Following the recent news that renewables now lead energy growth in the MENA market the first time, we take a look at the sector across the region.
According to APICORP, Renewable energy now accounts for around 40% or $100bn of all Middle East and North African power investments (committed or planned). This is expected to rise further in the years ahead, driving significant change in the regional and global energy landscape. Challenges remain, however, to achieving change on this scale and the picture for renewables is still mixed.
Not surprisingly, solar power is a major focus for the renewables sector in the MENA region, which has large open spaces and some of the most reliable year-round sunshine in the world.
In 2021 the Middle East and North African region will complete 3GW of solar power generating capacity projects. That in itself will not have a major impact on global energy supply or global renewables capacity. For context, planned and committed investments will take the UK’s offshore wind capacity on its own to 20GW by 2025. But 3GW is a significant increase on previous years and such a large single-year addition to capacity demonstrates the potential to ramp up regional solar power fast.
The MENA region is highly diverse in its electricity infrastructure. Though much of the region has one thing in common – a natural focus on gas and oil as a primary source of both energy and economic wealth – there are great variations in transmission systems. Some countries are very well connected across much of their population, while others have less reliable grids through historic lack of investment or recent instability.
So while 40% of power investment is presently being spent on renewable energy projects, it is notable that much of the rest is being invested in transmission grid projects and storage systems to accommodate a more dispersed energy sector.
That process may take time but with an expected $250bn being invested in electricity over the next five years, there is clearly an indication that grid capacity is being taken seriously, at least by some countries in the region.
Some nations are further along the renewables path than others. Jordan, for example, has increased renewable energy from just 1% of its power supply a decade ago to 20% today.
Morocco is a leader in the region. It has diverse renewable energy sources, with wind, solar and hydro power now making up almost 40% of its total generating mix. Just as importantly, around 90% of its current 3.5GW project pipeline is renewable.
In the UAE on the other hand, renewables constitute just 6% of total installed capacity and 3% of power generated as of 2020. The small country does, however, have around 5GW of solar projects in the pipeline which could see the small nation catch up to others quickly.
Saudi Arabia is facing a much larger challenge to ramp up renewable energy. It has only a third of a Gigawatt of utility-scale solar generation operational as of 2020. Even when combined with the present tenders under its National Renewable Energy Programme, the total renewables capacity of the Kingdom totals just 3.3GW. That is 24GW short of its stated target of 27.3GW, which it had hoped to achieve by 2024.
Oman is also a long way from achieving its short-term target of generating 10% of its power from renewables by 2025. In the past two years it has commissioned only a single 105MW utility solar PV project and a 50MW onshore wind project.
On a more optimistic note, Iraq’s first round of solar project bids – totalling 755MW of capacity – was announced in 2019 and short-listed companies were disclosed last year. It hopes to reach 10GW of solar power capacity by 2030, generating 20% of its power.
MENA is a strong candidate to become a major hydrogen-exporting region thanks to its combination of low-cost gas resources and, eventually, renewable energy.
Saudi Arabia and Morocco have already started on this path, becoming low-cost exporters of blue and green hydrogen along with other low-carbon products like net-zero ammonia. Other countries, such as Oman, UAE and Egypt are attempting to catch up, though the sector’s global demand remains relatively small at present.
Low carbon hydrogen is also heavily dependent on renewable energy being used for the electrolysers that produce it, because using fossil fuels to generate the high electricity output needed to produce hydrogen removes it from the clean-energy equation.
So to achieve genuine global impact through a growth in low carbon hydrogen exports, the region will really need to deliver on its renewables potential too.
That may create an even greater incentive to ramp up renewables projects – especially as the EU and USA examine carbon-import taxes that would make less-renewably produced hydrogen unattractive to both markets.