Is A Solar Boom Coming To The Middle East?
On April 6th, Middle Eastern nations announced an ambitious energy project to establish an Arab Common Market for electricity. The energy ministers from 14 Arab countries signed a memorandum of understanding, confirming their commitment to the development of an integrated electricity supply system for the Middle East. This announcement is very important, yet it also comes at time of even larger changes in energy in the Middle East: solar power. A future common electricity market will see an ever-increasing role for solar power as countries across the Middle East are heavily investing in renewables.
Ongoing low oil prices together with rising demographic concerns are increasingly motivating MENA states to invest in a more secure and diversified energy portfolio. With an estimated population of 692 million by 2050, the MENA region will require a substantial increase in generating capacity to meet future energy demands. This point has been hit home this year as Fitch has warned that most oil producers will not break even in 2017, based on a predicted average price of $52.50 per barrel. Most MENA countries need substantially higher prices (ex: Saudi Arabia needs $74) to balance their budgets.
Solar investment makes economic and security sense
These fiscal pressures risk instability, both in the short and long-term, not only due to general budgetary concerns, but the risk of energy-related social unrest. Erratic domestic electricity supply has been a main instigator of social unrest in Iraq, Lebanon and Egypt. To this end, a common electricity market and grid would help mitigate localized energy disturbances, aiding both economic and social stability.
Consequently, declining oil reserves, climate change, and hydrocarbon price instability means the Middle East will need to look elsewhere for future energy increases. A prime candidate is solar power, as the world’s deserts receive enough energy in six hours to meet the globe’s annual energy needs.
It appears that MENA governments have taken heed, as “over the past year we have seen huge investment in renewables […] It seems clear that this is a trend set to continue as nations in the Middle East strive to reduce their carbon footprints and increase generation capacity,” notes Anita Mathews, director at Informa Energy Group. In the GCC alone, which accounts for 47 percent of MENA generating capacity, some $316 billion worth of investments are needed by 2020.
Much more: http://oilprice.com/Energy/Energy-General/Is-A-Solar-Boom-Coming-To-The-Middle-East.html
