With the scheduled procurement of over 4 GW of solar power this year, the MENA region is making great strides toward establishing itself as a rising gigawatt-scale solar market. According to the Middle East Solar Industry Association (MESIA), over 3 GW was added to the MENA region’s pipeline in 2015. Egypt firmly established itself as a hot solar market by also adding 3 GW, set to be completed over the next four years.
Dubai has also been a swarm of solar activity recently. MESIA Director of Research Dr. Raed Bkayrat told PV-Tech that the Mohammed bin Rashid Al Maktoum Solar Park in Dubai has been a game changer in the region. With the successful 13 MW first phase installation in 2013, and recent financing for a 200 MW second phase, Bkayrat reports, this “has opened the floodgates.”
Solar Procurements in 2016
A new report released by MESIA anticipates the following solar PV procurements in 2016 across MENA:
- Algeria: 2 GW
- Egypt: 250 MW
- Jordan: 120 MW
- Kuwait: 85 MW
- Morocco: 245 MW
- Saudi Arabia: 170 MW
- Dubai: 800 MW
- Abu Dhabi: 350 MW
Dr. Bkayrat, a lead author of the new MESIA report, noted, “I think Jordan’s [state utility firm] NEPCO also played a role demonstrating that this can be done with its second-round direct bidding process. The four lowest bidders were around six and seven US cents per kWh.” He added, “The fact that someone has done it now makes life easier for the others.”
Falling Petrol Profits – A Boon
Although declining oil prices might suggest decreased budgets in Middle Eastern nations, interest in renewable energy is growing as the region ponders energy vulnerability in the face of climate change. Bkayrat points out that falling oil revenue are hastening fossil fuel subsidy reform, and encouraging public-private partnerships in new infrastructure investments.
Dr. Bkayrat explains, “Five years ago when oil was US$100 they were enjoying massive revenues and investing heavily in infrastructure; they were not too worried by the energy subsidies, and they didn’t pay too much attention to solar.”
“They started talking about solar five years ago, but the motivation wasn’t there because the cash was flowing in nicely. Most of the projects they were tendering were on an EPC basis, and the government owned the asset, they weren’t public-private partnerships or an IPP model.” However, Bkayrat adds, “As cash started drying up, this brought to a halt the infrastructure projects tendered on an EPC basis and forced the government to revise their subsidies.”
Solar – The Most Cost-Effective Option
Now, without government subsidies bleeding the budgets and falsely lowering fossil fuel costs, solar power procurements are playing out on a more level field in the Middle East. Dr. Bkayrat notes that this means “solar is becoming the most cost-effective power generation option in the region.”
So expect the Middle East to continue making large solar additions for years to come.
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