Mena to invest $805b in energy in 5 years
The UAE’S solar capacity is projected to grow the fastest in the region with nearly 5GW of solar projects in the pipeline as the overall planned and committed energy investments in the Middle East and North Africa region is expected to exceed $805 billion over the next five years, a study by Arab Petroleum Investments Corporation (Apicorp) reveals.
Apicorp said the modest $13 billion increase from the $792 billion estimate made last year is due to four factors. These include, apart from a strong confidence in the rebound of global GDP, rising energy demand, the comeback of Libyan projects — which alone accounts for around $10 billion in planned projects — and the accelerated pace of renewables in the region.
As per current estimates, Mena will add 3GW of installed solar power capacity in 2021 alone — double that of 2020 — and 20GW over the next five years. Wind and other sources such as hydropower are also coming into their own as countries step up their energy diversification plans.
In the UAE, renewables constituted around six per cent of total installed capacity and three per cent of power generated as of 2020. “Although it may just miss its short-term targets, the UAE’S solar capacity is projected to grow the fastest in the region with nearly 5GW of solar projects in the pipeline,” said the report.
The report said Mena can emerge as a major blue and green hydrogen-exporting region thanks to low-cost gas resources and strong renewable energy progress.
Dr Ahmed Ali Attiga, CEO of Apicorp, said the Mena Energy Investment Outlook 2021-2025 indicates that energy industries are entering a period of relative stability in terms of investments as most countries in the region return to GDP growth in 2021 and the energy transition showing no signs of slowing down. “We anticipate a slow but steady recovery of the energy sector from the fallout of the Covid-19 pandemic, supported by continued investment from the public sector and an upswing in demand.”
Committed gas investments in the region for 2021-25 are expected to total $75 billion, $9.5 billion less than the previous outlook. The decline is attributed to the completion of several megaprojects in 2020 and countries being more cautious to new project commitments in an era of gas overcapacity. Qatar, Saudi Arabia and Iraq are the top three Mena countries in terms of committed gas investments.
Power investments in the region over the next five years will be $250 billion, the highest of all energy sectors. This includes an estimated $93 billion and $157 billion in committed and planned projects, respectively, over the next five years.
“With a share of around 40 per cent, renewables form a significant part of those investments as countries push ahead with their energy diversification agendas,” said the report.
Investments in the petrochemicals sector are forecast to increase to $109 billion in 2021-25, a $14.2 billion jump compared to last year’s outlook. By contrast, committed investments dipped by $7.7 billion to around $12.5 billion due to the completion of several megaprojects in 2020.
The report noted that the expanding share of renewables, growth in power demand, and balancing supply and demand on a real-time basis necessitates the integration of modern, digitised energy storage solutions.