Growth in the power sector is expected to pick up from the current 7.4 per cent to over 17 per cent by 2020 with the spending on power generation between 2011 and 2020 pegged at approximately $100 billion (Dh367 billion), according to a recent report by Frost and Sullivan.
The sharp increase in power generation is mainly due to the rapid economic growth in sectors such as petrochemicals, water and mining and will be reflected in an increase in spending on power transmission and distribution (T&D).
A cumulative investment of about $30 billion on power T&D infrastructure is expected in the region between 2011 and 2016 along with the development of approximately 5,000 kilometres of new network infrastructure.
According to experts at Frost and Sullivan this will involve $8-$10 billion being spent on T&D lines.
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"Some key challenges faced by the power T&D sector in Saudi Arabia today include the constant need for investments to meet peaking demand, a lack of coordination between stakeholders, insufficient focus on energy efficiency, need for technology adoption, lack of qualified manpower, and a lack of finances, especially for the highly-priced energy efficient equipment," said Abhay Bhargava, industry manager, Frost and Sullivan Energy and Power Systems.
According to another upcoming report by Frost and Sullivan the Saudi power transformer market was estimated to be worth $1 billion in 2010, of which locally manufactured transformers amounted to $70 million.
Bhargava recommends that the Saudi power sector should develop local manufacturing enterprises which will help address most of the equipment requirements of the power T&D market and promote national enterprises.
"A critical challenge to the development of the Saudi Arabian power market is the lack of a technically capable workforce. To address this, the country needs to foster an environment that encourages joint ventures, with a focus on technology transfer and development of local talent," Bhargava said.