The Middle East and Africa’s (MENA) power capacity requirements are expected to increase at an annual rate of 6.4 per cent until 2022, according to the latest research report by Arab Petroleum Investments Corporation (APICORP) on the regional renewable energy sector
APICORP’s report also finds that the renewable energy drive in the region is led by the UAE, Morocco and Jordan, as each of these countries have put measures in place to ensure the diversification of their energy sources, with the help of European and international development organisations.
The report has identified that in order to support their renewable sectors, the main energy-importing countries in the region have introduced several supporting mechanisms including competitive bidding, the introduction of feed in tariffs (FiTs), tax exemptions and power-purchase agreements (PPA).
On the other hand, energy-exporting countries, excluding the UAE, have done little to incorporate renewables, as they continue to rely on cheap-to-extract conventional resources to meet rising electricity demand.
The UAE
The UAE, especially Dubai, has done impressive work to stay on track with the renewable energy targets. With phases 3 and 4 of the Dubai Solar Park, to begin commissioning by the end of 2020, the UAE is placed at the forefront of renewable energy development in the region.
Morocco
According to APICORP, the Moroccan government plans to reach a target of two gigawatts of solar and wind power each by 2020. The country has made further developments in its wind and solar sectors. Five wind projects totalling 850MW have already been awarded. For solar, phase 1 of the Noor Concentrated Solar Power (CSP) project was commissioned in 2016, while Noor-2 and Noor-3 are expected to add a combined 350MW in 2018.
Jordan
Jordan is also investing to expand its renewable energy sources, with support from the international community. These include the Japanese led Kepco project, Korean led Fujeij wind project, Al Rejef project and the Quweira project, which jointly is expected to increase the country’s energy target from 600MW to one gigawatt by 2020.
Saudi Arabia
The report also states that Saudi Arabia, with its ambitious renewable energy plan, is proceeding towards a promising renewable energy future. The first utility-scale solar project was recently awarded to ACWA Power. The 300MW Sakaka PV project in the Al-Jawf region achieved a world-record price of $0.02342/kWh and will operate under a long term PPA. The government has received four bids for the first wind project, expected to hold a capacity of 400MW in Al-Jawf region.
Egypt
APICORP also predicts a more positive outlook for Egypt as the country steps up to increase the solar and wind power production. Egypt’s main challenge is their low foreign reserves and an uncertain outlook for the pound. Financing remains the government’s biggest obstacle, but the growing commitment of international lenders such as the IFC and EBRD is helping to attract much needed funds into the sector.
Taking a broader look at the region, the falling cost of competitiveness is set to support the success of renewable energy plans. However, several other MENA countries are still struggling to make progress. Large oil and gas reserves and cheap extraction costs mean that hydrocarbons continue to meet rising demand in countries like Kuwait, Qatar and Algeria, and policy uncertainty and lack of an efficient and supportive regulatory framework are also contributing to slow progress.
