Regional governments differ widely in their green energy ambitions. Published in MEED, 17 September 2014
Renewable energy has begun to make some impressive inroads into parts of the Middle East, with solar power plants glinting in the desert sun and wind turbines wafting through the air in more and more places. Yet for most countries, these are sources of energy whose time has yet to come, and many governments have barely begun the process of moving away from oil, gas or coal-fired power plants in favour of more sustainable energy sources.
Might that situation change in the coming years? There are certainly some positive signs for advocates of green energy. A mass of targets, policies and government agencies has sprung up and, while the scale of the plans may vary, the idea of renewable energy is at least firmly on the agenda.
The leading market is Morocco, which already generates about 10 per cent of its electricity from renewable sources. Its capabilities mean that the Cairo-based Regional Centre for Renewable Energy & Energy Efficiency (RCREEE) ranks Morocco at the top of its Arab Future Energy Index. That result is based on a range of criteria including market structure, policy framework, institutional capacity and finance. According to the centre, Morocco stands out in terms of its strong institutional support for renewable energy and a market-driven approach that has attracted more investment to the sector than other countries.
Morocco is followed in the league table by Jordan. According to Amer Barghouth, private investments project manager at RCREEE, there is a clear logic to these countries doing well in the index, given that they are under the most pressure in terms of energy supply.
“In general, we find that countries that are more dependent on energy imports tend to be more aggressive in trying to diversify and include more renewable energy,” says Barghouth. “Jordan is a good example. Its conventional power sector uses imported diesel and heavy fuel oil, which is very expensive. Solar photovoltaic (PV) power is a lower-cost option, so they are taking it more seriously. They are doing that because it makes economic sense, and you see similar tendencies in Morocco.”
Energy-exporting countries, such as those in the Gulf, clearly do not suffer from the same pressures, yet most of them are showing some inclination to develop renewable energy and some have even become enthusiastic advocates.
Perhaps the most ambitious is Saudi Arabia, which wants to have 54GW of renewable energy generating capacity in place by 2032. That would account for half of the country’s energy needs by then.
The King Abdullah City for Atomic & Renewable Energy (KA-Care), the body set up in 2010 to lead the country’s activities in this area, says concentrated solar power (CSP) plants would provide 25GW of this total, with a further 16GW to come from solar PV power, 9GW from wind energy, 3GW from waste-to-energy plants and 1GW from geothermal facilities.
The prospects of all these new projects being developed over the coming years is something that the energy industry welcomes. “I believe there will not be any other country in the world that will offer the sheer size of renewable energy opportunities that Saudi Arabia will offer,” says one industry executive in Riyadh.
However, the progress to date has not been encouraging. KA-Care published a white paper in 2013 setting out its procurement strategy, but there has been a distinct lack of progress since then. While Riyadh’s plans appear substantial, it is difficult to compare them with those of other governments around the region because of the variety of ways in which they have set out their targets.
“Almost all the countries in the region have set targets, but not all the targets are created equal,” says Barghouth. “Some countries have clear targets that are part of national plans and are well articulated at the highest level, while in other countries a target might have been expressed by a minister or in a publication or as part of an outreach or media campaign.”
An additional complicating factor is that while some countries, including Saudi Arabia, express their targets in terms of megawatts of generating capacity, others talk in terms of the percentage of primary energy, of installed capacity or of electricity generation.
Morocco, for example, has set a target of 42 per cent of its installed capacity to be renewable energy by 2020. Elsewhere in North Africa, Egypt and Algeria have set targets for the same date of 15 and 20 per cent of electricity generation respectively. Libya is aiming for 10 per cent of electricity generation by 2025, but in light of the ongoing instability in the country, this is probably not a core priority for the authorities.
Events may yet conspire to throw other countries off course too. Lebanon, for example, has set a target of 12 per cent of electricity generation to be met by renewable energy by 2020, although if it does discover the significant quantities of natural gas that many suspect might be lurking in its offshore waters those plans could well be disrupted. Jordan has opted for a different type of target, aiming for 7 per cent of primary energy to come from renewable sources by 2015, rising to 10 per cent by 2020. Syria’s targets, meanwhile, are based on MW of energy generated, as with Saudi Arabia.
With the exception of Saudi Arabia, the Gulf countries often appear rather unambitious in terms of their targets. Bahrain and Kuwait are aiming for just 5 per cent of electricity generation to come from renewable sources by 2020, although Kuwait is hoping to increase that to 10 per cent by 2030. Oman is aiming for 10 per cent by 2020, while Qatar has set a target of just 2 per cent by 2020. The UAE does not have a federal target, but the authorities in Abu Dhabi say they are aiming for 7 per cent of electricity generation from renewable sources by 2020, while the target for Dubai is 5 per cent by 2030. Even Yemen is planning to outdo that, with a target of 15 per cent by 2025.
Overall, however, the countries of the Middle East and North Africa are fairly typical in the targets they have set, when compared with other emerging market economies around the world. Malaysia, for example, has set a target of 24 per cent of electricity generation from renewable sources by 2050, and neighbouring Indonesia is aiming for 15 per cent of electricity demand to be met by renewables by 2025, according to the Paris-based International Energy Agency.
Setting targets is just one piece of the jigsaw, however. What is also needed is a policy framework that will enable those aims to be met. Here again the performance of governments is rather patchy. According to the Abu Dhabi-headquartered International Renewable Energy Agency (Irena), while all the countries in the region have some sort of target, at least seven countries lack a renewable energy strategy or plan.
This issue was noted in a research paper by Rabia Ferroukhi, senior policy advisor at Irena, and five others, published by the Gulf Research Centre in December last year. “In Bahrain, there is no formally established policy support framework for renewable energy sources to help achieve the target of 5 to 7 per cent energy production from renewable energy sources by 2030,” the authors wrote. “Kuwait has set an objective to produce 10 per cent of its electricity from renewable sources by 2030 … However, similar to Bahrain, no legislative and regulatory framework has been established to reach this target.”
There are a variety of ways that countries can drive forward the process of developing their renewable energy ambitions. Some have set up dedicated agencies for renewable energy, while others rely on a separate department within an existing energy ministry. The formal structure is not necessarily the most vital point though.
“It is not so important to have a separate agency or a separate department within a ministry; what’s really important is to have dedicated human resources with a clear mandate to promote energy efficiency and renewable energy within a country,” says Nuzrat Myrsalieva, policy analysis project manager at RCREEE.
Another important element is creating the right incentives to draw investment and expertise into the sector. For many countries, that involves setting feed-in tariffs. Globally, such tariffs have been adopted by about 65 countries, but they are still relatively rare in the region. Other options include net metering, which encourages smaller providers to supply renewable energy to the grid, and public competitive bidding.
Within the Middle East, there is no clear preference among governments about which option to favour, and many countries have adopted a mixture. Algeria and Iran have both set feed-in tariffs, as have Syria, Jordan and the Palestinian Territories. Egypt and Dubai are both expected to follow suit in the future. Jordan, meanwhile, has also opted for net metering, along with Egypt, Lebanon, the Palestinian Territories, Syria and Tunisia.
According to Irena, the most common policies used by governments to promote renewable energy are public competitive bidding for fixed quantities of renewable energy, and public financing including grants and subsidies. Morocco has adopted a system of public competitive bidding to develop its renewable energy plants, and it has also been used for some projects in Saudi Arabia, Egypt and Algeria. Examples of more direct government funding include the UAE’s Masdar, which channels government finance into renewable energy projects, Algeria’s National Renewable Energy Fund and Tunisia’s Fonds National pour la Maitrise de l’Energie.
The decisions made on these issues will help to determine how likely it is that a government will be able to meet any renewable energy targets it sets. The most important element of all, however, remains the amount of political will that exists to turn away from legacy fuels and towards cleaner sources of energy.