Report signals PV boom in the Middle East and North Africa

The International Renewable Energy Agency (IRENA), the Renewable Energy Policy Network for the 21st Century (REN21) and the United Arab Emirates’ Directorate of Energy and Climate Change recently published a joint report examining the deployment of renewable energies in the Middle East and North Africa (MENA) region.

MENA region, the report says, is currently characterized by an increasing amount of renewable power investment and a burgeoning project pipeline to harness the region’s abundance of renewable energy resources.

Specifically, the report says that while from 2007 to 2010 renewable energy accounted for only 1% of the MENA region’s total primary energy supply, renewable energy in 2011 grew to 3.3% of the region’s 1200 TWh total power generation.

Furthermore, although hydropower remains the dominant type of renewable energy in the region, non-hydropower renewable power generation in the region from 2008 to 2011 more than doubled to reach almost 3 TWh.

While wind is the largest source of non-hydro renewable energy, solar power generation has seen the highest average annual growth in recent years. This is due to "a significant increase in photovoltaic installed capacity and production from a low-starting base, and to the recent introduction of concentrating solar power," the report says. Solar water heating technologies are likewise becoming widespread.

Some of the world’s largest energy players, especially national and international oil and gas companies, have now entered the MENA region’s solar market.

Investment in renewable power in the MENA region, the report adds, is expected to continue in the foreseeable future. It states that as of April 2013, there were 106 non-hydro renewable energy projects in the pipeline in the region totaling over 7.5 GW of new electric generation capacity.

Solar PV growth dominates

The current solar PV electricity share in the MENA region’s power generation mix remains relatively modest. However, "PV is experiencing rapid growth due to its tremendous potential and continuously decreasing technology costs," the report finds. From 2008 to 2011, the average annual growth rate of solar PV production was at least 112%.

"Focusing only on the number of countries with solar PV installed capacity, it is evident that this technology is more widespread than wind power in the region," the report adds. Specifically, all 21 MENA countries use solar PV to meet a part of their electricity demand, whereas by the end of 2012, only around 40% of the MENA nations produced electricity from wind.

In terms of solar PV capacity in the pipeline, the MENA region boasts a 2.3 GW solar PV project portfolio, with Israel, Oman and Jordan standing out with 842 MW, 407 MW and 400 MW, respectively.

Other countries with solar PV projects in the pipeline include Algeria (175 MW), Egypt (106 MW), Saudi Arabia (125 MW), the United Arab Emirates (113.8 MW), Morocco (127.7 MW) and Tunisia (5 MW).

The rapid growth of solar PV capacity in the MENA region is clear considering currently installed photovoltaic capacity in the region is 380 MW.

Finally, solar PV has an important role to play in the electrification of rural areas, where off-grid solar PV solutions are seen as competitive and at the correct scale for remote rural communities. Rural solar PV applications are not included in the pipeline figures, which only include projects greater than 1 MW.

Policy acceleration, target-setting and financial incentives

These trends have been accompanied, and caused in part by, a rapidly changing set of policies, targets, regional cooperation activities and institutions in the MENA region. Policy deployment and target-setting are now a widespread phenomenon across the region.

As of May 2013, all 21 MENA countries have renewable energy targets (19 of which have specified targets by technology), up from just five countries in 2007. If realized, the targets would result in 107 GW of installed renewable power capacity in the MENA region by 2030. Saudi Arabia alone is aiming for a staggering 54 GW of renewable energy capacity by 2032, with 16 GW coming from solar PV projects.

Moreover, at least 18 of the 21 MENA countries had some type of renewable energy promotion policy in place to help achieve those targets. Currently, FITs have been adopted in at least seven MENA countries. Seven countries have net metering in place and 11 countries have some form of renewable energy fiscal incentive, including capital subsidies and tax, production credits or reductions.

However, of all the policies employed by national governments to promote renewable electricity, the most common was public competitive bidding for fixed quantities of renewable energy and public financing, including grants and subsidies. At least 15 MENA countries have direct or indirect public funding or public competitive bidding processes in place.

Challenges remain

Renewable energy growth in the MENA region needs to be cultivated further so that renewable energy deployment goals are accomplished and targets are met successfully. To achieve this, the report stresses that several challenges need to be addressed to decrease the reliance on public and soft financing as well as to foster private investment in the region. These include regulations and market-based policies, energy subsidies, public awareness, political unrest, financial uncertainty and policy risk.

The 21 MENA countries considered in the report are Algeria, Bahrain, Egypt, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates, Yemen, Djibouti, Israel, Jordan, Lebanon, Malta, Morocco, Palestinian Territories and Tunisia.