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Renewable energy set to challenge fossil fuels in region
August 5, 2017, 4:32 pm
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It may seem ironic, but some of the biggest support for renewable energy projects in recent years has been from the Middle-East, a region rich in fossil fuels. As they turn to renewable energy to diversify their energy sources and steadfastly pursue a sustainable energy pathway, the Middle East and North Africa (MENA) region is fast becoming one of the largest renewable energy markets in the world.

With hydrocarbons being a major contributor to the economy and having significant hydrocarbon reserves, oil producers in the region have understandably been reluctant to promote and adopt renewable energy. However, in the past five years, there has been a dramatic shift in perceptions, especially among oil-rich Gulf Cooperation Council (GCC) states.

The realization that continuing to burn oil to generate energy is no longer a viable, efficient or sustainable option has spearheaded a drive for renewable energy among the GCC states. Also, the prevailing low oil price scenario and OPEC-mandated production cuts are encouraging countries in the region to keep their hydrocarbon reserves underground for longer, and instead pursue renewable sources to meet their energy needs.

A new report by MEED, a leading business intelligence service provider in the region, finds that more than 67 GW (gigawatts) of renewable energy projects are in various phases of planning or implementation in the region.

The MEED report titled ‘Renewable Energy in the Mena Region 2017’ estimates that the renewable energy sector will require in excess of US$ 200 billion in investments in the short-term, in addition to the expansion and upgrading of existing networks to facilitate the extra capacity.

As governments in the region seek to meet the rapidly growing demand for power through implementing ambitious renewable energy programs, the pipeline of renewable energy projects are expected to further increase in the coming five years.

The latest MEED report shows that the 12 countries in the MENA region together have a total installed power generating capacity of 271,761MW, but of this total energy, only seven percent was generated from renewable sources. Moreover, most of this renewable energy came from hydropower; with only Morocco and the UAE having solar power projects with capacities of 100 MW.

The region’s first utility-scale solar power plant was commissioned in 2013 in the emirate of Abu Dhabi in UAE. The 100MW Shams 1 concentrated solar power (CSP) plant, located about 120km southwest of Abu Dhabi and covering an area of 2.5 square kilometres, is one of the largest CSP plants in the world and is capable of producing solar energy sufficient to power over 20,000 homes.

Funding for Shams 1 came from Masdar Clean Energy, a business unit of the government’s renewable energy company Abu Dhabi Future Energy Company (Masdar). The company is also behind the visionary Masdar City project, which will rely entirely on renewable energy to meet its power needs, and aims to become the most environmentally sustainable city in the world.

Kuwait which commissioned its first solar power plant, the 10MW Sidrah 500 in Umm Ghudair oil field in 2016, is looking to ensure that 15 percent of its energy production would be from renewable energy sources by 2030.

The key driver behind the push for renewable energy in the region is economics. With falling oil revenues, governments have been increasingly encouraging private sector participation in the economy, including in power generation and water desalination through independent water and power producer (IWPP) models. This has enabled some of the largest international developers to bid competitively and submit some of the lowest prices in the world for renewable energy projects.

With renewable energy not only achieving parity with traditional thermal fossil fuel generation in the Middle East, but in 2016 actually falling below those achieved for conventional fossil fuel-fired plants, there has been a positive change in perception about renewable energy among governments in the region. From almost an absence of renewable energy 10 years ago, nearly all of the 12 countries analysed in the MEED report have some form of renewable energy targets.

Some of the region’s less wealthy governments have been implementing alternative frameworks and policies to kick-start renewable energy programmes on a smaller scale. The implementation of a well-structured feed-in-tariff (FiT) programme) in Jordan has allowed Amman to develop significant renewable energy capacity with cost effective tariffs.

Though the major focus of the region’s renewables market has been on large-scale utility solar and wind projects, if the region is to achieve some of its most ambitious long term goals it will have to look at the successful deployment of small-scale renewable initiatives, including rooftop solar and off-grid solar initiatives. If governments in the region seize the opportunity to enact and implement the right sustainable policies, the region could soon go from being an exporter of much maligned dirty fossil fuels, to an exporter of clean renewable energy.

 

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