25 Aug 21

Renewables at 7% in Middle East, and rising fast

Even in the Middle East and North Africa (MENA), the source of much of the world’s fossil fuels, the shift to renewable energy is picking up. Renewables already generate 7% of the region’s energy, and the rate is rising fast, a recent report reveals. 

In the first half of 2021, not a single contract was awarded for oil- or gas-fuelled power stations across the entire MENA area. However, the renewable energy projects awarded in the same region over the same period added up to a total of $2.8 billion. 

Global oil demand

Those figures, from MEED Insight’s report on Middle East Energy Transition, indicate the speed at which even in the Middle East, governments are shifting from traditional petrol-based energy to renewables. Sustainability is a major driver, but specific to the region are the worries about the long-term global demand for oil products – low since 2015 and expected to nosedive from 2040 – and growing confidence in the effectiveness of renewable energy in the region, especially solar. 

As a result, the forecast for renewables in MENA is decidedly ‘sunny’. There are currently renewable energy contracts worth $21.5 billion in the tendering stage. Those are likely to be awarded in the second half of this year and in early 2022. In all, the value of renewable energy projects currently in the pipeline is about $104 billion – although about three-quarters of that amount refers to projects still being studied. Some might still change in scope, or not go ahead at all.

Saudi Arabia

The report points to Saudi Arabia as a rich source of opportunity, with $18 billions’ worth of renewable energy projects in development - $13 billion of which is at or close to the tendering stage. Compare with the UAE, which is well ahead of Saudi Arabia in terms of renewable energy capacity installed, but only has $370 million in renewable energy projects at the bidding stage. 

The energy transition across MENA will have to deal with fast-rising demand for energy, currently going up by about 5% a year. Rapid expansion of renewables capacity is top of mind everywhere.

Hydropower makes up 21 GW of the 28 GW in renewables energy production capacity already installed across the region (i.e. 7% of MENA’s total capacity). Most new projects focus on wind and solar energy, which are increasingly attractive thanks to falling costs. For the world’s biggest (and cheapest) solar projects today, go to Saudi Arabia (pictured), Abu Dhabi, and Dubai. 

98 GW planned

In all, about 98 GW of new renewables capacity is planned in MENA, with 39 GW coming on stream by 2025. Dubai, for instance, aims to have 75% of its energy produced by sustainable sources by 2050. 

Various governments across the region are aiming not just to become heavy users of renewable energy, but also major developers of the relevant technology. 

Hydrogen in particular is a popular option among the many projects popping up across the Middle East. For example by using cheap solar to produce clean hydrogen from water – eventually expanding the as yet still tiny market for the fuel.  In all, $42 billions’ worth of green hydrogen projects are currently being planned across MENA. 

Image: Shutterstock

Authored by: Frank Jacobs