Pressure seen easing on struggling Saudi power grid

The strain on Saudi Arabia's power sector has eased in the second half of 2009 amid a slowdown in industrial and economic activity, a new report has said.

The growth in demand for electricity in the kingdom has been "held in check" and a study by Business Monitor International added that demand will no longer outstrip supply this year.

Analysts said they are now predicting a surplus in power generation, with demand growth seen slowing to 5 percent over the next four years.

In 2013, consumption in the country is set to reach 221 terawatt hours with generation at 259TWh.

In June, it was reported that the Saudi Electricity Company (SEC) was having to ration power to Jeddah's Industrial City, leaving business without power for three hours in the middle of the day, resulting in losses of between $133-240 million during the month.

"However, the strain on Saudi Arabia's power sector as a whole has been relieved to some extent of late as the growth in electricity demand has been held in check by reduced industrial and economic activity," BMI said in its Saudi Arabia Power Report for Q1 2010.

BMI added that despite the short term easing in demand, it would return in the long term, forcing the country to increase its capacity.

SEC has announced plans to spend $28bn to add 13,000MW of power over the next three years, rising to $70bn invested by 2018, the report said.

BMI said that gas power electricity generation would increase to 55 percent of the country's power mix by 2013, with oil generating 44 percent of the power needed.

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