Renewable Energy Grows In An Unlikely Place: The Sunny Mideast
In places like Jordan and the United Arab Emirates, solar power plants are providing an affordable and reliable source of electricity, badly needed by nations that produce oil and those that must import it. Wind farms are appearing, too.
The move toward renewable energy is in its earliest stages. Clean sources account for less than 5 percent of the region’s power capacity and face obstacles, including widespread subsidies, that make conventional sources of electricity artificially cheap.
But experts see real potential for growth in an area that gets some of the strongest and steadiest sunshine in the world. Parts of Jordan, for example, average 330 sunny days a year.
“In the past, whenever I used to meet with ministers of energy in some of the oil- or oil-and-gas-rich countries, they would talk about renewable energy, and that meeting would end in a nanosecond,” said Nabil Habayeb, General Electric’s president and chief executive for the Middle East and North Africa. “Today, many of them are eager to talk about it. Whether you’re oil-rich or not, it’s a big trend.”
After a previous wave of interest in renewable power was derailed by the global financial crisis in 2008, the fresh surge of investment has been driven by anxiety over maintaining reliable supplies of energy in times of political and economic turmoil and the allure of solar panels that are 60 percent cheaper than in 2009, Bloomberg New Energy Finance estimated.
Many experts and renewable energy advocates see solar as the smartest way to meet a demand for power that the energy analysis firm says has been climbing by about 4.5 percent a year, as growing populations increasingly embrace middle-class comforts like air-conditioning.
While there has been more talk than action in some nations, particularly those with their own oil reserves, things are beginning to change, said Elena Giannakopoulou, an energy markets economist at Bloomberg New Energy Finance in London.
“We expect them to start ramping up,” she said “Because it’s cheap, it makes sense,” the region’s sunshine is very reliable and “they have issues that solar can solve, like the security of supply.”
There are frustrations. Shifting policies and the failure of officials to follow through on ambitious plans have left some international companies disappointed, said Browning Rockwell, executive director of the Solar GCC Alliance, a solar trade group for the gulf.
He cited Egypt, where a government standoff with investors over contract terms, followed by an abrupt shift in promised payment levels, cast uncertainty over planned projects.
Centralized political power and state control of utilities can also make doing business difficult, he said.
“People are a little bit fatigued, because there’s been a lot of promise and hype,” Mr. Rockwell said. Now, though, many nations “are reaching a point where they have no choice” but to get serious about renewable energy.
Jordan has a keen enthusiast in King Abdullah II, who last year opened a solar plant to provide electricity to his palace and court, including for a new royal fleet of electric cars. In Abu Dhabi, a developer’s bid in September set a record for the world’s cheapest projected production of solar power, lower even than the cost at some coal-fired plants.
And Iran, reopening to the world as sanctions ease, is anxious to modernize its electricity infrastructure, and plans to invite developers to bid on solar and wind power projects that could total $12 billion, Bloomberg has reported.
The region’s biggest energy divide is between countries rich in oil and gas, most notably Saudi Arabia, and those that must buy fuel beyond their own borders. Both have an incentive to expand solar generation — oil- and gas-producing nations so they can sell more of what they drill and importers to reduce their dependence on volatile international markets.
Not surprisingly, though, it is the energy importers who are moving most aggressively.
For countries like Jordan, which endured disruptions to natural gas supplies from Egypt when a pipeline was repeatedly bombed during the Arab Spring uprisings, energy independence is a question of political and economic security.
The Shams Ma’an solar farm, built by First Solar and owned by a consortium of companies, began commercial operation in September near the ancient city of Petra, generating enough power for 35,000 homes, First Solar, which is based in Arizona, said.
And the 38-turbine Tafila wind farm increased Jordan’s total power capacity by 3 percent when it opened last year, said Masdar, one of the project’s developers.
Dubai and Abu Dhabi, in the United Arab Emirates, are also serious about renewables. The Gulf states’ emissions of planet-warming carbon dioxide are among the world’s highest, and the U.A.E. has vowed to shrink its footprint. Dubai aims to get 25 percent of its energy from clean sources by 2030 and 75 percent by 2050.
“They have understood here very clearly that they need to change,” said Christian von Tschirschky, an energy expert at Ernst & Young in Dubai.
The Dubai Electricity and Water Authority said in May that it had received a bid of 2.99 United States cents per kilowatt-hour from developers vying to be part of the third phase of the giant Mohammed bin Rashid al-Maktoum Solar Park, expected to be among the world’s largest when complete.
It was a record that did not stand long. In September, neighboring Abu Dhabi received a bid of 2.42 cents, marking another milestone in a sector whose costs have been dropping drastically toward competitiveness with more traditional fuels.
Egypt is also pushing forward on solar, although a shortage of hard currency and shifts in policy have put some big projects in question.
Leaders in Saudi Arabia have vacillated about their commitment, announcing ambitious renewable power goals and then backing away.
The low price of oil has created serious budget pressures in the kingdom, which relies on oil for much of its income and still burns some of its crude for electricity.
“They could release it to the world markets and generate increased revenues,” Mr. von Tschirschky said. And if oil rises, “the incentive to export at a higher price is even higher.”
If Saudi Arabia chose to put muscle into developing a solar power sector, its companies could become the region’s suppliers and installers, said Mr. Rockwell of the Solar GCC Alliance.
“Saudi has always been the big multiplier for the region, because if the Saudis can figure out how to make it work in their country, they’ll go elsewhere,” he said. “They can drive development of solar in other markets.”
That has yet to happen. If Saudi leaders fail to make a big push on solar, Mr. Rockwell said, they will miss a chance to bolster power production and to create a new source of jobs for a generation of well-educated but underemployed young people.
Across the region, he said, the biggest obstacle to clean power’s growth is the widespread subsidization of energy from fossil fuels. The International Monetary Fund estimates the Middle East, North Africa and Pakistan account collectively for 47 percent of world energy subsidies, although nations including the U.A.E., Egypt and Saudi Arabia have begun scaling back.
Experts say the subsidies fuel corruption, discourage efficient energy use and make it hard for newer sources to compete.
The biggest advantage solar now has, though, is its falling cost.
“That was the main challenge in the past,” said Mr. von Tschirschky of Ernst & Young. “Renewable energy was more expensive than the technologies to burn oil and gas Now, it’s more attractive.”