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Kuwait Power Key View
Key View: The Kuwaiti power market is well developed and existing generation is more than sufficient to meet current domestic consumption demands. This limits incentives for investment in new capacity, though the government has outlined plans to develop new thermal power plants in order to facilitate the introduction of electricity exports. This will also require investment in cross-border transmission and distribution infrastructure to enable Kuwait to trade power with other GCC markets, as well as Iraq. Non-hydropower renewables have made limited inroads due to the strength of Kuwait's oil and gas reserves, though we do highlight some upside risk from the potential development of the green hydrogen sector.
Headline Power Forecasts (Kuwait 2021-2026)
|Indicator ||2021e ||2022f ||2023f ||2024f ||2025f ||2026f |
|Generation, Total, TWh ||71.1 ||73.1 ||75.0 ||76.6 ||78.3 ||80.0 |
|Consumption, Net Consumption, TWh ||64.3 ||66.4 ||68.2 ||69.6 ||71.3 ||72.8 |
|Capacity, Net, MW ||18,969.5 ||18,973.6 ||18,985.2 ||19,014.1 ||19,478.0 ||20,029.6 |
|e/f = Fitch Solutions estimate/forecast. Source: EIA, IRENA, Fitch Solutions |
Latest Updates And Structural Trends
- Modest growth is expected in Kuwait's power market in terms of total electricity generation in 2022, with our current forecasts showing output rising by 2.8% to reach 73.1TWh. Thermal power will continue to make up the vast majority of output, with natural gas accounting for around 62% and oil for 37%, alongside a very minimal contribution from non-hydropower renewables.
- Kuwait's oil and gas resources mean the thermal power sector will remain the focus of investment. In April 2022, a joint venture between Heavy Engineering Industries & Shipbuilding and Mitsubishi Power submitted the lowest bid of KWD90.9mn (USD298.3mn) in a tender issued by Kuwait's Ministry of Electricity and Water and Renewable Energy for works on 2.4GW Sabiya Oil-Fired Power Plant in the country. The scope of work includes the modernisation of steam turbines and electric generators for eight steam units (Saudi Gulf Projects).
- Regional interconnections are also a target for expansion. In March 2022, the Kuwait Fund for Arab Economic Development signed a KWD35mn (USD115mn) loan agreement with GCC Interconnection Authority which will help fund development of Kuwait's transmission and distribution network as well as connections with southern Iraq.
- The green hydrogen sector could spur greater investment into non-hydropower renewables. In February 2022, Kuwait's oil minister Mohammad Alfares reported that the country was developing a pilot green hydrogen project as well as planning to tender a 2GW wind and solar power project via the Kuwait Authority for Partnership Projects.
This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.