The Qatari power EPC market is expected to register a CAGR of over 3.8% during the forecast period 2020 - 2025. Factors, such as the growth of the industrial sector, are expected to be the most significant long-term drivers for the market in the country. Similar to the other oil and gas producing countries in the region, the Government of Qatar is also concerned about overdependence on the petroleum industry. In order to address this problem, the government is actively investing in other industrial sectors to diversify the economy. As a result of this approach, during the last five years (2014-2019), 380 new industrial facilities have been built in the country, which is likely to drive the Qatar power EPC market during the forecast period. However, the entire risk of loss is bared by the contractor which is discouraging the entry of small local players into the market, which is likely to restrain the growth of the power EPC market in the country in the coming years.
- The power transmission and distribution segment is likely to register significant growth during the forecast period, due to the need for new infrastructure, as well as upgradation of existing transmission and distribution infrastructure.
- The Government of Qatar has been committed to the improvement of greater health and education services and is keen to develop the tourism market, which creates an increase in demand of electricity, therefore provides a wide range of opportunities in the Qatar Power EPC market.
- Shift toward the solar and wind power generation is expected to drive the market during the forecast period.
Key Market Trends
Power Transmission and Distribution Segment to Witness Significant Growth
- The transmission and distribution sector in the country is 100% owned by the state-owned organization, Kahramaa, a subsidiary of Qatar General Electricity & Water Corporation. No private investment is allowed in this sector.
- Qatar has a well-established grid infrastructure that connects 100% of the population in the country. Yet, the transmission and distribution sector is witnessing a massive inflow of investments, mainly owing to the increasing power demand and developments in the power generation sector, which resulted in the need for new infrastructure, as well as upgradation of existing transmission and distribution infrastructure.
- Electricity demand is increasing at a substantial rate in the country. In line with this growth, the power generation sector has also witnessed significant capacity additions. With the growth of the power generation sector, the requirement for expansion and upgradation of the transmission infrastructure has also grown, resulting in the increasing investments in this sector. The expansion of the transmission and distribution infrastructure is primarily driven by the following factors.
- With the growth of the industrial sector, particularly in the last five years, and increasing infrastructure development aimed at the FIFA World Cup 2022, the electricity demand in the past few years grown at a rate well over 7%. In order to meet this demand, the power generation sector witnessed significant capacity additions. During 2008-2018, the installed power generation capacity increased from 4,032 MW to 10,580 MW.
- Hence, during the forecast period, given the number of power generation projects under-construction and in-pipeline, the demand for the transmission and distribution infrastructure is expected to register a similar growth trend.
Shift Toward the Solar and Wind Power Generation to Drive the Market
- In 2008, the Government of Qatar announced Qatar National Vision 2030 plan, aimed at the sustainable future development. The vision had set the target of achieving 2% of the electricity generation from the renewables by the end of 2020, and 20% of electricity generation from solar power by 2030.
- In line with this plan, several projects are under-construction/under-pipeline in the country. Some of such major projects are:
- Siraj Power, a state-owned company, is in the processing of selecting the EPC contractor through bidding for a 700 MW solar power plant to be built in Al Kharsa district. The 350 MW of the solar capacity from this plant is expected to be connected to the grid by the first quarter of 2021, and the rest 350 MW is estimated to be connected to the grid by the fourth quarter of 2021.
- In 2015, Qatar General Electricity and Water Corporation selected K1 energy, a consortium between Mitsubishi and Tokyo Electric Power Company, to build a wind farm of a capacity of 2.4 GW.
- In January 2020, Total SA announced that it is going to build an 800 MW solar farm in Qatar. Upon commencement, this plant is expected to become the biggest solar power plant in the country. This solar farm is also Total SA’s biggest solar power plant project to date.
- The renewable power generation is expected to drive the investments not only in the power generation sector, but also in the transmission and distribution sector. The renewable energy is an intermittent source of power and hence, can put extra pressure on the grid infrastructure. In order to handle the intermittency issues, the transmission & distribution infrastructure is expected to require the upgradation.
- Hence, shift towards solar and wind power generation is expecetd to drive the market during the forecast period.
The market is moderately fragmented. Some of the key players in this market include El Sewedy Electric Co SAE, Samsung C&T Corp., Siemens AG, Yokogawa Electric Corporation, and Larsen & Toubro Limited.
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