Kuwait Power Market - Growth, Trends, and Forecasts (2020 - 2025)
The market is segmented by Power Generation (Oil, Natural Gas, and Renewables) and Power Transmission & Distribution
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Key Market Trends
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The Kuwait power market is expected to grow at a CAGR of over 3% during the forecast period. Factors such as increased demand for air-conditioning services in Kuwait which accounts for 70% of residential electricity demand and the increasing share of personal passenger cars in the overall transport mix are expected to drive the power market during the forecast period. Moreover, Kuwait’s government policies to increase the market share of independent power producers is further likely to promulgate the market. However, the volatile crude oil prices is expected to have a negative impact on the power generation sector as the majority of the power generation in the country comes from fossil fuels.
Natural gas is increasing its share in Kuwait energy mix and is expected to be the fastest-growing segment in the Kuwait Power Market, supported by the country’s diversification of its electricity generation supply portfolio by replacing crude oil with natural gas.
Kuwait has abundant availability of solar irradiance and receives solar energy throughout the year. This has created enormous opportunities in renewable sector to exploit solar energy from the sunniest sites in the country, with government’s target 15% in the country’s overall electricity mix by 2030.
Despite the decline in global oil prices, Kuwait signaled continued commitment to its stated production targets and investment programme and has ambitious oil and gas production targets which are expected to drive the power generation during the forecast period.
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Key Market Trends
Natural Gas to be the Fastest Growing Market
Kuwait plans to substitute natural gas for oil in the power generation sector, with an aim to address the government’s plant for climate change and also to retain oil-export revenues for savings and investment within the country. Therefore, natural gas is expected to be the fastest growing segment during the forecast period for Kuwait’s power market.
According to UNDP, Kuwait’s natural gas production is expected to grow from 17.4 billion cubic meters to 27.3 billion cubic meters in 2035. Moreover, Kuwait is favoring the use of natural gas in combined-cycle and steam plants for power generation and increasing share of natural gas-fired power plants with upcoming projects that are likely to bolster the natural gas segment in upcoming years.
Moreover, Kuwait uses electricity for water desalination and petrochemical production, as well as for enhanced oil recovery techniques for boosting oil production and being reliant on LNG imports to meet the demand. Therefore, natural gas is being used to meet most of the water desalination process.
Moreover, with natural gas being a clean source of energy and with government’s target to reduce emissions from power generation, natural gas has increased its share from 40% in 2005 to more than 47% in 2018.
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Ambitious Oil and Gas Production Targets Driving the Market
Kuwait has planned to invest over USD 100 billion between 2018 and 2023 in the oil and gas industry to boost production. These investments are majorly done, in order, to increase the crude production capacity from the current levels of crude oil and natural gas production.
Moreover, for the natural gas, Kuwait will increase production from 200 million billion cubic feet (bcf) per day to several folds by 2025 and beyond.
At present, nearly all of Kuwait’s crude oil production comes from onshore fields, but there are also active attempts to expand offshore production capacity. New investments are expected to be done in offshore oil and gas exploration and production in the coming years.
Also, Kuwait has begun chemical injection into a heavy oil field in the north of the country. The enhanced oil recovery (EOR) technique, which improves the mobility of residual oil through the reservoir, is the first of its kind to be applied in the Middle East and will attract investments by many oil and gas companies.
Therefore, the above mentioned factors are expected to increase the production and drive the power market during the forecast period.
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The Kuwait Power Market is moderately consolidated. Some of the key players are Kuwait Petroleum Corporation, ABB Ltd., General Electric Company, Siemens AG, and Al-Ahleia Switchgear Co. K.S.C.C.