

The power market in South East Asia, Africa and the Middle East is currently dominated by thermal power, which accounted for almost 85 percent of total installed capacity in 2011. Renewable energy is expected to have a greater share of the power market in the future, with solar and wind power sectors in particular expected to expand, but the demands of these growing economies make a substantial reliance on renewables impractical.

The high capacity of thermal power compared to more sustainable forms makes it a more profitable and pragmatic solution. Consequently, the share of thermal power is only expected to decrease to 79.5 percent by 2020.

Rising industrialization, ever-increasing population figures and growing economies all point to an electrical future that most infrastructure systems are presently incapable of handling. Therefore, to achieve greater industry efficiency and encourage competition, governments across this region are opening up their electricity markets and increasing private sector participation. The region has to invest heavily in order to increase its installed capacity and improve its existing infrastructure.

Transmission networks in many of these countries are already under tremendous pressure to supply power without interruption, and many new transmission projects are already underway or in the pipeline.

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