The pipeline for solar power projects in the Middle East and North Africa (MENA) is set to double this year, with Saudi Arabia accounting for more than half of all projects
A look at the future of solar in the GCC and the underlying business prospects
The United Arab Emirates is making progress on the construction of the first nuclear power plant in the GCC region. In July, the Emirates Nuclear Energy Corporation (ENEC) announced that the first nuclear reactor would come online to start generating electric power in late 2019 or early 2020.
CThe GCC region has a plan to wean its economy off oil. In the biggest sign of what the future of the Gulf would look like, Saudi Arabia’s crown prince, Mohammed Bin Salman recently signed a memorandum of understanding with Japanese multinational Softbank to build 200GW of solar power by 2030 at a cost of $200bn.
Softbank and Saudi Arabia reached an agreement in March to launch the massive solar power project, one that if completed would signal a dramatic ramping up of the renewable energy industry in one of the world’s most suitable spots for solar power.
If built, that solar-power plant will be about 200 times the size of the biggest solar plant operating today. It would more than triple Saudi Arabia’s capacity to produce electricity, from about 77GW today.
Two-hundred gigawatts is four times the solar capacity in the United States and four times China’s annual pace of solar power expansion. As of the end of 2016, the world as a whole had installed only 303 gigawatts of total solar photovoltaic capacity.
With current technology, solar panels capable of generating 200GW would likely cover 5,000 sq km—an area larger than the world’s largest cities.
And, yet, these are not unrealistic figures. Based on data from Bloomberg New Energy Finance (BNEF), the global solar industry produced about 100 GW worth of solar panels last year, and production capacity is ramping up quickly.
“We have just signed an MOU to create the world’s biggest solar power generation project,” Masayoshi Son, SoftBank’s CEO said soon after signing the agreement. “The Kingdom has great sunshine, great size of available land and great engineers, great neighbors, but most importantly, the best and greatest vision.”
Saudi Arabia that will build solar panels and invest in battery technology. Initially, there would be two large Saudi solar electricity generation projects, one with a capacity of 3 gigawatts and one at 4.2 gigawatts.
According to the memorandum, exporting either panels or some of the power generated by them is a possibility. Saudi Arabia is also seeking a role in solar research and development.
Although industry analysts were sceptical that the plan will emerge as it is being described, it is indicative of the growing appetite for solar energy in a region that has for years depended on its vast supplies of fossil fuels to generate electricity.
In February, Saudi Arabia headquartered ACWA Power was awarded the 300MW Sakaka solar project in Saudi Arabia by the country’s Renewable Energy Project Development Office (REPDO). ACWA Power signed the power purchase agreement (PPA) for one of the lowest ever solar tariffs of Halala 8.7815/kWh (~US$2.342) with the principal off-taker, the Saudi Power Procurement Company (SPPC).
The project is expected to involve a total private sector capital investment of about $300mn and will create job opportunities for more than 400 individuals, as Saudi Arabia takes its first step
on the road to energy diversification and renewable energy leadership.
Saudi Arabia revealed last year that it was planning to produce 10% of its power from renewable sources in the next six years. The drive by the world’s top oil exporter will see the kingdom developing 30 solar and wind projects by 2023 to boost its electricity generation and reduce crude oil burning.
The kingdom is targeting 9.5 gigawatt (GW) of renewable energy by 2023. The renewables initiative involves investment estimated between $30bn and $50bn. Tenders for a 300MW solar plant in Sakaka and 400MW wind plant in DumatAl-Jandal were announced last year.
The pipeline for solar power projects in the Middle East and North Africa (MENA) is set to double this year, with Saudi Arabia accounting for more than half of all projects, according to a new report released in March by the Middle East Solar Industry Association (MESIA).
The pipeline for 2018 will include nearly 13 gigawatts (GW) of solar power projects, with Solar photovoltaic (PV) systems accounting for 90 percent of the project pipeline (11.86 GW) and Concentrated Solar Power (CSP) projects making up 1.2 GW.
The 2018 project pipeline is more than double the 5.7 GW forecast in MESIA’s 2017 report. Projects currently in the planning stage amount to 8.7GW, while those at the ‘Bid Stage’ stood at 3.08 GW.
The rest of the pipeline consists of 1.23 GW of projects in the prequalification stage and a 50 megawatt (MW) project in the financial close stage.
According to the report, the low price of solar energy has led policymakers, regulators and industry leaders to take a number of steps to increase and accelerate the adoption of solar power throughout the MENA region.
“Most notably, countries that were late to adopt solar energy strategies and policies have now put forward ambitious targets. Countries with solar plans in place in terms of megawatts installed have substantially increased those targets,” says Wim Alen, General Secretary of MESIA.
“Finally, scaling up the size of solar projects has allowed nations to capture value across the value chain,” he adds.
Saudi Arabia’s 6.4 GW of PV projects accounts for more than half of the 2018 pipeline, followed by the United Arab Emirates’ 1.5 GW of PV, Egypt’s 1.15 GW (800 MW of PV and 350 MW of CSP) and Morocco’s 800 MW (a combination of PV and CSP), the report said.
Last year, the UAE’s Dubai Electricity and Water Authority (DEWA) achieved a world record by awarding the 700MW $3.86bn fourth phase of the Mohammed bin Rashid Al Maktoum Solar Park. It is the largest single-site Concentrated Solar Power (CSP) project in the world, based on the Independent Power Producer (IPP) model. Construction on the project commenced in March
Dubai also made a major leap towards achieving a sustainable energy mix with the launch of the second phase of the Mohammed bin Rashid Al Maktoum Solar Park last year. The 200MW plant has enough capacity to generate clean energy for 50,000 residences in Dubai and will reduce 214,000 tonnes of carbon emissions a year.
Kuwait has also announced that it is looking to issue a tender for the building of the estimated $1.2bn Dibdibah solar-power plant in the first quarter of 2018 as part of the country’s plans to produce 15% of power from renewable energy by 2030. Dibdibah is expected to produce half of the country’s planned renewable energy output.
Interest in rooftop solar technology reached an all-time high last year with residential customers, small- and medium-sized enterprises (SMEs), and large organisations in UAE, Saudi Arabia, Oman and Kuwait investing heavily in the sector which is already reaping rewards.
Dubai buildings with solar rooftops have nearly doubled to 435 between November 2016 and November 2017 as the emirate works to have all rooftops fitted with photovoltaic (PV) panels. More than 200 new buildings have been equipped with solar power since November 2016 with a total capacity of 15.6MW as part of DEWA’s Shams Dubai initiative. The initiative, launched in 2015, aims to have solar panels on all rooftops across the emirate by 2030.
In 2017, the MENA region had 4,903 MW of solar under construction, 1,142 MW under tender or awarded and 1,363 MW in operation. Oman’s enhanced oil recovery project of 100 MW thermal, which started commercial operations, was mentioned separately.