The Middle East and North Africa (MENA) region’s renewable energy promises great potential
The region has an abundance of solar resources together with some wind resources, and these are expected to attract a significant amount of investment once political stability is restored.
Algeria’s legislative framework for the renewable energy sector is one of the more progressive in the MENA region.
However, delays in implementation have stunted the growth of renewable energy’s proportion of the country’s energy supply. Algeria remains committed to its ambitious targets of 20% of energy supply from renewable energy sources (RES) by 2030. It has publicly stated that it will be investing US$120b (€93b) into renewable energy projects.
Wind energy potential is relatively low, yet several small-scale wind projects with capacities of 10MW to 20MW are planned to be constructed over the next three years, mostly near the northern coastline.
It is solar where the greatest potential lies as Algeria has an abundance of the resource.
Egypt remains a relatively new market with significant amount of potential and ambitious targets. Egypt is seeking to derive 20% of its energy from renewable sources by 2020 mostly through wind (12%) and hydro and solar PV (8%).
There are several studies being conducted to about connecting the Egyptian grid to the European grid.
Electricity sector reform, a modern grid infrastructure, proposed FITs and a renewable energy fund would lay a significant foundation for further growth in the renewable energy sector.
Renewable energy interest in Israel is largely driven by energy security concerns as the country seeks to diversify away from reliance on coal and gas.
However, internal bureaucratic hurdles and poor grid infrastructure have previously hindered significant development of renewable energy available through excellent natural solar resources.
It is estimated that 60MW of solar PV and wind are to be constructed in 2012. As solar technology costs continue to reduce, Israel has approved a 240MW CSP plant, which is expected to become operational in 2014.
Jordan is a net energy importer with limited oil and gas reserves. As a result, the Jordanian Government outlined a commitment to develop and construct 600MW of solar and 600MW of wind over the next decade.
In mid 2011, the Government invited companies to submit proposals for renewable energy generation projects to meet the Government’s renewable energy target of 1.8GW by 2020. 65 proposals were received, and the Government is currently reviewing and determining the investment incentive mechanism that it will implement to support the development and construction of these projects.
Without any domestic coal or oil reserves and energy demand expected to double by 2020, Morocco is actively seeking alternatives to meet its current and future energy needs. A target to generate 42% of electricity from RES by 2020 demonstrates the necessity and commitment to diversify their energy supply.
Despite no FIT or subsidies, the Moroccan Government has privatized the energy sector, which has encouraged private and foreign investment in renewable energy. Further reforms are planned with the breakup of the former monopoly enjoyed by the state utility, Office National de l'Electricite (ONE).
Being the only country connected to the European grid, Morocco has a great opportunity to transform itself from a net energy importer to a net energy exporter. Morocco’s excellent solar and significant wind resources support the case for the country to become an energy provider to Europe.
In the MENA region, Oman has been the pioneer of liberalizing electricity markets, implementing regulatory reform and privatization in the mid 1990s.
Oman also benefits from a well established Public Private Partnership (PPP) regime through which significant international investment has been deployed. The country’s approach to renewable energy has limited Government initiatives and support.
Onshore wind development is limited due to permitting availability and grid restrictions, yet small projects have been approved and are under construction with the potential to increase wind capacity to 750MW.
Solar resource in Oman is one of the highest in the world with the potential to supply all of Oman’s current energy demand.
In Saudi Arabia, the economic case for renewable is predicated on extending the life of its oil fields and export earnings, at the same time as meeting rapidly increasing power demand.
During 2011, Saudi Arabia announced a US$100b (€77b) spending commitment across nuclear and renewable energy aimed at achieving their target of 10% by 2020.
King Abdullah City for Atomic and Renewable Energy (KACARE) is part of this initiative. The centralized state-owned utility will provide the required stability and support to the pioneering renewable energy projects.
As part of introducing a new law for renewable energy, the Government is planning to adopt a solar energy FIT similar to what has been seen across Europe. Yet, no comprehensive technical or economic feasibility studies have been performed.
The Tunisian Government has ambitious targets in the renewable energy sector, although there is currently no FIT or renewable energy certificate incentive scheme in place. Tax incentives and subsidies are used to encourage development and construction.
Investment and expansion are required to develop and increase the grid to meet solar and wind targets. Interconnections with Algeria, Libya and European countries will be required and are currently being planned.
Various legislative, regulatory and financial barriers hinder the development of Tunisia’s attractive wind potential.
United Arab Emirates
The UAE has entered the renewable energy scene later than some others, but has arrived without leaving anyone questioning its commitment.
Abu Dhabi alone has committed US$15b (€12b) to meet its modest target of 7% by 2020. In spectacular fashion, Abu Dhabi has also committed to planning and constructing the US$22b (€17b) Masdar City which will rely on renewable energy to be a “zero carbon” and “zero waste” community.
This significant commitment and the country’s tax-free status are countered by a high level of bureaucracy in the permitting and regulatory environment.
Recognizing the administrative inefficiencies, and with an aim to be a leader in renewable energy in the region, the UAE is presently reviewing and determining multiple incentive structures to encourage investment.
Currently Dubai produces 4.5 MW of energy through solar plants but it is targeting to meet 1% of its energy requirements through solar technologies by 2020, and to arrive at 5% by the end of the following decade.
By Ernst & Young