UN Sustainable Development Goal 7 aspires to ensure access to affordable, reliable, sustainable and modern energy for all by 2030. But in Africa, around 600 million people continue to live without access to electricity. Seeking to reach as many of these people as quickly as possible, African governments are signing agreements with foreign firms to deliver off-grid solar products to millions of households.
British firm Bboxx, for example, has an agreement with the government of the Democratic Republic of the Congo to deliver solar home systems (SHSs) to 10 million citizens by 2024. SHSs consist of one or more panels, usually installed on household roofs, capable of providing up to 300 watts of power. This is sufficient to power laptops, televisions, LED lights, and – in certain models – refrigerators and cooking.
Underpinning this process is the belief that expanded access to off-grid solar can drive economic development by strengthening household income. According to the African Energy Commission, the process will “lift hundreds of millions of people” out of poverty.
Do these claims stand up to interrogation?
Increased income, increased risk
In a recent study, Patrick Lehmann-Grube, an independent researcher, and I reviewed 56 papers that focused on how access to off-grid solar energy impacts household income in Africa. Initially, the available evidence appears to provide strong support, with almost all the papers finding a positive effect.
This was largely based on the finding that SHSs enabled local stalls and kiosks to stay open longer by operating beyond nightfall. The testimony of a Kenyan fruit and vegetable seller is typical. After the addition of a SHS, she reported being able to add “two more hours of trading each day”. Across the studies, additional work hours allowed household income to increase by around US$20–£40 (£17-£33) per month.
Workers’ greater capacity for self-exploitation
Existing studies generally cite working longer hours as a marker of economic progress. Yet this finding is ambiguous since increased income here is achieved through a greater capacity for self-exploitation. Given the physical limits to the length of a working day, these observed increases can only lead to a limited economic gain.
For economic development to be strengthened and sustained, it must be incorporated into a process of increased productivity. This should be achieved by an increasing output per unit of labour time – not simply via people working longer hours or more people working – and supported by an accumulation of capital.
Existing studies tend not to focus on these dimensions, leaving the true economically transformative nature of off-grid solar products unclear. The low energy capacity of SHSs should, nonetheless, caution against any great enthusiasm that they can generate such transformative economic progress.
Short-term gains, long-term losses?
The shift of energy provision via SHSs away from centralised public governance and towards a privatised model has in many instances also shifted the financial burden of maintenance onto local communities. Several studies noted that the maintenance costs for off-grid solar products often surpass what rural households and communities can afford.
Yet most studies focus on the short-term impact, usually within a couple of years of a household or firm gaining access to off-grid solar. Short-term income gains will prove fruitless in the future, however, should communities be unable to assure maintenance of the equipment.
Several studies also documented the recent introduction of a pay-as-you-go model. The model aims to extend low-wattage solar products to income-poor rural African households, who are often unable to afford the full upfront cost. Already, pay-as-you-go solar firms are beginning to push a range of other products to their clients, such as irrigation pumps and appliance leasing.
This strikes a further note of concern, as studies on financial technology (or fin-tech) services have demonstrated their frequent association with rising indebtedness. Indebtedness constrains rather than liberates households, a process hardly conducive to economic development.
Can off-grid solar still drive economic development?
One solution to the limited economic impact of increased access to SHSs would be to focus on the provision of mini grids. Capable of powering entire rural communities or urban suburbs, research demonstrates that they support a far larger range of activities, extending into productive and industrial use.
Another avenue will be through developing domestic capacity in the design and manufacture of off-grid solar power. This carries the potential to generate productive employment and help stimulate a shift towards industrial development.
Existing studies have proved adept at identifying households who appear to have financially benefited from access to off-grid solar through increased income. But they have been less well attuned to the downsides.
Alongside rising indebtedness, these include the more general processes of polarisation, marginalisation and exclusion that inevitably accompany any process of capitalist economic development.
If, as Brazilian economist Celso Furtado once wrote, capitalist development is “a process of reshaping social relations founded on accumulation”, future research would do well to focus on how social relations are being reshaped by off-grid solar expansion – and with what consequences.
Adding to the list of novelties of our times, we now have the first global energy crisis. And it comes at a time in which we still struggle to make the switch to renewables that is necessary for international energy security.
That’s what the International Energy Agency’s boss Fatih Birol told the Sydney Energy Forum, where global energy and climate leaders had gathered this week.
The energy crunch has not even peaked yet, Birol specified. Energy prices are currently expected to increase by 50% on average in 2022.
The discussion was centred on how to scale up and strengthen supply chains for the clean energy technologies needed to ensure a secure and affordable transition to net-zero emissions.
For the occasion, the International Energy Agency (IEA) has published a series of reports from which we learn that the level of geographical concentration in global supply chains has reached (very) unsustainable levels and can hinder the global energy transition.
Where we’re at with renewables: Still far from what we need
This might seem counterintuitive, as solar and wind installations keep breaking records. In 2022, following yet another global annual installation record with 167.8 GW of capacity grid-connected globally in 2021, solar PV has passed the Terawatt milestone.
Furthermore, tenders for solar PV projects awarded below the USD 2 cents level are no longer surprising. Last year, a new world record was set in Saudi Arabia with a winning bid of 1.04 USD cents per kWh. But the latest development in solar auctions is a first negative bid of minus 4.13 EUR cents per kWh – meaning the developer accepts to pay the electrical system instead of being paid for the power the plant generates over the duration of the contract – that won a Portuguese floating solar tender in April 2022 (a hybrid project including wind capacity and battery storage, which will overcompensate the negative returns from the solar plant).
The global wind industry had its second-best year in 2021, with a total power capacity now up to 837 GW. In particular, offshore wind power had its best year in 2021 with 21.1 GW of capacity commissioned, three times more than in 2020 and bringing its market share in global new installations to 22.5%.
So, although the gap with fossil fuel power generation continues to widen due to oil and gas prices rising even faster, challenges across the renewables supply chain are becoming increasingly worrying.
The role of China: A renewable energy stronghold
China has the world’s largest solar and wind power capacities, and not by a tiny bit. A third of all solar PV and half of all wind global additions in 2021 were installed in China.
To put this into perspective, according to SolarPower Europe, China added some 55GW of solar capacity last year, twice as much as the second largest market – the United States – and as much as the other top five markets combined. A new year-on-year record, which brings the total capacity of the country to over 300GW.
Over the last decade, government and industrial Chinese policies focused on solar power as a strategic sector have enabled huge economies of scale and shaped the global supply, demand and price of solar PV. Pushed by higher prices and less confident policies, the global solar PV manufacturing capacity has thus increasingly left Europe, Japan and the United States and flowed into China.
As a result, the Asian country now dominates the entire global supply chain and has taken the lead on investment and innovation.
China has invested over USD 50 billion in new solar PV supply capacity – ten times more than Europe − and created more than 300,000 manufacturing jobs across the solar PV value chain since 2011, the IEA reports. In addition, the country is home to the world’s 10 top suppliers of solar PV manufacturing equipment.
China is the most cost-competitive location to manufacture all components of the solar PV supply chain, with costs 10% lower than in India, 20% lower than in the United States, and 35% lower than in Europe.
That’s why today China’s share in all the key manufacturing stages of solar panels exceeds 80% and for key elements including polysilicon and wafers, this is set to rise to more than 95% by 2025. Basically a monopoly on solar tech.
Supply chains are choking
China’s market has been no less than vital for the downward trend in the costs of renewables and, in particular, to make solar PV the most affordable electricity generation technology in many parts of the world. However, such a major concentration poses significant threats to the energy transition and security of supply that governments must address.
Pressure on global supply chains created by abrupt Covid-related closings and re-openings of world economies – and China has adopted even more stringent lockdown measures than anyone in the West, causing serious economic disruptions both in China and abroad – has been compounded by Russia’s invasion of Ukraine. And now, supply disruptions and soaring prices are affecting a wide range of key commodities across the globe and causing political tensions and even crises, notably in Ecuador and Sri Lanka.
Fierce competition for raw materials, bottlenecks in manufacturing capacity and logistics, pressure on margins across the entire value chain, combined with long lead times for mining projects, risk undermining the pace of clean energy transitions. Without concrete action, the crisis will worsen.
To be on track for net-zero by mid-century, global production capacity for the key building blocks of solar panels – polysilicon, ingots, wafers, cells and modules – would need to more than double by 2030 from today’s levels and existing production facilities would need to be modernised. Despite improvements in using materials more efficiently, in fact, the solar PV industry’s demand for critical minerals is set to expand significantly.
The US Secretary of Energy Jennifer Granholm told the Sydney Energy Forum that accelerating the clean energy transition “could be the greatest peace plan of all” and that it is truly about energy security and nations’ independence.
But as governments around the world are seeking to limit the worst effects of climate change while abandoning risky fossil-fuel dependencies, they need to turn their attention to ensuring the security of renewable technologies supplies as an integral part of clean energy transitions.
In other words, global energy security needs to be redefined to include the supply of the minerals, materials and manufacturing capabilities necessary to deliver clean energy technologies, and cover areas such as energy consumption, emissions, employment, production costs, investment, and trade and financial performance.
In stronger and diversified supply chains lie big opportunities
Attention needs to be increasingly focused on the high reliance of many countries on imports of energy, raw materials and manufacturing goods that are key to their supply security.
To expand and diversify the global production of renewable technology, reducing supply chain vulnerabilities is critical for a secure transition to net zero emissions. But such efforts also offer significant economic and environmental opportunities, explains the IEA.
New solar PV manufacturing facilities along the global supply chain could attract USD 120 billion of investment by 2030. And the solar PV sector has the potential to create 1,300 manufacturing jobs for each gigawatt of production capacity, with the most job-intensive segments being module and cell manufacturing, and could double total PV manufacturing jobs to one million by 2030.
Improving recycling capabilities also entails great opportunities. Recycling solar panels keeps them out of landfills, but also provides much-needed raw materials with a value approaching $80 billion by 2050.
If panels were systematically collected at the end of their lifetime, supplies from recycling them could meet over 20% of the solar PV industry’s demand for aluminum, copper, glass, silicon and almost 70% for silver between 2040 and 2050 according to the IEA.
To inform the conversations at the Sydney Energy Forum, the IEA has published a series of new studies, including the Securing Clean Energy Technology Supply Chains report, which contains specific insights for the Indo-Pacific region that is home to major raw material producers such as Australia for lithium and Indonesia for nickel.
The report identifies five pillars for governments and industry action: Diversify, Accelerate, Innovate, Collaborate and Invest.
It recommends improving the efficiency and speed of permitting and approving clean energy projects and critical mineral production while maintaining high environmental and labour standards and promoting robust recycling industries to reduce demand for raw materials.
Increasing and prioritising investment in research and development, as well as in the training of skilled local workforces, can lead to technologies and manufacturing processes that rely on smaller quantities of critical minerals or on a more diversified mix.
Shifting from cheap energy to energy security
So although renewables are still by far the cheapest form of power today, it’s necessary to recede from the “cheap” narrative and rather concentrate on renewable sources’ true (and unique) potential to generate energy security at stable prices – at consumer, developer, operator and decision-maker levels.
Cheap comes at a price.
Not only has China’s industry drawn concerns about human and labour rights but the electricity-intensive manufacturing of solar PV is mostly powered by fossil fuels because of the prominent role of coal in the parts of China where production is concentrated – mainly in the provinces of Xinjiang and Jiangsu, where coal accounts for more than 75% of the annual power supply.
Solar panels still only need to operate for four to eight months to offset their manufacturing emissions and then have a lifetime of 25 to 30 years. However, these CO2 emissions could be reduced with a less carbon-intensive power mix.
In this regard, Europe holds the highest potential — says the IEA — given the considerable shares of renewables and nuclear available, followed by countries in Latin America and sub-Saharan Africa that have strong hydropower output.
Building solar PV manufacturing infrastructure around low-carbon industrial clusters can unlock the benefits of economies of scale. Solar and wind sectors could look at energy storage and e-mobility examples of gigafactories in the EU and the US, applying a more modularised approach to their value chains.
One of the priorities is to designate extensive suitable areas (land and maritime) for renewable projects and improve auction design. Auctions are important as they allow for higher project bankability due to fixed returns for investors for long periods of time.
Volumes on offer in the renewables wholesale market, however, are often not in any way aligned with climate targets nor with investor interests. This distorts the market and can lead to insufficient remuneration for investors to provide the high upfront working capital needed for large-scale renewable energy projects.
Preeti Kapuria and Debosmita Sarkar in their assertion in the ORF of today, that climate vulnerabilities, food security, and resilient development have some sort of cause to affect relationships elaborated on this article that is worth meditating on. Here it is:
Climate vulnerabilities, food security, and resilient development
Both climate risks and non-climatic drivers need to be factored in to curb food and water shortages induced by climate change in vulnerable regions of the world.
The Sixth Assessment Report (AR6) of the IPCC has estimated an average increase of the order of 1.09°C in global surface temperature over the last decade from the 1850–1900 levels. The AR6 Working Group II (WGII) makes an assessment of climate change impacts and risks as well as adaptations necessary in the context of non-climatic global concerns like biodiversity loss, natural resource extraction, ecosystem degradation, unbridled urbanisation and demographic shifts, rising inequalities, and the most recent COVID-19 pandemic.
Recognising the interactions of coupled social, climate, and ecological systems, AR6 draws from the natural, ecological, and social sciences in a way to understand the risks emerging from interactions amongst these coupled systems and offer reasonable solutions for the future—hedging against the risks emanating from such interactions. In WGII, impacts are assessed with respect to exposure, vulnerability, and adaptation including assessments of sustainable development models and the plausibility of climate-resilient development. Adopting climate-resilient development requires transitioning to states that reduce the impacts of climate risks, strengthen adaptation and mitigation actions, and, most importantly, conserve and restore these coupled systems. Accordingly, the report focuses on transformation and system transitions in energy; ecosystems conservation; urban and rural infrastructure; and industry and society.
Adopting climate-resilient development requires transitioning to states that reduce the impacts of climate risks, strengthen adaptation and mitigation actions, and, most importantly, conserve and restore these coupled systems.
A multitude of risks can arise from exposure to climate-related hazards, that have significantly varying impacts across regions, sectors, communities depending upon the vulnerability of the affected human and ecological systems. It can also arise from climate change mitigation or adaptation strategies—a new aspect considered under the risk concept of AR6. Climate change has already induced substantial and increasingly irreversible losses spanning across socio-economic-ecological systems. Frequent high-intensity climate and weather extremes have pushed millions of vulnerable people across regions below the poverty line, confronted with acute food and nutritional insecurity, water scarcity, employment vulnerability and loss of basic livelihoods. Besides, it has also led to higher incidences of food-borne, water-borne, or vector-borne diseases as well as humanitarian crises driven by widespread displacement (forced migration). Most of these impacts have been concentrated in the countries of the Global South and the Arctic region.
As per the estimates of the report around 3.3 to 3.6 billion people, globally, are highly vulnerable to the risks associated with climate change. The global hotspots of human vulnerability are particularly concentrated in the Global South, the Small Island Developing States and the Arctic—regions with extreme poverty, governance challenges, and limited access to resources, violent conflict, and higher engagement rates with climate-sensitive livelihoods.
Major challenges: Food insecurity and water scarcity
Increased exposure to climate-induced risks have undermined the possibility of achieving food and nutritional security, especially in vulnerable regions of the world. Frequent, high intensity and severe droughts, floods and heatwaves, accompanied by substantial sea-level rise continue to increase such risks, especially for regions with lower adaptive capacity. Higher global warming pathways in the medium-term pose even higher risks to food and nutritional security. Consequently, countries in Sub-Saharan Africa, South Asia, Central and South America, and the Small Islands will remain considerably vulnerable to such risks. With global warming progressively weakening soil health and altering natural processes, a substantial reduction in marine animal biomass and changes in food productivity on land and in the ocean are expected. Reduced water availability and streamflow change in many regions, predominantly in parts of North and South America, the Mediterranean region, and South Asia present some additional challenges to food security.
Frequent, high intensity and severe droughts, floods and heat waves, accompanied by substantial sea-level rise continue to increase such risks, especially for regions with lower adaptive capacity.
As per AR6, around 4 billion out of 7.8 billion people experience severe water shortages for at least one month per year due to interactions of climatic and non-climatic factors. The rising population pressure in the developing countries of Asia, Africa, and the Middle East continues to exacerbate the crisis associated with poor water quality, low availability, limited accessibility, and poor water governance. These regions are, therefore, likely to experience even higher rates of depletion of groundwater resources. In the absence of irrigation and varying rainfall patterns, yields of major crops in semi-arid regions, mainly in the Mediterranean, sub-Saharan Africa, South Asia, and Australia, are already experiencing negative growth.
As for the urban areas, over this decade, almost three-quarters of the urban land across South and Southeast Asian countries is expected to experience high-frequency floods while some parts of Africa may experience severe droughts of similar magnitude. Without adaptation, these water-related impacts of climate change, not only present severe implications for food security but, is likely to contribute to a 0.49 percent in decline in global GDP by 2050, with significant regional variations. Estimates suggest declines to the tune of 14 percent in the Middle East, 11.7 percent in the Sahel, 10.7 percent in Central Asia, and 7 percent in East Asia. Even across countries at different income levels within a region, such water-related impacts are projected to have a differential impact on overall economic growth.
Making the choice: Adopting a climate-resilient development
It is evidently clear that the exposure and vulnerability to climate change-induced risks are strongly influenced by the development trajectories pursued by communities and nations, their patterns of consumption and production, the nature and extent of demographic pressures, and unsustainable use and management of ecosystems and related services. Going forward, meeting food security targets will have to cope with climate risks and non-climatic drivers that continue to cause forest cover degradation (including biodiversity loss), land degradation, desertification, and its submergence (mainly in coastal areas), and unsustainable agricultural expansion, land-use change, and water scarcity.
Almost three-quarters of the urban land across South and Southeast Asian countries is expected to experience high-frequency floods while some parts of Africa may experience severe droughts of similar magnitude.
Greater emphasis will have to be placed on adaptation planning and implementation at a system level that cuts across sectors. In this context, amidst growing public awareness and political cognisance, the WGII AR6 nudges policymakers and communities to adopt a climate-resilient development pathway, while cautioning against its limits and the plausible impacts of maladaptation. To cite an example from the report, in the context of water-related climate change-associated risks, a complimentary design of non-structural measures like early warning systems; structural measures like levees, enhanced natural water retention through wetlands and rivers restoration; land use planning and forest management; on-farm water storage and management; and, soil conservation and irrigation can be effective in ensuring economic, institutional, and ecological benefits of water. Promoting sustainable food systems and ensuring nutritional security will require community-based adoption of sustainable farming practices, agro-forestry, and ecological restoration and supportive public policies to make it a reality.
Interestingly, AR6 highlights effective and feasible adaptation solutions based on climate justice, entailing distributive and procedural justice complemented by recognition of diverse cultural and social perspectives. Integrated and inclusive system-oriented solutions that are based on equity and justice can reduce risks and enable climate-resilient development. Inclusive processes that strengthen the ability of the nations to contribute to effective adaptation outcomes can enable climate-resilient development.
 This article is based on a technical summary of the Working Group II’s contribution to the Intergovernmental Panel on Climate Change’s (IPCC) Sixth Assessment Report, titled “Climate Change 2022: Mitigation of Climate Change”, released on 28th February 2022, announced until 1st October 2021.
Debosmita Sarkar is Research Assistant with the Economy and Growth Programme at ORF Kolkata. Her research interests include macroeconomic policy, international finance and development economics.
Preeti Kapuria is currently a Fellow at ORF Kolkata with research interests in the area of environment, development and agriculture. The approach is to understand the linkages between biodiversity, ecosystem functioning, and ecosystem services and to examine how environmental governance, participatory economics and the commons, and the workings of social-ecological systems influence these linkages.
Solar Appreciation Day 2022: Here’re Some Unique Use of Solar Technologies Worldwide to Combat Energy Crisis
India’s budget for FY2022-23 clearly highlights the country’s priority to double down for ‘green’ and renewable energy, particularly solar, to combat climate change and meet the emission reduction targets set for 2030.
Moreover, as the Ukraine-Russia war continues, coal and natural gas prices are surging sharply across the globe. With the soaring power bills, several European and Asian countries are seeking alternatives to Russian supplies. And using technologies based on solar energy is a comparative quick fix to the energy crisis.
Meanwhile, Solar Appreciation Day 2022 is here, which is celebrated globally on every second Friday of March. The day has become all the more significant amid the ongoing climate and energy crisis. On this day, here are some unique solar technologies that demonstrate the immense potential of solar technologies to address the needs of the modern world.
Solar trolley invented by a farmer from Haryana
Pradeep Kumar, a farmer from Haryana, has built a mobile solar plant with panels mounted on a trolley that can be moved on demand. The trolley is custom made as per the user’s requirements.
In an interview with The Better India, Pradeep said, “the devices come in two sizes and carry solar panels which provide electricity of 2 HP and 10 HP. The trolley can also be mounted to the back of a tractor and has sturdy wheels that allow it to move over uneven surfaces.”
The cost-effective technology has benefitted over 2000 farmers so far.
Bihar’s floating solar power plant
The Mithila region in North Bihar is called the ‘Land of Ponds’ and is taking complete advantage of its gift. A floating solar plant is set to be commissioned in the region, consisting of 4,004 solar modules. Each module lodged in a pond can generate 505-megawatt peak (MWp) electricity and nearly 2 MW of green and clean energy. The plant can supply electricity to 10,000 people in the state.
The main benefit of a floating solar power plant is that the water cools the solar panels, ensuring their efficiency when temperatures rise, resulting in increased power generation. It also minimises evoporation of freshwater and aids fishery.
This innovation has hit two birds with one stone: producing green energy from solar panels and promoting fish farming underwater.
South Korea’s solar shade
In South Korea, a highway runs between Daejon and Sejong and its entire bike lane on the 32 km stretch is covered with solar roof panels. Not only do they generate sufficient electricity, but they also isolate cyclists from traffic and protect them from the sun.
The two-way bike lane is constructed right in the middle of the road, while there are three other lanes for vehicles to travel on either side. This also obstructs the high beam lights of oncoming cars.
Using the technology, the country can intern produce clean, renewable energy.
Solar-powered desalination technique by Chinese and American researchers
Desalination process is considered to be among the most energy-intensive activities. Now researchers have developed a solar desalination process that can treat contaminated water and generate steam for sterilizing medical instruments without requiring any power source other than sunlight itself.
The design includes a dark material that absorbs the sun’s heat and a thin water layer above a perforated material that sits atop a deep reservoir of salty water such as a tank or a pond. The holes allow for a natural convective circulation between the warmer upper layer of water and the colder reservoir below and draw the salt from the water.
Not only is the solar-powered desalination method efficient but also highly cost-effective.
Saudi Arabia’s goal of sustainable development using solar technology
Dry-climate arid regions are prone to droughts and often face water scarcity. While local food production would have been a distant dream for countries that host mostly deserts, scientists in Saudi Arabia have developed a unique solution using solar technology.
In an experiment, they designed a solar-driven system that could successfully cultivate spinach using water drawn from the air while producing electricity. This proof-of-concept design has demonstrated a sustainable, low-cost strategy to improve food and water security for people living in dry-climate regions.
“Our goal is to create an integrated system of clean energy, water, and food production, especially the water-creation part in our design, which sets us apart from current agrophotovoltaics,” says senior researcher Peng Wang.
Renewables Market to Expand Robustly in 2021 by Nidhi is published on MW Creators of 4 December 2021. Some details of this renewables market particularly amongst certain MENA nations are reviewed and found to Expand Robustly in 2021. Excerpts are below.
The above image is for illustration and is of Enterprise as related to the same topic.
It is the Latest Study on the Industrial Growth of the Middle East and North Africa (MENA) Renewables Market 2021-2027.
A detailed study accumulated to offer Latest insights about acute features of the MENA’s Renewables market. The report contains different market predictions related to revenue size, production, CAGR, Consumption, gross margin, price, and other substantial factors. While emphasizing the key driving and restraining forces for this market, the report also offers a complete study of the future trends and developments of the market. It also examines the role of the leading market players involved in the industry including their corporate overview, financial summary and SWOT analysis.
The report provides a comprehensive review of the trends, opportunities and challenges in Middle East’s fast-changing renewable energy sector. Updated in April 2020 to reflect the huge disruption caused by the Covid-19 pandemic, the report looks at the immediate impact of the virus on the regional energy market, and its impact on the region’s ambitious plans to develop solar, wind and waste-to-energy projects in the region. The report looks at the long-term investment plans as well as the current project opportunities planned or under development across the region.
Mena Renewables 2020 with Covid-19 update is the latest premium market report from MEED, the leading provider of Middle East business intelligence.
The report provides a comprehensive country-by-country review of the renewable energy sector across the Mena region with in-depth analysis of projected investments, policy and legislative frameworks, and the projects planned and under way.
It also details the key government bodies driving the development of renewables in each country.
Written by MEED, the Middle East market experts within the HTF MI Group, the report is a valuable asset for anyone seeking to do business in the Middle East’s energy sector that will help in shaping business development and strategy in the region.
Updated in April 2020, the report looks at the impact of Covid-19 on the renewable energy sector in the Middle East and North Africa, and what that means for business and investment in the region.
Middle East renewable energy ambitions face new challenges
The de-facto shutdown of much of the global economy in the first four months of 2020 caused by measures to stop the spread of coronavirus (Covid-19) is challenging many of the drivers of business growth and investment in the Middle East and North Africa. The collapse of oil prices and fall in tourism and consumer spending has raised deep questions about some of the region’s highest growth sectors.
One sector that shows no sign of disappearing is renewables. While the supply chain for projects has been disrupted, and the commercial model for privately finance power plants has been upset, the region remains committed to diversifying is energy sources and lowering its costs through renewables.
With about 28GW of renewable energy production capacity installed across the Middle East and North Africa (Mena), of which by far the biggest component is hydropower with 21GW, renewable energy represents only 7 per cent of the region’s power generation capacity. But with electricity demand rising at about 5 per cent a year, and with a shortage of readily available natural gas supplies, expanding renewables capacity is now one of the top policy priorities for governments in the region.
Boosted by falling technology costs and the drive to reduce carbon dioxide emissions, most countries are planning and procuring solar and wind projects. Across the region, governments have set ambitious clean energy targets, with Dubai the most aggressive, aiming for 75 per cent of its energy to come from clean sources by 2050. At the start of 2020, about 98GW of new renewable energy generation capacity was planned across the region, with 39GW of additional capacity due to come on stream by 2025.
The latest edition of Abu Dhabi’s World Future Energy Summit (WFES) in January 2020, highlighted the strides that have been taken in the region, and particularly by the UAE, to play a leading role in the transition from unsustainable carbon-production to sustainable renewable energy.
Completion of the GCC’s first utility-scale renewables projects has increased confidence among governments, developers and financiers. This has reduced the cost of financing and delivering projects. The market also expects greater adoption of small and medium-scale schemes such as rooftop solar.
At present, it is countries with hydropower capabilities that have the highest renewables capacity. The landscape is changing rapidly however as a series of large-scale solar and wind projects are being delivered. But as renewables move from the fringes to the centre of the region’s energy eco-system, regulators, investors and consumers must overcome several structural and technical obstacles.
Regulatory reform is the biggest challenge facing renewables. Merging renewable energy, primarily photovoltaic solar power, into power grids requires policy adjustments and new regulations. This includes ensuring grid flexibility and stability, integrating new technologies such as battery-storage and electric vehicles, and establishing commercially-attractive business models. Another challenge is to break the link between electricity and water production that is hard-coded into the region’s utilities.
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