US$48 trillion needed to meet global power demand over the next two decades

NBAD report identifies the need for innovative approaches to financing energy infrastructure to meet future demand.

  • Energy demand in the Gulf to triple in the next fifteen years far outstripping today’s supply.
  • Closing the global energy gap will require US$48 trillion of investment over the next 20 years in projects that provide additional energy generation capacity and improve the efficiency of energy use.
  • More than half of the investment in new electricity generation worldwide is in renewables – solar PV will be at price grid parity in 80% of countries in the next two years.
  • Gains made from energy efficiency are as great as the benefits of increased generation – with some industrial applications of energy efficiency delivering 100% payback in five years.
  • This puts the Gulf at the centre of a significant new opportunity in energy.

These findings are set out in the NBAD: Financing the Future of Energy Report which was launched today at the Global Financial Markets Forum in Abu Dhabi. The report, commissioned by NBAD, the Middle East’s leading bank, from the University of Cambridge and PwC, and in collaboration with Masdar, sets out the changing nature of the global energy mix over the next decade which will see an increased contribution from renewables. The report highlights the growing demand for sustainable energy; the technologies that are most likely to close the supply-demand gap; and the scale of financing required.

“We should not underestimate the scale of the task that is facing us all” stated Alex Thursby, CEO NBAD. “To meet the significant demand for energy globally – in particular across the West-East Corridor, the rapidly growing super-region that stretches from Africa through the Middle East to Asia – we need to develop innovative approaches to financing energy projects. The future gap in energy demand and supply presents a real opportunity for the banking sector and the Financing the Future of Energy Report marks the start of a strategy to learn, collaborate more and to make a real contribution to helping this region meet its own energy challenges. At NBAD we want to understand better what the real drivers are so we can respond to them effectively and be a positive force, accelerating the transition to a much needed new world of energy.”

The report provides the evidence base from which the financial services sector can develop innovative financing structures and products to meet this significant opportunity and support the growth of the low carbon economy.  It also provides insights into how the financial community can engage with public and private sector stakeholders to create a more integrated energy mix for the future.

“The strategy we have set ourselves at NBAD is to expand our presence along the West-East Corridor and this report provides a platform for to us to engage the key decision makers in the region and develop new financial structures that will ultimately convert the trends into bankable solutions.” said Nathan Weatherstone, Executive Director, Project Finance Advisory.

In response to the scale of the opportunity set out in the research, NBAD has established a dedicated team, under senior leadership, to evaluate and create new financing products that will support the development of renewable energy. The team will embark on an engagement programme with key regulators, policy makers and industry players to capture up to date market trends and promote continued partnership and shared learning between the renewables and finance industries.

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