World Future Energy Summit
14–16 January 2025
ADNEC, Abu Dhabi
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Solar investments soar across the Middle East

Despite its traditional reliance on hydrocarbon fuels for both domestic energy consumption as well as exports, the Middle East is fast becoming a beacon for the renewables industry, in terms of technological development as well as active adoption. Even though these two approaches to energy provision differ radically, they both appeal greatly to the Middle East because of the region’s unique makeup and assets. Just as they successfully did with oil, ME countries are now attempting to tie their fortunes to another natural resource that they possess in abundance: sunlight.

Weaning itself away from hydrocarbons is an ongoing process for the Middle East, one which had a troubled start due to the initial costs and political pressures attached to striking out in such a bold new direction. However, with the price of solar energy provision tumbling in the past ten years, strengthened by the proliferation of advanced solar technologies and expertise globally, the ME solar industry is rapidly gaining ground and attracting vast streams of foreign and domestic investment.

As noted elsewhere in this newsletter, the Middle East is expected to more than triple its share of renewable energy from 5.6% in 2016 to 20.6% in 2035, with solar making up the lion’s share of this figure.[1] In order to meet this ambitious target, which requires the instalment of around 100GW of renewable energy provision capacity, it’s predicted that between $30-$40 billion of capital will need to be invested in future projects across the region.[2]

Record low solar tariffs boost ME adoption rates

Given the hugely promising state of affairs regarding the global and ME solar markets currently, this target of achieving an additional 100GW of capacity seems an eminently achievable outcome. The price of solar power provision technology, particularly solar modules from China, has fallen rapidly during the past five years – a trend that looks set to continue well into 2020 and beyond.

Today, Middle Eastern countries are experiencing record-low solar bids that place them at the forefront of the global solar adoption trend. Bids of between 2-3 cents per kilowatt hour were routinely posted throughout mid-late 2017, and Saudi Arabia’s 300MW PV solar tender in October saw a record-breaking bid of 1.786 cents per kWh.[3] With such reduced tariffs, the price of solar power provision in the Middle East will be lower than that of fossil fuel-generated electricity.[4] This represents a crucial difference between traditional complaints aimed at renewables of “clean energy, but at a steep cost” and the new emerging reality of being able to offer clean solar power more inexpensively than fossil fuels.

Building solar capacity across the Middle East

Each successful solar project is building the case for further investment and development in the Middle East, as recent announcements indicate:

Kingdom of Saudi Arabia

  • In late March 2018, the Saudi Government and Japan’s SoftBank announced their intention to build 200GW of solar capacity throughout Saudi Arabia by 2030, at a combined cost of $200 billion.[5] If even a fraction of this project’s ambition is realised, it will have staggering implications for solar in Saudi Arabia and the Middle East as a whole. Current estimates suggest that achieving this kind of solar power access could save the country $40 billion of oil and gas annually, while providing a surplus for export.[6]
  • By the end of 2018 alone, Saudi Arabia aims to have invested approximately $7 billion to develop seven new solar plants as well as other renewable energy projects.[7]

UAE

  • The Mohammed Bin Rashid Solar Park, the largest single-site solar park in the world, is currently adding another 800MW of photovoltaic capacity for its third phase of development. The park also broke ground on phase 4 in mid-March 2018, which will see another 700MW of Concentrated Solar Power (CSP) added by 2020.[8]
  • Abu Dhabi aims to develop four new PV solar plants with a combined capacity of 5.7GW by 2026.[9] Once completed, the Al Noor plant in Sweihan will be Abu Dhabi’s first utility-scale PV site, a success that the government is clearly keen to replicate with further plants.

Oman

  • Oman tendered its first large utility-scale PV independent power project (IPP) earlier this year.[10] The project aims to deliver a 500MW facility located in Ibri, around 300km from the capital Muscat, at an estimated cost of around $500 million. This is a first and significant step in the Omani Government’s plan to add around 4 GW of renewable generation capacity by 2030.[11]

As these future projects and current circumstances demonstrate, solar is enjoying bright and energetic conditions in the Middle East, with yet more sunny times predicted.

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Sources:

[1] Arabian Business, Middle East renewable energy output to triple by 2035, 14/01/2018

[2] The National, Middle East renewable energy targets require as much as $40bn capital investment, says GE, 28/01/2018

[3] PV Tech, Bids in 300MW Saudi solar tender breach two cents, 03/10/2017

[4] Clean Technica, Here’s why the Middle East leads in Lowest Solar Tariffs, 23/10/2017

[5] CNBC, SoftBank and Saudi Arabia are creating world's biggest solar power generation project, 27/03/2018

[6] The National, Enormous Saudi Arabian solar push could lead to new Middle East energy era, 08/04/2018

[7] Straits Times, From oil to solar energy: Saudi Arabia plots a shift to renewables, 06/02/2018

[8] Arabian Business, Sheikh Mohammed launches phase 4 of giant Dubai solar park, 19/03/2018

[9] Zawya, Abu Dhabi plans up to four new solar power plants, 22/01/2018

[10] PV Magazine, Oman launches tender for 500 MW solar plant, 02/01/2018

[11] Ibid

https://www.thenational.ae/business/energy/middle-east-renewable-energy-targets-require-as-much-as-40bn-capital-investment-says-ge-1.699558

https://cleantechnica.com/2017/10/23/heres-middle-east-leads-lowest-solar-tariffs/

https://cleantechnica.com/2017/09/19/solar-boom-middle-east/

http://www.straitstimes.com/world/middle-east/from-oil-to-solar-energy-saudi-arabia-plots-a-shift-to-renewables

https://www.forbes.com/sites/dominicdudley/2018/02/14/can-the-middle-east-make-a-success-of-renewable-energy-it-may-not-have-a-choice/#14b075791da2

https://www.forbes.com/sites/mikescott/2018/01/15/cheap-clean-energy-revolution-comes-to-the-middle-east-epicentre-of-the-oil-industry/2/#4fa2216718e0

https://www.oxfordenergy.org/publications/a-roadmap-for-renewable-energy-in-the-middle-east-and-north-africa/

http://www.atlanticcouncil.org/publications/reports/renewable-energy-in-the-middle-east

http://www.arabianbusiness.com/energy/387509-middle-east-renewable-energy-output-to-triple-by-2035

https://www.pv-tech.org/news/third-phase-of-mohammed-bin-rashid-al-maktoum-solar-park-reaches-financial

http://www.masdar.ae/en/energy/detail/mohammed-bin-rashid-al-maktoum-solar-park-phase-3

https://www.thenational.ae/business/energy/enormous-saudi-arabian-solar-push-could-lead-to-new-middle-east-energy-era-1.719786

http://www.arabianbusiness.com/energy/392294-sheikh-mohammed-launches-phase-4-of-giant-dubai-solar-park

https://www.thenational.ae/business/energy/more-renewable-projects-in-the-pipeline-for-gcc-countries-in-2018-1.692859

https://www.zawya.com/uae/en/story/Abu_Dhabi_plans_up_to_four_new_solar_power_plants-ZAWYA20180122114335/