Industry Trend Analysis - Gas Power Domination To Continue Unabated - FEB 2018

BMI View: Natural gas-fired power will remain Bahrain's primary power resource over the coming decade, supported by the country gaining access to LNG imports in 2019. Efforts to diversify to renewables will intensify over the coming years - but we will need to see progress on announced tenders before we integrate any new renewables capacity into our 10-year forecast.

We see little scope for Bahrain to reduce its heavy reliance on gas-fired power generation over the coming decade, despite efforts to expand its domestic renewables sector. In fact, the country's consumption of natural gas in the power sector is set to grow substantially - in line with the expansion of aluminium smelter capacity and the development of desalination capacity. As such, we currently forecast gas-fired power to make up close to 100% of total power generation in Bahrain throughout our 10-year forecast period to 2027.

We expect robust power consumption growth - driven by expanding water desalination capacity and diversification into energy-intensive industry such as aluminium production - to lead to steady gas-fired power generation expansion over the coming decade. We forecast power consumption and gas generation to expand by annual averages of 5.7% and 6.2% respectively between 2018 and 2026. A large contributor to this will be the commissioning of the Line 6 aluminium expansion smelter project, which will support natural gas generation and power consumption growth of 34% and 28% respectively over 2019.

Aluminium Sector Driving Power Capacity Expansion
Bahrain - Power Generation By Type (LHS) And Thermal Capacity (RHS)
e/f = BMI estimate/forecast. Source: EIA, BMI.

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