Photovoltaic (PV) developments in the Middle East and North Africa (Mena) region will mainly depend on the number of large-scale projects, such as the Desertec and MedGrid project, the 2013 PV and Solar Market Intelligence Report by Ispy Publishing has found.
The report also revealed that the Mena region could become home to a new industry with great potential in a region with considerable solar energy resources. If the concentrated solar power (CSP) market increases rapidly in the next few years, the region could benefit from significant job and wealth creation, as well as from enough power supply to satisfy the growing demand. The world's renewable energy sector, the report found, would also benefit from increased competition and lower costs in CSP equipment manufacturing.
Research carried out by Standard Chartered Bank's Renewable Energy and Environmental Finance team, a PV project in the GCC would generate a real Internal Rate of Return (IRR) of 9.4 per cent if oil prices rise to 163/bbl (in real 2010 terms) by 2030. Even in the case of flat real oil prices to 2030, the project would still generate a rate of return of 4.6 per cent.
According to the Mena Renewables Status Report 2013, issued by Meed Insight, more than 100 renewable energy projects including solar, wind and biomass are currently under development in the region.
Renewable energy investment in the region grew by 40 per cent in 2012 compared with 2011, whereas worldwide investment in the sector reduced by 12 per cent. The report noted that regional investment topped 2.9 billion (Dh10.6 billion), indicating that the sector is undergoing a transformation from niche market to regional phenomenon.
"It is apparent that whilst the solar industry in other areas is struggling, right across the Middle East and North Africa, the opportunities are there for companies to get themselves involved with a wealth of opportunities that are presenting themselves. Right now, nothing is hotter for solar than the Middle East," said Derek Burston, exhibition manager of new expo, GulfSol 2013, which concluded recently.Countries leading the way in solar energy development include the UAE, Saudi Arabia, Jordan and Morocco. The UAE and Saudi Arabia have emerged as the biggest markets among GCC states for the deployment of solar power, accounting for most of the projects. The six GCC countries altogether have sanctioned solar power installation projects worth approximately 155 billion, which will generate more than 84GW of power when complete in 2017.
"To meet the goals that the GCC have set themselves means expertise will be needed from the international solar power industry to deal with the difficulties involved in construction in desert terrain, including dust, high winds and transmission requirements," Burston said.
The Ispy report further revealed that due to increasing demand for renewable energy sources, the manufacturing of solar cells and photovoltaic arrays has advanced considerably in recent years. Solar photovoltaics have long been argued to be a sustainable energy source. More than 100 countries use solar PV and by the end of 2011, a total of 67.4GW had been installed, sufficient to generate 85TWh/year. Solar photovoltaics is now, after hydro and wind power, the third most important renewable energy source in terms of globally installed capacity.
There are currently three operational utility-scale hybrid CSP/natural gas plants in the region: Algeria's Hassi R'mel, Egypt's Kuraymat, and Morocco's Ain Bni Mathar plants. However, in all of these plants the CSP component is a small portion of the overall power output, with the highest proportion at 17 per cent in the Kuraymat plant.
In part due to subsidised retail electricity and a lack of policy frameworks for residential-scale PV, the region has shown a preference for commercial and utility-scale PV plants. Currently the largest PV plant in the region is Enviromena's 10MW PV plant in Masdar City in Abu Dhabi, which the company commissioned in 2009. Industry analysts, however, have identified a number of barriers to developing the solar potential of the Mena region.
Building new solar facilities will in many cases require extensive new transmission, as many prime sites, particularly for CSP projects in North Africa, are located far from population centres. Due to the lack of existing solar markets, there is also a lack of personnel in the region with experience developing and building solar plants, a problem which is being addressed by research and academic institutions in Saudi Arabia, the UAE and other nations.
The largest project announced to date in the region is Dubai's Mohammed bin Rashid Al Maktoum Solar Park, which aims for 1GW of PV and CSP generation by 2030. The 3.2 billion, 48-square kilometre park will begin with a 10MW PV plant scheduled for completion in 2013. Dubai's Electricity and Water Authority is currently evaluating bids by selected contractors to build the plant.