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The Middle East can achieve first-move advantage in a market that appears to be the
longer-term future of energy.
The rise of shale has posed a rare challenge to Middle Eastern oil, culminating in a global oil
price war and moving OPEC members to slash profits to retain market share. But at a time when
OPEC's hegemony over the oil markets has been challenged, let us not forget there is another
abundant natural energy resource the Middle East possesses - the sun.
The abundance of sunlight (and therefore solar power) offers Middle Eastern energy producers
an opportunity to achieve first-move advantage in a market that appears to be the longer-term
future of energy. In light of recent instability in oil markets, the importance of alternative
renewable energies, particularly solar, has become all the more pronounced. The drop in oil
prices has precipitated an efficiency rush in energy production in all producer nations. In the US,
oil producers are leaving no stone unturned in the hunt to become as efficient and sustainable as
possible.
In Europe, there is a renewed push for renewable energy and some countries like the UK are also
pursuing nuclear energy as a longer-term solution. In the Gulf, there are similar measures taking
place to become more efficient in a more competitive energy market, and increasingly, they are
turning to solar to achieve it.
Domestic budgets
The Gulf states remains one of the biggest oil producers in the world, and make up the biggest
exporting members of OPEC, especially Saudi Arabia. While some of these countries can afford
to swallow current oil prices for now, they will nonetheless find it difficult to maintain their
domestic budgets - all OPEC countries chose to cut prices in order to hold onto market share, this
means slashing profit. It would not be unprecedented for these countries to encounter domestic
trouble.
The other, more serious concerns for these major oil producers, is the increasing consumer
demand in their own countries. In past decades, the region has been able to sustain luxury
alongside completely inefficient energy policies through government subsidies. But the entire
energy outlook for the region is changing rapidly.
Rising populations, a growing middle class, industry diversification and increasing consumerism
has turned a number of countries in the Gulf region into major energy consumers. In Saudi
Arabia, oil accounts for over 65 percent of all electricity production, in Kuwait it is 71 percent, in
Lebanon it is 94 percent and in Yemen it's an astonishing 100 percent. This represents an energy
policy that is inefficient and in the long run - unsustainable.
Saudi Arabia is the biggest petroleum consumer in the region, it is the world's second biggest
consumer of total primary energy, 60 percent of which is petroleum-based. But most importantly,
it paints a distressing future for the regions oil export industry. If consumer demand continues to
grow, it will eventually result in downward pressure on oil exports and could start affecting
subsidies. Without a robust and efficient energy balance in the region, it will inevitably lead to
these producer nations becoming less profitable with a weaker export outlook.
Long-term dynamic
And with competitors in the oil market like Russia, Iran and the North American shale, this is a
long-term dynamic that will undermine Middle East's global energy dominance.
However, the possibilities associated with harnessing Middle Eastern solar energy could be a
game-changer. Solar is becoming much cheaper to invest in, and now has an established and ever
improving infrastructure. Substantial investment in solar will act as a shield for the region's more
valued commodity; oil. Saudi Arabia alone for example, could have made $43.8bn in additional
oil revenue in 2013 were it not for its spiralling domestic consumption.
It also would have acted as a massive stimulus to the country's finances. Earlier this year, Saudi
Aramco, the state oil company, announced it would be making solar energy investments across
the country in an attempt to diversify the country's energy supplies. It is also expected to
conserve the country's oil resources primarily for export.
It has been a slow process but is nonetheless an important one for the future of the solar energy
sector. One of the biggest success variables for any solar energy project is not just investment,
but location. The Middle East's solar industry is one of the most economically sustainable and
acts as the best conserver of the region's oil resources.
Investment opportunity
It is also a very strong investment opportunity for those looking to invest in a sustainable, longterm energy sector with a ready market and significantly lower start-up costs then depleting
energy exploration.
But these new developments would also have another important advantage for the Middle East; a
cleaner environment. The use of petroleum for electricity generation has made the Middle East's
air quality one of the poorest in the world. Twenty-nine of the world's most polluted cities are in
the MENA region.
Recent energy challenges could have very costly consequences for the region if left unaddressed,
but they could also reap huge rewards if met with robust energy reforms and additional
investment in alternative energies, especially solar. And there are positive signs for the region.
Saudi Arabia alone has announced a $109bn investment plan to generate a third of its electricity.
Qatar has also made solar energy agreements with major renewable energy companies as part of
its commitments to the Solar GCC alliance.
How these measures materialise over the next decade or so remains to be seen, but there is room
for optimism. What's more, the Middle East's unrivalled solar potential means that theoretically,
it can become more then a just a world leader in fossil fuel production, it can become a world
leader in renewable energy production as well.
The possibilities associated with harnessing Middle Eastern solar energy could be a gamechanger. Solar is becoming much cheaper to invest in, and now has an established and ever
improving infrastructure.
Middle Eastern startups are also getting in on the solar boom, attempting to solve the regions
problems on a smaller scale. Karmsolar aims to combat the regions water shortage with solar
desalination systems and water pumps, while Solarist hopes to provide cheap, portable desalination
machines.
Unsurprisingly, a study by S&P pegged interest in solar power to rising oil costs. According to
S&Ps findings, from 2004-2008, the annual value of solar activity rose each year, with deal
activity reaching $3.1 billion in 2008 (oil prices peaked in July 2008.)
For oil-rich Gulf States, the move toward solar energy is a smart one. The more solar energy they use
to power their nations, the more petroleum they can export to oil-thirsty countries.
Last year was a breakthrough 12 months for solar power in the Middle East.
To put 2014 in perspective, in the previous 7 years only 70 megawatts (MW) of solar photovoltaic
system (PV) projects were awarded across the region. In 2014 alone, that figure stood at 287MW
a fourfold increase according to a new report published by the Middle East Solar Industry
Association.
There are two factors fuelling this sharp rise in solar projects in the region.
First, the price of solar systems has dropped dramatically since 2009 when the first large-scale
solar project in the Middle East was unveiled by Masdar in Abu Dhabi. The installation cost of
utility-scale solar PV power plants have fallen from about $7.00 perwatt in 2008 to less than
$1.50 per watt last year. This amounts to more than a 75 per cent cost reduction. It means that for
the same budget used to run a 10MW solar PV power plant in 2008, a plant five times larger can
be built today without having to spend a fil more.
As a result of this cost reduction, solar energy is now competitive with the wholesale price of
electricity in many jurisdictions in the Middle East. One example is the recent Dubai Electricity
& Water Authority (Dewa) tender for a 100MW solar PV power plant. Dewa was able to secure a
25-year electricity tariff of approximately $0.06 per kilowatt hour (kWh). This tariff is broadly in
line with the price of generating power from natural gas, the staple fuel for much of the regions
power generation infrastructure.
At the same time as solar prices are falling, the cost of generating electricity from natural gas is
going up.
Here in the UAE, the government has historically been able to produce or import natural gas for
less than $2.00 per million British thermal units (MMBtu) resulting in natural gas-based
electricity generation at very low cost.
Today, however, much of the new domestic natural gas production could cost up to $8.00 per
MMBtu to deliver to the market due to high concentrations of hydrogen sulphide (H2S) or
carbon dioxide (CO2), which are toxic and corrosive. LNG imports, which were introduced in
2010 in Dubai and may begin on a larger scale in Abu Dhabi as early as 2016, cost more than
$12.00 per MMBtu.
Meanwhile, in Jordan, the natural gas pipeline that provided the country with 95 per cent of the
fuel needed to generate its electricity was repeatedly blown up during the Arab Spring. This
pushed up the average cost of electricity to $0.24 per kWh.
When solar developers approached the government and offered solar PV energy at a price that
was 30 per cent cheaper, its no surprise that Jordan jumped at the opportunity and awarded longterm utility-scale power projects to 12 international consortiums dotted across the countries.
Together they will generate 300 GWH of clean electricity, enough to power nearly 1 million
households.
Even with the recent drop in oil prices, solar power will continue to grow. For one, oil accounts
for only 5 per cent of global electricity production, according to the International Energy Agency.
In the Middle East, the majority of the electricity generated comes from natural gas. And as we
have seen from the Dewa example, solar power is already in line with the cost of electricity from
natural gas.
Moreover, solar and oil operate based on opposite drivers. With fossil fuels such as oil and
natural gas, as demand goes up, so do prices. With solar, as consumption goes up, prices come
down thanks to economies of scale. And so, as demand for solar continues to balloon in our
region, we will see prices continue to deflate, thus creating a whirlwind cycle which will
progressively expand the footprint of solar across the region regardless of the fluctuations in oil
prices.
Looking ahead to 2015, we will see three trends emerging.
First, we will see projects become much bigger in size. The typical project will go from 1 to
10MW to 10 to 100MW. According to research compiled by Mesia, in 2013 there were only 4
projects awarded that were larger than 10MW. In 2015, we expect that number to reach 40, a
tenfold increase.
A good example of the regional move toward solar can be found in Egypt. As its natural gas
infrastructure continues to age, it is becoming more expensive for Egypt to generate power using
the fuel. Egypt has therefore turned its attention to how it can take advantage of its abundant
potential for solar and wind energy.
Just last month Egypts ministry of electricity unveiled a landmark programme which will see it
introduce about 2,000MW of large-scale solar PV power plants and 300MW of rooftop solar
power projects. The fact that about 176 companies responded to the ministrys invitation to
submit proposals for this Feed-in-Tariff (Fit) programme is a clear signal that solar has become a
bankable source of energy in all corners of the Arab world.
At the same time, the market is becoming more broad-based. In the past, most of the solar
projects were focused on the UAE. This year there will be large-scale solar tenders in at least 10
different markets in the Middle East, a new record, with Egypt leading the way followed by
Jordan and then Morocco. Even small Arabian Gulf countries such as Qatar are making progress
with solar.
This diversity will become more exciting once Saudi Arabia enters the market. It has so far been
held back from achieving its Herculean solar potential due to the lack of political alignment. But
in time they too will turn to solar in a big way, following the footsteps of Jordan and Egypt.
This will no doubt herald a new wave of dramatic growth in our regions emerging solar market.
In fact, Saudi Arabias most recent plans for solar PV entail building a capacity of 6GW over the
next 10 years. 2015 is expected to be the year that Saudi finally starting moving ahead with its
ambitious plans.
Finally, we will see niche segments within the solar industry emerging. In the past, the typical
profile of the companies was small local installers. But as the market continues to grow we will
see more specialised companies. Aside from the traditional installers we will see system
operators such as SAT Engineering and solar-diesel hybrid system providers such as Enerwhere
rise to the forefront.
Dubais landmark unveiling of a grid-connected solar rooftop programme will also foster the
growth of specialised rooftop installers. As a result, solar companies that had to endure razor-thin
margins to win projects in the past now have the luxury to pick and choose which projects they
can chase.
As a specific example, Chinese solar panel manufacturer Chang Zhou Almaden is reportedly
setting up a factory in Dubai to produce up to 400,000 PV panels annually.
This year will therefore be a breakthrough year for solar energy in the Middle East. The UAE
will do its share leading the industry, with large-scale solar projects awarded in both Abu Dhabi
and Dubai. But in 2015 we will also see such mega projects mushrooming across the entire
Middle East, ushering in a new era for our regions most abundant source of energy solar
power.
Vahid Fotuhi is the president of the Middle East Solar Industry Association and director of
origination at Access Power MEA.
financial backing of 19 major shareholders, only three of which remain on board. Desertecs
scale of ambition has already receded to the role of a service provider for a few projects in the
region, instead of its intended role of a major policy influencer and the founder of an enterprise
that would have electrically interconnected the EU and MENA regions.
Nature Middle East reporter Louise Sarant examines the story of how the ambitions of one solar
conglomerate crashed and burned in a region that's brimming with solar energy potential.
The problem may rest with the policymakers in governments that give or withhold investment in
business or research. Or perhaps the trouble is with the industry itself, which still hasn't found a
good middle ground between sustainability aspiration and actual cost. Maybe the right formula
lies in aligning research and investment with feasible projections about cost and manpower.
Whatever the solution, the reality is not changing: power capacity is weakened and an alternative
energy source is desperately needed. Solar power, many scientists agree, is the obvious choice.
We need to make it more than just pie in the sky.
Masdar City is another program developed to showcase the feasibility of creating carbon-neutral
cities.
Shams 1 and Masdar City are both supplemented by the recent launches of renewable technology
incentives. The UAE are far ahead of the game compared to their neighbours.
As such, gas and oil are responsible for almost all of the energy used in the United Arab Emirates
and the GCC.
There were two main factors that piqued interest in utilizing renewable energy within the Middle
East. First was the reduction in cost of certain technologies that are involved in producing
renewable energy (such as PV), especially in the previous decade. The second reason is the
simple fact of demand; the region wants and needs renewable energy.
Due to the immense economic growth within the UAE especially the rapid development that
occurred in the past 40 years energy demand has escalated extremely quickly. The UAE is one
of the largest consumers of energy in the world, when looked at per capita. The regions low-cost
market for energy also contributes to the populations consumption of renewables, as it reduces
the attractiveness of choosing a greener lifestyle in favour of utilising traditional power sources.
A Smart Move
The UAE and several surrounding nations are opening the doors in regard to energy supply
options and also creating policies that will keep the demand for energy in check. The decision to
move away from hydrocarbons and move towards alternative energy systems is based in part on
the fact that the UAE will become the first country in the GCC to introduce civilian nuclear
power. Renewables play a huge part in this strategy as the region enjoys sunshine all year,
lending itself to an integration of solar power.
Solar may not be as cost-effective as traditional energy sources at this stage, but the future does
look bright. With technology progressing continuously, the cost factor will most certainly be
reduced, making the value of solar power more evident. This wont only assist the Middle East
and the UAE though; even countries with less favourable climates, such as Germany and the UK,
will be able to benefit from these developments.
The cost of such heavy reliance on fossil fuels for its domestic energy needs has negative
impacts in the long term as well; it could almost take over the initial cost of developing and
installing renewable technologies like utility-scale PV solar power.
Benefits of expanding on renewable energy within the region include decreasing their swiftly
increasing carbon footprint and opening the path for the development of green energy solutions.
Is the Middle East the Next Big Market for Solar Energy?
Matthew Merfert, First Solars Director of Projects for the Middle East and African markets,
moved to Dubai. His mission: to expand the companys photovoltaics business to the sundrenched deserts of the Arabian peninsula, a region that has been slow to adopt renewable energy
sources thanks to its abundant oil reserves. Thats changing though, and First Solar is getting in
on the ground floor. I caught up with Merfert along the immaculately over-planned Dubai Marina
to hear about the challenges and opportunities of solar energy in the Middle East.
Wired: Whats the state of the solar energy field, and how does First Solar fit in?
Merfert: Solar energy can broadly be split into four different technology types, each at varying
stages of R&D and commercialization: solar hot water, Concentrated Solar Thermal Power
(CSP), Photovoltaics (PV), and Concentrated Photovoltaics (CPV). PV, which leads the pack in
terms of deployed capacity and lowest cost of energy, utilizes a direct energy conversion process
from photons to electrons, requires no moving parts and relies fundamentally on solid-state
semiconductor physics. First Solar specializes in thin film Cadmium Telluride (CdTe) PV
modules, which offer clear low-cost manufacturing and high-temperature performance
advantages. We also recently set a new world record for CdTe module conversion efficiency,
achieving 16.1% total area module efficiency in tests confirmed by the U.S. Department of
Energys National Renewable Energy Laboratory. While Europe and the United States have
traditionally been strong markets for solar power, we have seen growing demand from the
Middle East, India, South Africa, China and Japan.
Wired: Why is First Solar getting into the game in the Middle East? Is it really a growth area
given the regions plentiful and cheap oil?
Merfert: Its useful to think of the Middle East as two markets: energy exporters and energy
importers. The push towards solar energy in the energy exporting nations may seem paradoxical,
since the region is home to more than half of the worlds recoverable crude reserves. But there is
a growing realization amongst the energy exporters that investing in solar energy helps to reduce
the domestic consumption of oil and natural gas for power generation, freeing up resources for
export. With some countries in the region burning as much as a third of their oil output for
domestic power needs, there is a strong business case for those hydrocarbons to be exported
instead, fuelling economic diversification and growth.
In the energy-importing nations, the pitch is different. These countries import significant
amounts of energy and often have to face challenges such as supply disruption and fuel price
fluctuations. These countries have also started to acknowledge that solar can form an important
part of their power generation portfolios, providing a hedge against fuel-price fluctuations and
therefore, energy security.
Wired: What are the challenges specific to the Middle East region?
Merfert: The Middle East presents unique operational challenges and the two most frequently
asked questions are about performance in high-temperature and high-soiling environments. If
youve spent a summer day in Dubai or witnessed a sandstorm in central Saudi Arabia, you
would see that these can have an impact on technical performance.
The primary impact of heat on photovoltaic system performance is represented by a PV modules
temperature coefficient, which shows the dependence of power performance on temperature.
While all semiconductor devices incur increasing losses in conversion efficiency as operating
temperature increases, the use of Cadmium Telluride (CdTe) gives us a distinct energy yield
advantage when compared against conventional silicon technologies by virtue of CdTes lower
temperature coefficient. CdTes temperature coefficient is -0.25% / C, vs. -0.45 to -0.5% / C
for silicon. Since PV plants only produce power when the sun is shining, typical module
operating temperatures are in the 50-70C range, way above the testing standard of 25C. This
translates into as much as nine percent additional energy for each watt installed in a typical hot
desert climate.
Dust can also impact photovoltaic (PV) system performance. The factors influencing dust
settlement on PV modules are well documented, and we measure the soiling on-site through
reference modules. Our equipment also goes through rigorous testing for sandblasting,
environmental sealing, and corrosion.
While we dont need to clean the arrays in the US, where rainfall mitigates annual soiling losses,
we do need to provide for cleaning solutions dependent on water availability in the Middle
East, India, and parts of Africa. As an energy generation source, PV is an extremely low water
consumer when compared to other technologies and we have been working with dry, mechanical
solutions to minimize water usage.
Wired: Whats the UAE governments stance on solar energy? Is it something theyre actively
pursuing, or is it a tough sell?
Merfert: The UAE is, in fact, a regional leader in the adoption of solar energy. The emirates of
Abu Dhabi and Dubai have both announced programs and have kicked off pilot projects. First
Solar has 5MW of modules in Abu Dhabis 10MW Masdar City plant, and we are building a
13MW plant in Dubai, which is expected to generate more than 22 million kilowatt hours of
electricity per year, on average, which is enough to meet the average annual electricity needs of
more than 500 local households. Electricity generated by the power plant will displace an
average of more than 14,000 metric tons of CO2 annually, equivalent to removing 1,600 cars
from the road every year. The 13MW plant is only first phase of a planned 1000MW solar park.
The emirate of Abu Dhabi plans to produce 7% of its electricity from renewable sources
including solar power, while Dubai has committed to producing five percent of its electricity
needs from solar by 2030.
The case for solar power in the Middle East and North Africa
We often hear about the Middle East and North Africas (MENA) centrality in global energy
markets as it is home to more than 52 and 42 percent of global reserves of oil and gas
respectively. The region is also responsible for more than 36 and 20 percent of global oil and gas
production.
However, MENA is also the world leader in other aspects of the energy markets, namely energy
use and energy intensity (i.e. energy use per $1,000 of output). Between 1981 and 2009
these grew faster in MENA than any other region. Furthermore, the gap between MENA and
other regions is significant (Figure 1). This is especially true in energy intensity, which saw
negative growth rates in all regions during 1981-2009, except for MENA.
These figures highlight the inefficiencies associated with energy usage in MENA, which are
partly driven by the fuel subsidies an integral part of the economies of the region. In 2009
alone, energy subsidies in MENA amounted to about US$170 billion (Iran has the highest, at
US$65 billion), constituting around eight percent of MENAs US$2.2 trillion GDP. These
subsidies are not only expensive but also badly targeted; mostly benefiting the regions
wealthiest.
Such inefficient consumption of energy has had adverse effects on the air quality in MENA. Five
MENA countries, Saudi Arabia, Egypt, UAE, Iran, and Kuwait are among the top ten countries
in terms of PM10 concentrations. Moreover, 29 cities in MENA are among the100 most polluted
cities in the world.
One industry in particular bears responsibility for such high levels of pollution in the region:
electricity. While MENAs population and GDP have grown at an average annual rate of 2.4 and
5.5 percent between 1981 and 2009, its electricity production has grown by an average annual
rate of 7.2 percent, outperforming all other regions such as East Asia (at 6.2 percent) and Latin
America (at 4.5 percent). This rapid growth of electricity production has introduced a significant
environmental challenge for MENA because 96 percent of its installed capacity is running on
fossil fuels. Renewables (including hydropower) account for only about 3 percent of its installed
capacity, making the electricity sector in MENA one of the least environmentally friendly in the
world. This is especially true for countries where the share of oil in electricity production is more
than 50 percent: Yemen (100%), Lebanon (94%), Iraq (92%), Kuwait (71%), Saudi Arabia
(55%), and Syria (50%).
While shifting from oil to natural gas is an economically logical strategy for electricity sectors in
MENA, it has environmental consequences: 45 percent of current CO2 emissions in MENA are
from burning natural gas. Therefore, a shift from oil to renewables, mainly solar power, is the
most environmentally sound and sustainable option.
Solar electricity generation is possible in areas with direct normal irradiance (DNI) above 5 kWh
per meter square per day, which is true for more than 85 percent of MENA. In a 2008 study, the
Center for Global Development reported that solar power in MENA has the potential of meeting
50 to 70 percent of global electricity demand. Therefore, it is technically and also economically
feasible (albeit on a level economic playing field and over the long-term) for MENA to meet its
internal electricity demand from purely solar power. Furthermore, MENA has the potential to
become an exporter of solar energy to Africa and Europe. Europe is an especially ripe and ready
market for MENAs solar power. The European Unions (EU) energy strategy, as reported in EU27sEnergy Roadmap 2050 calls for 64 to 97 percent of the EUs electricity to be supplied from
renewable sources by 2050.
Besides its role in reducing pollution and the export potential to Europe, solar power provides a
stable and predictable price as it does not depend on highly volatile fossil fuel markets for
electricity generation, making investments in this sector highly desirable.
In sum, solar power offers MENA tremendous environmental and economic advantages. To
achieve them, solar power would need a level playing field to gain access to MENAs electricity
industry. Removing fossil fuel subsidies would be a necessary first step in this direction.
relatively easy to get oil and gas from existing sources (as compared to global counterparts),
at low costs; while at the same time, the alternate sources of demand for energy were
minimal, says Abhay Bhargava, head, energy and power systems practice, Middle East and
North Africa, Frost & Sullivan.
However, a decline in output from existing production reserves and a need for economic
diversification have pushed oil-exporting nations to focus on alternative means of energy, he
says.
Diminishing production costs have also made solar a viable option for countries in the
Middle East.
Prices of solar have come down by 50 per cent in the last two years and this has made it
more viable, says Vahid Fotuhi, president of the Middle East Solar industry Association
(MESIA).
As the industry grew, more companies and manufacturers, including China, have entered
this sector and this has really pushed down the price. As the manufacturing capacity goes
up, the cost will come down.
CHALLENGES IN ADOPTING SOLAR ENERGY
Despite solar energys current adoption rate in the region, the industry still faces some
operational challenges.
The combination of heat, dust and humidity is a major challenge that can typically reduce
the achievable efficiency of modules, which could endanger the cost competitiveness and
financial feasibility of a proposed project, says Bhargava.
However, he points out that a bigger challenge that solar would face in the region would be
to prove its financial feasibility when compared to electricity generated through subsidised
hydrocarbons.
The region has conventionally proven to have some of the lowest rates for electricity in the
world, and this exerts pressure on solar energy developers to deliver electricity that can
compete with conventional sources, he says.
A lack of regulation and a quality framework also poses a challenge to the development of
solar power generation in the region, according to Fotuhi.
Experts say that bringing in benchmarks and standards could be instrumental for the sectors
growth.
Regulations can play a role in streamlining the procurement process even if FIT or similar
mechanisms are not utilised, says Tim Armsby, partner at Eversheds.
In addition regulations provide confidence to the market can also establish industry
standards. If one looks at the pipeline of renewable energy projects in procurement across
the Middle East, it is those countries, such as Jordan and Morocco, which have a clear
regulatory framework that are in the lead at the moment.
In the long term though, the region needs to focus on developing local skills, to ensure that
their economies can extract maximum gains from these proposed investments.
HEATING UP
As investments in solar industry gain traction in the Gulf, experts foresee a healthy rise in
solars contribution to the regions energy mix in a decade.
Taking into consideration announced targets and wishlists on the part of the MENA
countries, we could expect solar to contribute anywhere between seven to 10 per cent of the
total energy mix in the region, with nuclear energy being the other major gainer in this
period, says Bhargava.
But despite all its challenges, solar energy can offer the Gulf some significant benefits such
as economic diversification, conservation oil for exports and reduction of carbon emissions.
The key challenge, arguably, is having in place a sustainable, as in long term and viable
renewable energy policy, which those committing their funds and resources can rely on,
says Michelle Davies, a partner at Eversheds.
One of the biggest banks in the Middle East is betting on solar power
The Gulf States may have been built on oil, but their future is going to be in solar.
The opportunity is enormous, the technology exists and, according to a new report from the
National Bank of Abu Dhabi, cost is no longer a reason not to proceed with renewables.
Ill repeat that for emphasis: this report comes via the National Bank of Abu Dhabi, one of the
biggest banks in the Middle East. And it couldnt be more enthusiastic about the investment
opportunities in renewable energy.
Even oil prices as low as U.S. $10 per barrel, the report finds, cant compete with Dubais latest
large scale solar project. It references a recent report from Deutsche Bank predicting that solar
will be at grid parity in 80 percent of the world in just two years and notes that its already
cheaper than grid energy in 42 of the 50 largest U.S. cities. More than half of the money
currently pouring into new energy capacity is going to renewables, it finds, as will most of the
U.S. $48 trillion in energy investment needed over the next two decades.
It is very clear that renewables will be an established part of the global energy mix, Alex
Thursby, NBADs Chief Executive acknowledges in a introduction to the report. Governments
around the world, including the Gulf region, are setting out their ambitions for decarbonizing
their economies, and the global debate about energy has never been more intense.
Reneweconomy breaks down why this is such a big deal: the Gulf countries demand for new
energy capacity is expected to triple over the next 15 years. And renewables, the NBAD is
saying, are going to be the most cost-effective way of meeting that demand. RTCCs Ed King,
meanwhile, points out that the report could be indicating a shift in the regions historically
antagonistic attitude toward anything that isnt oil and gas and possibly even a new
willingness to cooperate in international climate negotiations.
Solar, after all, is looking like its too good of a deal to turn down.
Support transmission infrastructure in the Maghreb and Mashreq for domestic supply and
exports as part of Mediterranean grid enhancement,
Leverage public and private investments for CSP power plants and other related projects
for over $4.85 billion from sources;
Support energy security, industrial growth and diversification, and regional integration in
the MENA region.
The Investment Plan is designed around deployment of about 1012 commercial scale power
plants to be constructed over a 35 year time-frame. The scale of investment will attract private
sector partners, result in economies of scale and cost reduction, and promote learning from
diverse operating conditions.
Solar PV represents an ideal renewable energy type across much of the Middle East and Africa,
explained Susanne von Aichberger, an analyst at NPD Solarbuzz. Even so, market drivers and
constraints differ greatly between the two regions.
As far as 2014, PV demand in Africa will remain dominated by South Africa largely because of
the construction of several large PV projects via the Renewable Energy Independent Power
Producer Procurement Program.
In the past 12 months, new plans for large PV projects have emerged across Africa, including
the sub-Saharan countries of Cameroon, Swaziland, and Uganda, stated von Aichberger.
Announcements of PV projects in the 100 MW range have now become common, as a means of
expanding power generation capacity quickly.
Weve covered some of these projects already, including one companys plan to develop 600
MW of new solar PV capacity in Ghana in the next few years, another companys plan
tobuild 400 MW worth of solar in Ghana, and a plan to build 3,000 MW worth of solar in
Nigeria.
On a more general level, the government of Kenya has recently been setting its eyes on
renewable energy as a whole. Not surprising when you consider the fact that a recent joint study
from the UN Environment Programme and the Government of Kenya found that the country
could benefit to the tune of $45 billion by 2030 from such a switch.
Rashid solar park near Bab Al Shams should be ready next year. And energy-poor Jordan is also
doing well, showing investor-friendly continuity and concluding its first large agreements last
week.
Both Dubai and Abu Dhabi have been working on regulations for householders to install their
own PV systems, with Abu Dhabi running a small pilot project. But while solar panels are now a
standard feature of urban roofscapes in cloudy Germany and Britain, they are almost invisible in
the sunny Gulf.
Saudi Arabia has been even more frustrating. In 2012, the kingdom announced plans for some 40
gigawatts of solar power, costing US$109 billion, in the period up to 2030. The King Abdullah
Centre for Atomic and Renewable Energy then ploughed through an extensive process of
consultation aiming not only to generate solar power, but also to create local industries and
employment. Still, the Middle East Solar Industry Association believes the policy and funding
framework needed to light up the Saudi solar programme is not in place, and unlikely to appear
this year.
Such unfulfilled expectations are dangerous. Solar companies often struggling with poor
margins elsewhere and without the deep pockets of oil companies set up in the region but lose
faith and withdraw staff after waiting years for projects. It will be harder to entice them back
next time.
One of the lessons from the German experience has been that it is vital to create an ecosystem of
solar developers, suppliers and installers, to reduce costs and ensure consistent quality. This will
not emerge while solar companies continue to struggle with stop-start activity. Much better a
steady stream of smaller projects, than an expected tidal wave that never arrives.
Middle East governments need to set consistent policies and pricing schemes, not ad hoc
provisions, to allow solar power to compete fairly. If subsidies on electricity prices are not
removed, at least they should be made transparent so householders and businesses can make an
economically sensible decision on installing solar panels.
Conditions have never been more favourable for the solar industry to boost the regions energy
supply, environment and economy. But the Middle East needs to find more responsive and
flexible commercial models, or the lights will stay off on its solar dawn.
Solar energy seems to be the new go-to investment segment in the small Middle East country of
United Arab Emirates.
The power and water utility servicing the iconic city of Dubai will invest $3 billion to boost the
generation capacity of the countrys largest solar power plant from 1 GW to 3 GW. Saeed Al
Tayer, managing director and CEO of Dubai Electricity and Water Authority (DEWA),
recently announced that the installed capacity of the Shaikh Mohammad Bin Rashid Al Maktoum
Solar Park would be increased significantly.
The initial installed capacity target for the solar park was 1 GW by 2019, with an investment of
$3.3 billion. DEWA now plans to increase the parks installed capacity to 3 GW by 2030. This
will be inline with the United Arab Emirates Vision 2021, which requires the country to source
24% of its energy requirement from clean energy sources like renewable energy and nuclear
energy.
The Shaikh Mohammad Bin Rashid Al Maktoum Solar Park was launched in 2013 when a 13
MW block of solar photovoltaic power system was commissioned. The second phase of the
project, however, was a blockbuster affair and grabbed the worlds attention. Through a tender,
Saudi project developer ACWA Power secured the rights to develop 200 MW capacity at the park
at a record-low levelised tariff of 5.84/kWh.
The expansion announcement of the solar park comes just days after the Federal Electricity and
Water Authority announced that it will set up 100 MW of solar power capacity in the northern
region of the country.
Conclusion
Solar power in middle is the rising energy for all purposes after oil soon or later solar energy in
Middle East will replaces oil or natural gas energy. Many gulf kings are investing billions of
dollars to develop solar energy in their region with is renewable and safe to our environment.
References
1. http://www.aljazeera.com/indepth/opinion/2014/12/can-solar-power-replaceoil-mid-201412752357541154.html
2. http://www.forbes.com/sites/natalierobehmed/2013/09/03/the-middle-eastturns-to-solar-energy/
3. http://www.thenational.ae/business/energy/solar-power-to-shine-through-inthe-middle-east-in-2015#full
4. http://www.wired.com/2013/05/dubai-goes-solar/
5. http://www.natureasia.com/en/nmiddleeast/article/10.1038/nmiddleeast.2015
.5
6. http://www.greenprophet.com/2015/04/solar-energy-power/
7. http://blogs.worldbank.org/arabvoices/case-solar-power-middle-east-andnorth-africa
8. http://gulfbusiness.com/2014/04/middle-east-eyes-solar-easy-oil-eraends/#.VW0x_M9Viko
9. http://www.salon.com/2015/03/03/one_of_the_biggest_banks_in_the_middle_e
ast_is_betting_on_solar_power/
10.http://www-cif.climateinvestmentfunds.org/country/middle-east-and-northafrica-region
11.http://cleantechnica.com/2014/05/19/middle-east-africa-solar-pv-marketsurge-50-2014-according-new-report/
12.http://www.thenational.ae/business/industry-insights/energy/middle-eastawaits-dawn-of-solar-power-age
13.http://cleantechnica.com/2015/04/15/dubai-will-invest-3-billion-boost-solarpower-project-capacity-3-gw/