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Tuesday, 23 February 2021

shift to green energy could restructure more than our consumption habits

How will increased reliance on renewable energy change geopolitical power dynamics? The energy sector is set to be completely transformed over the coming decades with the march towards renewables, and with it, the geopolitical dynamics that conferred power to nations with oil or gas deposits. This global shift is expected to very rapidly create a new set of winners and losers, with adaptable economies such as China set to dominate, and oil-dependent economies in the Middle East and Russia potentially seeing their clout significantly diminished. Bilateral relations, risks of conflict, and economic stability will all need to be rethought under the new global renewables regime.

A new class of renewable energy superpowers: Unsurprisingly, China is poised to reap the benefits of this new geopolitical order. China produces more than 70% of the world’s solar panels and half of its electric vehicles. The country also controls over one tenth of the world’s cobalt reserves, meaning that countries wishing to purchase solar panels or EV batteries, or manufacture their own, will likely end up doing business with China.

Other countries are focusing on bilateral energy interests, with Australia and Singapore planning to build the world’s first intercontinental power grid between the two countries, and the UK and Norway working on laying down the North Sea Link, the world’s longest subsea electricity cable to both import and export electricity from and to one another. The shift could also be a godsend for countries heavily reliant on energy import, but which have an abundance of wind and solar resources that can be harnessed for local energy production, such as Morocco.

How will this change the region? A decline in fossil fuel export revenues could destabilize the economies of countries like Saudi Arabia that are less diversified than oil producing giants like Russia. Oil interests that have shaped foreign policy in the Middle East for decades may collapse as the rise of renewables makes it easier for countries to achieve energy independence. Countries may start to look to developing more local “grid communities,” trading electricity among themselves instead of sending fossil fuels across the seas.

A 2019 report (pdf) by the International Renewable Energy Agency (IREA) outlined three major areas in which countries could (and should) try to get ahead. Exporting green energy, controlling the raw materials needed to harvest green energy — such as the cobalt used to make EV batteries and solar panels — or developing a superior technology that uses green energy, such as manufacturing EV batteries.

This is how Egypt is adapting to this changing dynamic: Egypt has been working to capitalize on its solar energy production capacity with the building of Benban, Africa’s largest solar park, and has committed to producing 42% of its electricity from renewable sources by 2035, according to its Integrated Sustainable Energy Strategy. With an estimated 58 GW of renewable energy generation capacity and peak summer demand ranging in the mid-30s, Egypt produces an excess of electricity that could be redirected for export — which is exactly what we’re working on.

Egypt has been courting investors for the Euro-Africa electricity link, a 2-GW transmission link that will connect Egypt’s electricity grid to mainland Europe via Cyprus making it the longest interconnector cable in the world, positioning Egypt as a long-term renewable supply hub for Europe. We also set up an interconnection grid with Sudan and are working on another interconnection project with Saudi Arabia.

The downside risk for Egypt: On the other hand, the IREA report’s prediction that a reliance on renewable energy will diminish the importance of energy “choke points” — busy global shipping routes for oil — could be bad news for the Suez Canal.

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