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    Qatar Power Market Overview


    September 23, 2022 - Fitch Solutions Sector Intelligence

     

      • Power
      • Qatar
      • Market Overview
      • Fitch Solutions

      Qatar Power Market Overview

      • 23 Sep 2022
      THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.
      Regulation And Competition

      In May 2000, the Qatari government transferred assets owned by the Ministry of Electricity and Water (MEW) to Qatar Electricity & Water Company (QEWC), a semi-public body that is 57% owned by the government and its affiliates, and 40% by private investors. QEWC is responsible for adding new electricity generating capacity and is working on several large-scale power projects with foreign companies such as AES and International Power. Public-private partnerships are now the established model for procuring new electricity capacity in Qatar.

      Following the dissolution of MEW, responsibility for electricity transmission and distribution activities was transferred to the state-owned Qatar General Electricity & Water Corporation (Kahramaa), which is the sole purchaser of electricity generated in Qatar, and is responsible for the forecasting of national demand and determining future requirements for electricity generation. The government has considered plans to privatise transmission and distribution functions in order to improve services and generate further investment. However, at present Qatari nationals receive free electricity supplies, and prices are heavily subsidised for other customers (such as businesses), a policy that poses a significant barrier to complete privatisation. Kahramaa did implement a price increase in late 2015, although prices remain low (at QAR0.08/kWh up to 2,000kWh then QAR0.09/kWh up to 4000kWh and QAR0.10 per additional unit over 4,000kWh).

      Sustainable Energy Policies

      Renewable energy is still in the early stages of development in Qatar and the country is almost entirely focused on solar power. Qatar has set a target of 10GW of solar power by 2030. The country's planned solar power investments are primarily owned and operated by Qatar Solar, which is wholly owned by the Qatar Foundation, a non-profit organisation privately owned by Qatar's former emir Sheikh Hamad Bin Khalifa Al-Thani. Although the government has set ambitious targets around the expansion of solar energy, and has announced plans to move forward with the construction of a number of small-scale renewable projects, for the time being there is little to suggest that the country will significantly move away from its reliance on natural gas for electricity generation any time soon.

      In addition, Qatar faces several challenges with the development of solar power. They include the following:

      • lack of price competitiveness with natural gas
      • lack of renewable energy policy framework
      • solar power projects require huge land areas

      There is some scope for renewed investor interest in the renewable energy sector amid news that Qatar Petroleum and QEWC have formed a joint venture to develop new solar energy projects in the country. The new company will eventually be opened to foreign investors and is reportedly due to have an initial investment of USD500mn.

      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.

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