The Middle East Solar Industry Association (MESIA) says energy investment in the Middle East and North Africa (MENA) region could hit $1 trillion in the 2019-23 period.
The organization cited statistics from consultancy Frost & Sullivan valuing the regionâ€™s operational PV capacity at $5-7.5 billion, with an additional $15-20 billion worth of projects set to come online by 2024.
However, policymakers in many countries are still struggling to find the right mix of legislation, technology, financing and procurement options to kick-start development, the regionâ€™s top solar industry group said in its Solar Outlook Report 2020.
MESIA noted a large gap among the regionâ€™s varied PV markets in terms of cumulative installations and development. Egypt, Jordan, Morocco and the United Arab Emirates lead on deployment with Saudi Arabia soon to swell their ranks. While a handful of countries including Pakistan and Iraq are struggling to bring more solar online, markets such as Tunisia, Kuwait and Oman are starting to add significant projects to the regional PV pipeline, said the association.
Regional policymakers are increasingly prioritizing distributed solar, led by Dubai. The most populous city in the United Arab Emirates launched its Shams Dubai program in 2015 to support residential PV and commercial and industrial solar installation. By October, Dubai had installed around 125 MW of distributed PV capacity at 1,354 sites, MESIA said.
The industry association also highlighted the important role played by the Dubai Electricity and Water Authority in getting commercial and industrial projects built, noting market drivers for the segment vary across the MENA region. Cuts to electricity tariffs in markets such as the UAE, Jordan, Oman and Saudi Arabia have played a role, backed by the establishment of supportive regulatory frameworks, particularly for wheeling and net metering, the regional body said.
The Egyptian authorities made significant progress on the massive Benban solar complex last year. Roughly 1.47 GW of solar capacity â€“ including a wealth of bifacial and tracking projects â€“ was commissioned at Benban by the end of November, MESIA said. The $4 billion, 1.8 GW complex will eventually feature 41 projects.
The Egyptian government wants renewable energy to account for 20% of its electricity mix by 2022, and 42% by 2035, including 52 GW of large scale and distributed-generation projects. It continues to look beyond feed-in tariffs with the Egyptian Electricity Transmission Co (EETC) and World Bank private sector arm the International Finance Corporation signing a deal in April to fund projects chosen via auctions, for example. The EETC signed a solar power purchase agreement with Saudiâ€™s ACWA Power in October for the 200 MW Kom Ombo project, at a price of $0.0275/kWh. Construction is expected to wrap up in the first quarter of next year.
However, Egyptian energy demand is set to leap from 27.6 GW last year to 67 GW by 2030, MESIA said, citing Frost & Sullivan data. To facilitate renewables deployment, the country will need a competitive electricity market and will have to scrap subsidies for fuel and electricity tariffs dating back to 2016 while also facilitating the development of energy storage to support distributed PV roll-out, the industry group argued.
United Arab Emirates
MESIA describes the UAE as a regional â€śfront runnerâ€ť for PV and it made undeniable progress last year. Having launched commercial operations at the 1,177 MW Sweihan PV project, Abu Dhabi in November the allocated the fifth, 900 MW phase of the massive, 5 GW Mohammad bin Rashid Al Maktoum Solar Park for a record low power price of $0.01693/kWh. The solar parkâ€™s installed capacity currently hovers around the 713 MW range, MESIA said, noting the third to fifth stages of the project will be finished in the years ahead, with full completion scheduled for 2030.
The future also looks bright for solar in the wider UAE, particularly at utility scale. In November, the Emirates Water and Electricity Co closed submissions from developers for a 2 GW solar project at Al Dhafra. That project is set for completion by the first quarter of 2022.
MESIA said it expects a similarly sized tender early this year, as Abu Dhabi may be gearing up to install another 6 GW of solar by 2026. However, PV will have to compete with nuclear and rival renewables in future. With more intermittent renewables capacity coming online, MESIA expects the UAE authorities to start to include more energy storage capacity in future PV tenders.
MESIA said energy storage will be â€śpivotalâ€ť to the development of Jordanâ€™s solar sector. The country has been developing storage capacity for a while, as it is struggling to stabilize its electrical transmission network while it brings significant amounts of large scale solar and wind capacity online.
â€śAt this stage, Jordanâ€™s capability to strengthen the grid, commitment to achieve increased energy efficiency and develop additional storage is key for the future market attractiveness,â€ť the industry association reported.
The authorities launched a tender last year for a study on the feasibility of installing 30 MW of pumped storage capacity at the nationâ€™s key dams, MESIA noted.
Saudi Arabiaâ€™s growing PV market continues to move from strength to strength, according to the association, which highlighted the 300 MW Sakaka PV plant â€“ the kingdomâ€™s biggest to date. The regional body also noted the Renewable Energy Project Development Office asked 60 pre-qualified companies to submit bids for â€śsix solar energy schemes with a combined capacity of 1.5 GWâ€ť late last year, in addition to six projects the authorities started tendering this month.
However, while the country remains one of the most promising regional PV markets, the Saudi authorities still need to tackle key challenges, MESIA said. The government must collaborate more effectively with the private sector, among other things. It also needs to improve the regulatory environment and propose new business models to unlock the potential of its fledgling commercial and industrial solar sector, the industry group said.
Tunisiaâ€™s PV sector had a relatively big 2019, MESIA said. The authorities allocated 500 MW of new solar capacity in December to three consortia. Elsewhere, Italian energy giant Eni closed 2019 by commissioning a 5 MW solar plant at an oil concession in Tunisiaâ€™s Tataouine governorate, backed by 2.2 MW/1.5 MWh of energy storage capacity.
MESIA sees Tunisiaâ€™s commercial and industrial solar segment as particularly promising but noted the market continues to struggle in the face of fossil fuel subsidies. The regional body argued the Tunisian government must introduce incentives such as tax breaks to encourage greater investment in commercial and industrial PV, among other policy considerations.
MESIA also noted the Tunisian authorities have overseen critical investments in grid infrastructure upgrades over the past year, in anticipation of $2 billion of anticipated foreign investment in the solar and wind sectors over the next three years. The Tunisian Ministry of Industry and Small and Medium Enterprises has said the expected influx of funds could support development of 1.9 GW of fresh renewables capacity by 2022.