The National Bank of Abu Dhabi (NBAD) presented its Financing the Future of Energy Report at the Global Financial Markets Forum currently underway in Abu Dhabi. It concluded that growing energy demand would require $48 trillion in investment over the next 20 years to close the energy demand and supply gap.
Crucially for the renewable energy industry, the NBAD report concludes that solar PV will play a key role in meeting this energy demand due to its increasingly cost-competitive nature, with recent tender prices from the Gulf Region forming a new benchmark.
The future gap in energy demand and supply presents a real opportunity for the banking sector and the Financing the Future of Energy Report marks the start of a strategy to learn, collaborate more and to make a real contribution to helping this region meet its own energy challenges, said NBAD CEO Alex Thursby in presenting the report. Thursby noted that the emerging super region, across the West-East Corridor from Africa through the MENA and to Asia would be a key area for energy demand growth. He also noted that the Gulf States are well positioned to supply these markets with financing solutions.
At NBAD we want to understand better what the real drivers are so we can respond to them effectively and be a positive force, accelerating the transition to a much needed new world of energy, said Thursby. The NBAD has established a new team under senior management to evaluate and create new financial products to support renewable energy development.
The Financing the Future of Energy Report sets out four main pillars. The first quantifies the large opportunity for renewables based on the growing demand for energy globally, and the increasing competitiveness of renewables, in particular solar PV and terrestrial wind. It notes that falling oil prices will not significantly impact the continuing growth of renewables.
The second pillar confirms the proven and cost-effective nature of renewable deployment. It also notes the important role of energy efficiency, including in industrial applications where it can offer compelling returns.
Thirdly the report concludes that while markets may be local, global opportunities exist in terms of financing and supplying renewable energy projects. Strong local initiatives such as Masdar in the Gulf States will allow for the region to lead in providing new energy solutions.
The final pillar is need for collaboration between policymakers and the financial community. Because of the scale of ambition and sheer level of investment, the report states, there will be a major role for the private sector and, by extension, financiers.
Financing the Future of Energy Report was commissioned by NBAD and compiled with input from the University of Cambridge, the PwC Middle East network, in collaboration with Masdar.