The Makings Of A Solar Superpower?

Solar PV’s stark price reductions since 2008 mean the Middle East can exploit this today in an economically attractive manner, and, according to many, should – for the benefits of energy security, sustainability and associated economic diversification that brings jobs and new enterprise.

This will need to be approached in a structured manner to ensure that this technology is rolled out in a comprehensive and economically effective manner, according to PwC, the world’s largest accounting firm.

This does not mean any of the other technologies won’t become the priority in the future, but as for now the focus should be solar PV, one of its consultants said.

By way of example, PwC’s figures suggest it is possible now to buy almost three times the solar capacity in 2013 for every dirham, riyal or dinar spent compared to 2008.

Once the necessary regulatory framework is in place, it is much more certain for the Middle East to realise its ambitions as a hub for Solar PV. Add to this that the region produces most of the elements to manufacture cells and panels and enjoys a very competitive cost of energy.

In terms of investments, most of the international players, like Total, are already entering into discussions with local companies for the establishment of joint ventures. Any new investor will require local know how and, especially for solar thermal and local construction capacity.

For local players, they will require international development know-how such as solar resource measurement experience, plant design, technology selection and procurement experience.

Kuwait is often regarded as one of the countries with the hardest task ahead to develop solar and indeed renewable energy in general. This is largely due to its heavy reliance on oil and the fact that it has no projects registered under the Clean Development Mechanism, an accreditation for project developers seeking carbon credits, according to the International Renewable Energy Agency (Irena).

At the end of 2012, the country tried to redress this balance, with Emir Sabah al-Ahmad Al-Sabah announcing he was seeking to produce 15 per cent of its energy from renewables such as solar and wind by 2030.

Speaking at United Nations climate talks in Doha, the emir said it was important for all nations to work on the “pressing issue” of global warming. But he said developing nations such as his should not be forced to take on binding targets for reducing greenhouse gas emissions.

The lack of action and this seeming ambivalence on the subject has seen many criticise Kuwait for paying lip service to the renewable cause.

Oil and gas still dominate the local economy. Kuwait is the third-biggest producer in the Organisation of Petroleum Exporting Countries and has the capacity to generate about 10.9 gigawatts of electricity. Oil accounted for two-thirds of Kuwait’s primary energy supply in 2009, up from about 58 per cent at the beginning of the decade, according to Irena. Natural gas makes up almost all the rest.

The emir said that by 2015 Kuwait will produce about one per cent of its electricity from renewables. Irena estimates the nation has 70 megawatts of renewable projects, including 10 megawatts of photovoltaics, 50 megawatts of concentrated solar power and 10 megawatts of wind.

According to Standard Chartered, Kuwait will continue to rely on high oil prices to post strong fiscal and external surpluses in 2013. Oil revenue is well-placed to support investment and the start of the year has seen official announcements on planned spending amounts, the bank said in its Mena ‘A region in flux’ report. However, ongoing tensions between parliament and the cabinet may detract from this.

“Kuwait looks unlikely to reduce its dependence on oil in the short to medium term and will see lower levels of foreign direct investment than its peers, as a result,” the report said.

It is clear than that a lot of work still needs to be done to exploit the Middle East’s natural climate advantages. The region has talked about it, and in light of rising energy demand, it will become more important to integrate solar into the mix. There are some that still argue that for all the talk, the actual investment and number of projects has been very limited. Saudi and Abu Dhabi are currently the front- runners to hoist the region on their shoulders in front of the world. But it will take more research, planning and investment before industry leadership becomes a reality.