The green big bang in MENA

  • MENA has significant potential for the development of renewable capacities, particularly solar and wind, as countries aim to diversify their economies.
  • Solar Photovoltaic (PV) is expected to account for most of the new capacity in the region, and Jordan and the UAE are the two largest markets in the region.
  • Algeria and Palestine are two emerging markets in the renewables sector. Algeria holds the largest solar field in the world, and Palestine is tendering 110 MW of projects till 2020.

MENA renewable landscape encouraging

MENA economies have great potential for renewable energies, mostly solar and wind, and are able to replace part of their hydrocarbon demand with renewables.

The MENA solar energy market is expanding significantly as government-driven auctioning and net-metering schemes drive down costs and attract investments.

According to the Middle East Solar Industry Association, more than 5.7 GW of solar power is expected to be generated by MENA, with 2017 poised to be the strongest year yet.

The region has been offering some of the world’s lowest costs for developing solar energy, as a result of lower module prices, lower balance of system costs, and increased competition.

Solar Power in MENA: From mirage to reality

Solar Photovoltaic (PV) is expected to account for most of the new capacity in the region, and the market for PV is expected to be much more diversified compared to Concentrated Solar Power (CSP) and wind.

The two largest markets in the region will be Jordan, which compromises of IPP tenders, EPC projects and commercial and industrial projects, and the UAE, mainly due to DEWA’s IPP tender and Shams rooftop programs.

Algeria and Palestine are two regional emerging markets when it comes to clean energy, and are worth keeping an eye on.

Specifically, Algeria has the largest solar field in the world and the largest capacity in the entire Mediterranean basin. The energy generated by solar power would be 5,000 times the country’s current electricity consumption.

MENA: Solar power vs. fossil fuels

Despite MENA’s high potential for green energy, particularly in solar and wind energy, it still lags behind the US, Australia and Europe.

One of the main reasons why MENA’s progress in the sector is slow, is the continued dependence on its vast resources of fossil fuels. But, while the transition will be challenging, the region’s commitment should hold.

In oil-producing MENA countries, namely Iran and Libya, subsidies of fossil fuels represent between 15% and 20% of GDP. For oil-importing countries such as Egypt, Jordan and Morocco, subsidies also represent an explicit cost to the national budget.

The lack of a clear regulatory framework, clear tariff and off-take mechanisms that support investment for reaching target renewable capacities is a key issue that the region is facing.

Jordan and Morocco have the most advanced legal infrastructure in place to support investment for renewable energy projects and are also in the forefront of attracting investment in the sector, followed by Saudi Arabia and the UAE.

Kuwait and Oman, despite having expressed interest for renewables, are still in earlier stages of the development cycle.

While each country has taken some of the steps needed to encourage investment in renewables, this has not been enough to pave the way for further progress.

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