Surging Demand: The Future of Electricity in MENA

Electricity consumption across the Middle East and North Africa is soaring with an expected continued upward trend as nations diversify energy sources to meet growing demand, reveals a new report from the International Energy Agency (IEA) released today. The report, titled 'The Future of Electricity in the Middle East and North Africa', offers an exhaustive analysis of the electricity systems in a region pivotal to the global energy network.

Between 2000 and 2024, electricity demand in the Middle East and North Africa region tripled, driven by increasing populations and incomes. According to the IEA, based on current policy settings, consumption could rise by another 50% by 2035, equaling Germany and Spain's current demand.

The IEA projects that up to 40% of the demand increase will stem from the need for cooling and desalination in a region characterized by extreme heat and water scarcity. Furthermore, urbanization, industrialization, transportation electrification, and expanded digital infrastructure are additional factors pushing up electricity usage. Currently, natural gas and oil dominate the region's electricity output. However, efforts are underway in countries like Saudi Arabia and Iraq to reduce oil dependency in electricity generation.

Natural gas is anticipated to meet half of the electricity demand growth by 2035, slashing oil-fired outputs to 5% from 20% today. Solar energy is expected to expand significantly, possibly increasing its share of regional power up to 25% through a tenfold rise in solar PV capacity by 2035. Nuclear power is also positioned for robust growth, with a threefold increase in capacity foreseen. This energy transition will steer the Middle East and North Africa away from oil for electricity production, reshaping global energy balances and emission contributions.

The report highlights that investment in the power sector reached $44 billion in 2024, projected to rise by 50% by 2035. With about 40% of this investment funneled towards improving grids, the region aims to tackle transmission losses that exceed global averages. The document also contemplates a scenario where slower diversification could increase oil and gas demands, potentially slashing export revenues by $80 billion and raising import costs by $20 billion by 2035, reflecting the necessity for planned energy shifts in the region.

(With inputs from agencies.)