Source: Al Jayyousi, Odeh, 2015. Renewable Energy in the Arab World, Transfer of Knowledge and Prospects for Arab Cooperation, Friedrich-Ebert-Stiftung Jordan & Iraq.
In light of these developments, the Pan-Arab Renewable Energy Strategy was adopted by the League of Arab States during the 3rd Arab Economic and Social Development Summit in January 2013 in Riyadh to articulate the renewable energy goals of the Arab world and improve its energy future. The Pan-Arab Renewable Energy Strategy specifically seeks to:
- Utilize the abundance of renewable energy resources in the MENA region;
- Enhance the future energy security of the MENA region through the diversification of energy resources;
- Increase the share of renewable energy technology and energy installed and deployed in the MENA region by 2030;
- Meet the requirements of national and regional development by streamlining renewable energy target-setting procedures and providing guidelines for developing national renewable energy action plans in the MENA region;
- Preserve the MENA region’s indigenous oil and natural gas as strategic reserves for the future;
- Contribute to reduce the environmental impact of activities associated transportation, industrial and residential consumption.
If the countries of the Arab world are able to achieve these ambitious objectives, it’s estimated the installed renewable energy power generation capacity will increase from roughly 12 gigawatts in 2013 to 75 gigawatts in 2030. The following article will highlight some of the important aspects of the renewable energy market in the MENA region by asking a series of questions.
1) Which clean energy markets are the most promising in the MENA region?
According to the League of Arab States and the World Bank, electricity demand in Arab countries is expected to increase by 84% in 2020 compared to 2010. This increase would require an additional 135 gigawatts of generating capacity, which would require that Arab countries invest around $450 billion in infrastructure for electricity alone to reach this goal by 2020.
Having said that, the MENA region is fortunate because it has a substantial endowment of renewable energy sources. Especially when it comes to solar and wind energies. In fact, according to the International Energy Agency, Concentrated Solar Power technologies alone could generate a hundred times more electricity in the MENA region than the electricity consumption of the Arab region and Europe combined.
The following table presents some renewable energy resource indicators, reflecting the significant potential in the Arab countries.
Renewable energy resource indicators in the Arab countries
Source: International Renewable Energy Agency. Pan-Arab Renewable Energy Strategy 2030, Road Map of Actions for Implementations.
a) Solar power potential
The main measure of a region’s suitability for solar thermal concentrated applications is called Direct Normal Radiation and most Arab countries fall between the range of 2050 and 2800 kilowatts-hour per square meter per year. These rates are among the best in the world, which makes the MENA region ideal for implementing solar heating and cooling, Concentrated Solar Power and Concentrated Photovoltaic applications.
Map of global solar radiation in the Arab region
Source: International Renewable Energy Agency. Pan-Arab Renewable Energy Strategy 2030, Road Map of Actions for Implementations.
b) Wind power potential
The MENA region is also rich in wind power potential. However, this potential is concentrated in certain geographical areas. The greatest potential for large-scale wind power projects is in the Atlantic and Red Sea coasts, where the wind speed frequently exceeds the 6.9 meter per second economic feasibility threshold. In particular, Morocco, Oman and Mauritania have demonstrated great wind power potential, as they all meet the minimum wind speed requirement.
Map of wind speeds at 50m height in the Arab region
Source: International Renewable Energy Agency. Pan-Arab Renewable Energy Strategy 2030, Road Map of Actions for Implementations.
c) Other renewable energy potential
Several Arab countries also have the ability to develop geothermal, biomass and waste-to-energy applications. There are sites in Algeria, Morocco, Saudi Arabia and Yemen that have temperatures that exceed 200 degrees Celsius at 5000 meters depth, which makes them ideal locations to develop sustainable geothermal renewable energy. On the other hand, there are Arab countries, like Sudan, which have a unique opportunity to develop sustainable biomass renewable energy, thanks to their extensive agricultural activities.
2) Which countries have invested the most in the renewable energy sector in the Arab world?
Most Arab states are procuring significant utility-scale renewable power projects. However, Algeria, Egypt, Jordan and Morocco have some of the most impressive project pipelines under construction within their borders. While the rest of the Arab world has project portfolios that are smaller, they are projected to grow substantially in the upcoming years.
The following table provides an overview of project portfolios for the Arab states.
Renewable energy projects in Arab countries announced in 2013
Source: International Renewable Energy Agency. Pan-Arab Renewable Energy Strategy 2030, Road Map of Actions for Implementations.
a) General renewable energy and technology-specific targets
Twenty Arab countries have announced renewable energy targets that represent fractions of electricity generation or installed capacity. In terms of installed capacity, Morocco’s clean power target of 42% by 2020 is the most ambitious in the MENA region. However, Algeria, Egypt, Qatar, Saudi Arabia, and Tunisia have also announced their desire to generate more than 20% of their electricity for different horizons.
Fourteen Arab countries have also committed themselves to one or more technology-specific targets. Not surprisingly, the MENA region seems to be more focused on solar technologies than wind technologies. However, the MENA region’s targets for other renewable energy, such as geothermal and waste-to-energy, is substantially lower.
The following table provides a detailed list of announced technology targets thus far for all states covered in this study.
Technology-specific targets in the Arab countries
Source: International Renewable Energy Agency. Pan-Arab Renewable Energy Strategy 2030, Road Map of Actions for Implementations.
3) What are the main factors that are driving Arab countries to develop renewable energy projects?
There are numerous factors that have motivated Arab decision-makers to develop renewable energy plans and endorse the Pan-Arab 2030 strategy including the desire:
- To satisfy the ever-increasing energy demand in the MENA region and beyond;
- To harness the MENA region’s unique renewable energy potential to provide a diverse and affordable range of energy generation options;
- To decrease the dependency of oil-rich Arab economies on fossil fuels;
- To generate affordable and clean energy in Arab countries that suffer from energy scarcity;
- To stimulate sustainable economic and social development by generating jobs and creating new economic and industrial growth opportunities;
- To protect and preserve the environment and reduce the impact of environmental degradation caused by oil and gas exploration;
- To increase the private sector’s role in regional energy markets to promote efficiency and the faster adoption and deployment of renewable energy cultures and technologies.
4) What is the installed renewable energy capacity in the MENA region?
Despite the MENA region’s abundance of renewable energy sources, the level of installed renewable energy technologies still remains low. However, since 2014, there has been an impressive scale-up of renewable installed capacity in many Arab countries. In 2015, the total installed capacity of all renewables (including hydro) reached approximately 14 gigawatts.
In the same year, it’s estimated that renewable energy made up 6% of the region’s total power generation capacity, with hydropower dominating the majority of this capacity at 4.7%. Interestingly, the region’s wind and solar energy only accounted for 0.9% and 0.4% of this capacity respectively.
Source: International Renewable Energy Agency. Pan-Arab Renewable Energy Strategy 2030, Road Map of Actions for Implementations.
The following table contains a breakdown of renewable electricity installed capacity by country and technology.
Renewable energy installed capacity in the Arab countries – 2012
Source: International Renewable Energy Agency. Pan-Arab Renewable Energy Strategy 2030, Road Map of Actions for Implementations.
a. Solar
In 2015, the combined installed capacity for solar power in the Arab world exceeded 800 megawatts. Algeria had the largest installed photovoltaic capacity with 270 megawatts, followed by Egypt with 90 megawatts and UAE with 33 megawatts. On the other hand, Morocco had the largest installed Concentrated Solar Power capacity with 183 megawatts, followed by UAE with 100 megawatts and Algeria with 25 megawatts.
b. Wind
In 2015, the combined installed capacity for wind power in the Arab world exceeded 2000 megawatts. Morocco had the largest installed capacity for wind power with 790 megawatts, closely followed by Egypt with 745 megawatts. Tunisia and Jordan also showed great potential with 245 and 197 megawatts respectively.
c. Hydropower
In 2015, the combined installed capacity for hydropower in the Arab world was 11,000 megawatts. Egypt had the largest installed capacity for hydropower with 2,874 megawatts, followed by Iraq with 2,513 megawatts and Morocco with 1,770 megawatts.
5) Where does investment in the MENA region’s renewable energy come from?
Up until recently, most of the investments made in the MENA region’s renewable energy sector have been financed by governments, international renewable energy development assistance and regional development banks. However, several Arab countries are trying to promote more clean energy investment by encouraging the establishment of renewable energy funds and state-backed private sector entities and the repurposing of budgets in existing financial channels.
a. Renewable energy funds
National renewable energy and energy efficiency funds have been created in Algeria, Egypt, Jordan, Morocco and Tunisia to invest in, and provide grants to renewable energy projects. While these funds are at various levels of maturity and financial sustainability, they demonstrate a commitment to promoting the innovation and deployment of renewable technology in the region. To further explore the status of funding opportunities and policy developments in the MENA region’s renewable energy sector, visit the renewable energy profiles of seventeen Arab nations on the Regional Center for Renewable Energy and Energy Efficiency (RCREEE) website.
Selected Renewable Energy Funds
Source: International Renewable Energy Agency. Pan-Arab Renewable Energy Strategy 2030, Road Map of Actions for Implementations.
b) State-backed private sector entities
In some Arab countries, state-backed private sector entities have been created to channel funds into domestic and international renewable energy projects. These entities were established to substitute or complement the activities of public funds. For example, the Emirate of Abu Dhabi in the UAE established Masdar in 2006 as a privately structured company with the aim of investing portions of the emirate’s sovereign wealth fund in renewable energy projects in UAE and abroad.
c. Existing financing channels
On the other hand, some Arab states have chosen to use existing financing channels to fund renewable energy projects. For example, Libya has opted to reserve a portion of its public budget to invest in renewable energy projects. Whereas Kuwait has announced plans to invest money in domestic renewable energy projects through its sovereign wealth fund. State-backed energy companies have also created investment units to fund renewable energy projects in Algeria, Kuwait, Morocco, Qatar, Saudi Arabia, Syria, Tunisia and UAE.
6) What are the main policies used in the Arab world to promote the renewable energy sector at the moment?
Public financing is the most popular form of financial support policies for renewable energy projects and these policies can be divided into two main categories. The first is public competitive bidding, which allows power purchase agreements to procure utility-scale renewable energy. The second is public investments in renewable energy projects through grants, soft loans or research and development activities. Although public competitive bidding encourages stakeholders in the private sector to invest in large-scale renewable energy projects, there are other policies that benefit small power producers.
Feed-In-Tariff programs reward small electricity producers with premium prices for each unit of renewable electricity they produce. On the other hand, net-metering allows small renewable energy self-producers to send excess electricity to the grid. Thus, lowering their monthly electricity bill. Unfortunately, in the MENA region, there is a bias towards supporting large-scale renewable energy projects as opposed to Feed-In-Tariff and net-metering programs. This is demonstrated by the fact that 10 Arab states have adopted public competitive bidding policies, whereas only five Arab states have adopted Feed-In-Tariff policies and only eight have adopted net-metering policies.
Renewable energy support policies
Source: International Renewable Energy Agency. Pan-Arab Renewable Energy Strategy 2030, Road Map of Actions for Implementations.
7) Do the current legal frameworks in the MENA region support the adoption and deployment of renewable energy technology?
In 2014, there were only six Arab countries that had passed renewable energy laws including: Algeria, Jordan, Morocco, Palestine, Syria, and Tunisia. However, only two of those countries – Algeria and Jordan – provided a statutory guarantee of priority access to the grid for renewable energy. In other parts of the Arab world, renewable energy law is still in the process of being drafted or still pending approval from legislative bodies.
The future adoption of renewable energy laws is vital for the development of a clean energy sector in the MENA region, because they reduce risk to private investors and they provide clear expectations and a legal framework to support Arab governments’ renewable energy targets and strategy. Nevertheless, even though numerous Arab governments have yet to draft and approve comprehensive renewable energy legal frameworks, they have adopted various supporting policies for renewable energy projects.
8) What are the main obstacles hindering the adoption of clean energy technologies in the Arab region?
Despite the favorable environmental conditions, the considerable economic gains and the increasingly affordable price of technology, the rate of renewable energy adoption is still lagging in the MENA region. This lag can be attributed to various factors, including institutional inertia caused by the unfamiliar nature of the renewable energy market, the lack of clarity in institutional roles and responsibilities and the lack of dedicated policies and regulations. In that past, Arab power markets have traditionally been characterized by centralization and the heavy involvement of the public sector in the generation, transmission and distribution processes.
However, as the power demand in Arab countries continues to soar, there has been a very strong push in the region to deregulate the power and water markets. This push has driven many Arab countries to liberalize their laws (to varying degrees) to allow the private sector to participate in power generation activities. Although private participation in the renewable power sector has increased in the MENA region in recent years, it still remains relatively limited.
9) Transfer of technology between the Arab world and the countries of North and South.
According to International Renewable Energy Agency “Pan-Arab Renewable Energy Strategy 2030”, “renewable energy is a suitable area for the transfer of technology between the Arab world and the countries of North and South. Renewable energy technologies, characterized by diversity and decentralization, make it particularly suitable to develop energy in rural areas, or in projects between the Arab world and Europe, within a regional vision that embraces mutual interest exchange in technology, localizing manufacturing and energy industry.”
It added that “In this context, it would be possible to take advantage of the clean development mechanism (CDM), adopted in the Kyoto Protocol, in renewable energy applications to reduce greenhouse gases.”
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