Multiple countries

Renewables

In the context of energy and the environment, the Middle East and North Africa (MENA) region is best known for the role it plays in supplying oil and gas to world markets, thereby contributing heavily to global CO2 emissions. However, the region has recently become associated with more climate-friendly activities, with the rapid expansion of investment in renewable energy, in particular solar and wind power.

At present the MENA region accounts for less than 1% of the word's consumption of solar and wind power, according to the BP Statistical Review of World Energy, but its contribution to clean energy production and its consumption of energy from these sources is set to increase rapidly in the next few years with the completion of a string of new projects in Morocco, Egypt, Jordan and the UAE. Saudi Arabia has also set out ambitious plans for solar energy, but is lagging behind its regional peers in terms of implementation.

MENA governments showcase developments at Paris conference

The UN's COP21 Paris climate change conference provided an opportunity for policymakers to showcase clean energy programmes, which was embraced by both Morocco and the government of the UAE emirate of Dubai. Morocco made the boast that its Noor complex in Ourzazate, 200 km south of Marrakesh, is the largest solar park in the world. Dubai too rolled out the superlatives in claiming that the 800‑mw third phase of its Sheikh Mohammed bin Rashid al‑Maktoum solar park will be the largest single-phase solar scheme in the world.

These claims are debatable, but there is little question of the intent of these governments to increase the role of renewables in their energy mix. A similar determination is evident in Egypt, where several private ventures are working on 39 50‑mw solar schemes in the Benban area to the north of Aswan.

Oil importers at forefront of renewable development

For Morocco, Dubai, Egypt and Jordan there have been sound economic reasons for the pursuit of renewable energy. These countries are all dependent on imported fossil fuels for a significant part of their energy requirements, and even with the current slump in prices of coal, natural gas and oil, it makes sound economic sense for them to diversify in the longer term, particularly as the relative cost of using renewable energy has started to fall. Moreover, Egypt and Morocco have major grounds for concern about the impact of climate change on their countries. The floods that inundated large parts of northern Egypt in November serve to emphasise how vulnerable the Nile Delta is to storm surges and to any significant rise in sea levels. In Morocco the long-term decline in rainfall levels, which is ascribable to climate change, has brought a real risk of water scarcity.

Morocco's solar plans are the most advanced

The drive to invest in renewables has opened up significant commercial opportunities. In Morocco the total cost of building the first three phases of the Noor solar complex will be about US$2.8bn. The 160‑mw Noor‑1 plant is set to come on stream in early 2016, and the next two phases, of 200 mw and 150 mw, respectively, are scheduled for completion in 2017 and 2018. All three projects are being carried out by ventures led by Saudi Arabia's ACWA Power, one of the region's leading private electricity investors.

The state-owned Moroccan Agency for Solar Energy (Masen) will hold minority stakes in each of the operating ventures, and will purchase the electricity produced. The prices quoted by ACWA Power for the three schemes range between 15.7 cents per kwh (for Noor‑2) and 18.9 cents for Noor‑1. Part of the financing from multilateral agencies, such as the World Bank, is designed to cover the difference between the price charged to Masen and the lower price for onward sales to the Moroccan state electricity and water distribution company, ONEE.

The next phase of Masen's Noor programme will entail building 170 mw of photovoltaic (PV) capacity at three different locations. ONEE is also pressing ahead with the 75-100-mw first phase of its own Noor Tafilat scheme, which will also use PV technology; PV panels offer better energy storage than the concentrated solar power (CSP) technology used for some of the earlier projects. Morocco is also building up considerable wind power capacity, and has recently selected Nareva, a local company, for a project to build 850 mw of wind farms in various locations.

Dubai is accelerating efforts, while Abu Dhabi's plans are more advanced

The Dubai solar programme has been ramped up from a modest start of 13 mw in the first phase, to a 200‑mw second phase being carried out by a consortium of ACWA Power and Spain's TSK, with completion scheduled for mid-2017. The power purchase price agreed for this plant was just 5.85 cents per kwh, partly reflecting the low finance charges that the operating consortium was able to negotiate. For the third phase, the Dubai Electricity and Water Authority is now evaluating 21 applications to pre-qualify, prior to inviting bids. It is scheduled for completion in 2018. Dubai has set a revised target of having 3,000 mw of solar power capacity by 2030.

Abu Dhabi has also made its mark in the solar energy sphere with its Masdar initiative. However, progress has been slow with Masdar's first two solar schemes—Shams 1 and Noor 1, both 100 mw—and the Abu Dhabi government has recently launched a new 350‑mw PV project based on its standard independent power project model, in which the state-owned Abu Dhabi Water and Electricity Authority will hold a 60% stake. Prospective developers have been invited to submit expressions of interest for this scheme by mid-January.

Egypt's programme takes different approach

The Egyptian solar energy programme is based on a feed-in tariff (FID) approach, whereby developers have been invited to propose projects of up to 50 mw, for which they will be guaranteed payment of 14.34 cents per kwh for electricity sold to the Egyptian Electricity Transmission Company. The total solar capacity to be covered by the FID is 2,300 mw. The government has signed initial agreements with 39 prospective developers, including prominent local energy companies and specialist renewable energy investors from around the world. These developers are now raising letters of guarantee from banks to cover their share in the connection costs, and are completing the procedures to obtain use of the land that has been allocated in the Benban area. These measures include obtaining licences from the armed forces. The power purchase agreements for these schemes are likely to be signed in the second half of 2016.

Abundant sunshine is one of the critical advantages that the MENA region has in its bid to develop solar power. It now appears that several countries in the region are taking serious steps to exploit this advantage. Egypt also has the prospect of making use of its large reserves of white sand, which is rich with silica, one of the principal materials used for the manufacture of PV solar panels and so could benefit both as a key player in the manufacture of the capital inputs for solar energy and as a producer of solar power. When these projects are realised, these pioneers will not only be able to rely on solar power to meet an increased share of their energy needs, but particularly in the case of the North African countries, also potentially to develop significant export markets to Europe.