greenEconomy
Tuesday, 11 January 2022

MENA to double renewable energy production in next 5 years

Renewable energy production in the MENA region will more than double over the coming five years as states ramp up investment in green technology and reduce reliance on hydrocarbons, according to the International Energy Agency (IEA). Capacity in the region will eclipse 32 GW by 2026, up from 15 GW currently, the organization forecast in its Renewables 2021 report (pdf), published in December.

But: The MENA region is far behind other parts of the world which are taking far bigger steps to increase their renewables footprint and phase out use of fossil fuels.

The epicenters of MENA renewables growth: Egypt, the UAE, Saudi Arabia, Morocco and Israel will account for more than 75% of renewables growth over the next five years, the IEA said.

Powered by the region’s most abundant resource: Solar will be the driving force, accounting for more than two-thirds of renewables growth as the technology becomes more cost effective. An increase in competitive auctions, falling system costs and better financing conditions has seen bid prices in MENA fall more than 80% over the past six years.

The UAE leads the pack: The country’s capacity is set to rise by over 6 GW by 2026 thanks to solar PV and concentrated solar power, as well as rising bioenergy and hydropower generation. This is higher than that forecasted last year on the back of higher PV production.

A close second is Saudi Arabia whose renewable capacity is also expected to rise by over 6 GW, underpinned by a rise in utility-scale solar PV.

Egypt’s renewable capacity is set to rise by 68% or 4 GW over the coming five years, bringing the country’s total capacity to around 10.1 GW from 6.1 GW currently. We covered the IEA’s forecast for Egypt in greater detail in an article in Going Green last month, which you can check out here.

Israel + Morocco: The IEA expects Israel to more than double its renewable capacity, increasing 5.2 GW over the period, while Morocco will add another 3.8 GWof utility-scale solar PV, onshore wind, CSP and hydropower capacity.

More bullish on MENA renewables is Apicorp, which said in a report last year that it expects 20 GW of solar energy alone to come online by 2025.

In any case, MENA still has a lot of catching up to do: Of the IEA’s eight regions, MENA came second to last behind Sub-Saharan Africa. China, Europe, the US, India, Latin America and ASEAN will all make bigger gains over the coming five years than MENA.

Investment in conventional energy will continue to far outweigh renewables: Of the USD 805 bn Apicorp expects to be invested in MENA energy projects in the first half of the decade, only around USD 100 bn will go towards renewables.

The region could add up to 57 GW by 2026 if it wasn’t for some major challenges: The region lacks the sufficient grid infrastructure to connect renewable plants and transport the power to demand centers, as well as utility-grade infrastructure for storing renewable energy. MENA also suffers from exacerbating overcapacity amid pandemic-driven reduced energy demand. Existing regulatory frameworks currently do not allow corporate purchase power agreements and bilateral contracts, which could open the doors to more investment in the sector.


Your top climate stories for the week:

  • Green hydrogen plan in the works: Egypt will soon sign an agreement with a foreign consultancy to put together a 12-month strategy to develop the green hydrogen industry.
  • Solar energy players call to scrap tariffs on solar panels: The Solar Energy Development Association (SEDA) has sent a letter to Electricity Minister Mohamed Shaker requesting that the ministry cancel the duty.
  • Kuwait’s sovereign wealth fund is jumping on the ESG train: The Kuwait Investment Authority is looking to make its entire USD 700 bn portfolio fully compliant with environmental, social and governance standards.

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