New Hampshire, USA — A new report from GTM Research and the Emirates Solar Industry Association (ESIA) examines which countries in the Middle East/North Africa (MENA) region expect the most growth for solar energy.
As the worldwide solar industry plods through a two-year slowdown, everyone is looking for the next growth market. Traditionally strong regions are struggling in Europe (notably Germany) and the U.S.; Japan and China have promise but are relatively closed off to the rest of the world. At the head of the list of new-frontier growth prospects are Latin America and the Middle East/North Africa (MENA) regions. A new report from Greentech Media, produced in conjunction with the nonprofit Emirates Solar Industry Association (ESIA), which seeks to expand solar power in the UAE and through the entire MENA region, takes a closer look at the promise of several MENA countries for renewable energy growth.
Key to unlocking the potential of these regions is understanding their motivations, explains Scott Burger, solar market analyst for GTM Research. “What is driving these select few nations is different than in a lot of other regions,” he says. “The drivers are less surface-level than seen in a lot of other countries.” For European nations it’s greening their economies; in China it’s to save the overbuilt local industry. But in MENA regions it comes down to rising energy usage, preserving natural resources, and nurturing local expertise. Not to mention that oil-producing countries would much rather export and sell for $100/barrel instead of $4-$5/barrel to consume domestically.
Bottom line: they want to remain energy exporters, in the sense of global leaders in technology and intellectual property (IP). “The more they develop their [renewable energy] industry, the can stay as a leader in the energy industry,” Burger says.
GTM’s full report is chock full of deep information on a number of MENA countries and their renewable energy motivations, but here’s a broad summary of the most promising aspects:
Saudi Arabia: 16 gigawatts (GW) of solar PV and 25 GW of concentrated solar power (CSP), both by 2032. In 2011, the Saudi Electricity Company (SEC) controlled roughly 51 GW of generating capacity, more than doubling since 2000, and projected to grow another 50 percent to 77 GW by 2020. Saudi Arabia is the world’s largest oil producer, and 80 percent of its export and revenue come from the production and sale of hydrocarbon resources. It is also MENA’s largest oil consumer, one of the few major industrialized economies that produces a significant portion of its electricity through oil-burning plants. If Saudi Arabia doesn’t curb its energy demand, institute energy efficiency requirements, and diversify its electricity generation profile, it could become an oil importer by 2030, Burger points out. (Domestic natural gas isn’t a savior here, since much of it is earmarked as a feedstock for several domestic industrial sectors.)
The King Abdullah City for Atomic and Renewable Energy (KA Care) program, established in April 2010, has laid out an “aggressive” plan to build out the country’s renewable (and nuclear) energy resources. Despite pushing back planned a first tender for 4Q12 out to late 2013, “the Saudi Arabian government is serious” about its renewable energy goals, which it sees as a way to diversify its economy and support a younger, growing population to compete in a global marketplace, according to Burger. It’s moving cautiously, carefully navigating domestic energy needs vs. diversifying its economy, all in the light of the Arab Spring movement — but “we think they will move [forward] and in a big way.”
Turkey: 30 percent renewable energy generation by 2030. Turkey already has most of that renewable energy goal through hydro (~24 percent), as well as “a pretty viable wind market,” Burger noted, which means it needs to add around 3 GW of solar by 2023. Perhaps most importantly, Turkey is the sole MENA market that resembles a more traditional European market, with an established feed-in tariff model — and thus will be the only market not driven by large-scale government tenders, Burger noted. Turkey also has a strong net metering program, and has sunlight comparable to Spain. Expect large-scape projects to emerge in 2013.
Abu Dhabi: 7 percent renewable energy by 2020. There isn’t a publicly published breakout of how much of this target is solar power, but it should account for most of that total, according to Burger. He pointed to 100 MW of solar (CSP) already in place with a 10 MW PV plant and another 1 MW plant being built. Besides solar, Abu Dhabi also is pursuing a 100-MW “waste-to-energy” plant and a 30-MW wind plant.
Algeria: 22 GW of renewable energy capacity by 2030. Algeria has “significant potential” to develop its solar resources: excellent sunlight hours, rapidly rising electricity demand, a population that’s bigger than Saudi Arabia, and not a lot of carbon resources. “It has all the right factors to be a long-term strong market,” Burger said. It’s not clear, however, how much of that will be developed in the short term (2015-2016). Of that 22 GW number, 10 GW of that is in the Desertec Initiative, which aims to ship 10 GW worth of energy to Europe; the rest (12 GW) will be for domestic electricity demand. Algeria’s initial plans were to develop 650 MW by 2015 (tendered in 2012) and have 100 MW installed by 2013, but the country “has not laid out a good policy framework” to achieve those targets, Burger said.
Jordan: 10 percent renewable energy through 2020. Solar should be about 600 MW of that total, Burger noted. Jordan has a real need for power, with expensive residential rates exceeding $0.30-$0.35 per kilowatt-hour, he said. Still, investments in renewable energy will be challenged due to relative geo/political instability, a common theme among MENA countries.
Morocco: 40 percent renewable power generating capacity by 2020. Morocco launched its Solar Plan in 2009, declaring to generate 2 GW of solar power by 2020. Toward that end it has selected five sites for solar projects (four of them 400-500 MW in size), commissioned one per year from 2015-2019, but so far only one has moved forward: the Ain Beni Mathar ISCC plant, with 20 MW of total 470 MW capacity provided by solar thermal. Morocco’s timelines haven’t been very clear, Burger points out, but the country has deployed large amounts of capital and has a relatively strong regulatory framework.
Egypt: 20 percent of renewable energy generation by 2020. One of the MENA region’s early adopters of renewable energy development, Egypt now has roughly 3.5 GW of renewable energy installed, mostly hydropower, but solar will account for the bulk going forward. Of that 20 percent goal by 2020, it wants 12 percent from wind, and 8 percent from hydro and solar. (Of Egypt’s ~27.7 GW current installed capacity, 10 percent is hydro, 2 percent from wind, and half a percent from solar.) Egypt’s New and Renewable Energy Authority (NREA) has a 100 MW solar thermal plant and two 20-MW PV plants on its drawing board, but geopolitical/social unrest could delay such plans, Burger notes.
Qatar: 20 percent of renewable electricity by 2030. The host of the 2022 World Cup, Qatar is aiming to literally clean up its image — it has the highest per-capita carbon footprint in the world, 2.5× that of the U.S. in 2008, Burger points out. Almost all of Qatar’s electricity generation is gas-fired plants, with subsidized electricity rates that effectively prevent residential solar additions. Most of that 20 percent-by-2030 goal will be met by heavily state-funded solar — announced plans include 1.8 GW of solar projects by 2014, though without many details available except promises to tender a 200 MW project in early 2013. Qatar also is pursuing a local partnership with SolarWorld for polysilicon manufacturing. Qatar, like other MENA regions, still has to diversify its economy, while navigating the political unrest around the Arab Spring.
Bottom line: Look for significant solar energy developments in the MENA region over the next five years, varying by country, and not exactly linear annual growth because of the tender-based projects being developed. Look for a peak of roughly 3.5 GW in 2015 as many planned projects start to come to fruition.
Base case MENA demand forecast, in megawatts (MW). (Source: Greentech Media)