The issue of sustainable development is receiving unprecedented levels of attention and relevance around the world. The Middle East is home to a large number of oil exporters as well as some of the world’s largest carbon emitters. The region has taken on the responsibility of reducing greenhouse gases (GHG), and as a result, the countries in the region have set ambitious goals to promote renewable energy and, thereby, reduce their carbon footprint. This article unfolds the different aspects of the solar industry in the Middle Eastern nations.
Middle East Solar Dynamics
The Middle East, with its abundant sunlight, can be worldwide leaders in solar power. However, sluggish growth in electricity demand and an unclear economic outlook across the area may deter investment. The region has a near-ideal environment for solar power generation, which is why large solar power plants have already been built in Saudi Arabia, Qatar, the United Arab Emirates, Oman, Kuwait, and Jordan. There are many more in the works, which will provide possibilities for renewable energy professionals too. In the forecast period of 2020-2025, the Middle East solar PV market is estimated to grow at a CAGR of more than 8%. Large-scale solar power facilities that are now under development are expected to come operational during the projected period, driving the market significantly.
Solar PV utility-scale projects have been increasing across the Middle East, with widespread support in all countries. During the projection period, several ambitious photovoltaic projects are projected to fuel the solar market in the next few years. In the near future, the impending solar power projects in this region, as well as the utilization of hybrid power solutions, could generate enormous prospects for the solar power market. Because of the amount of ongoing and prospective projects in Saudi Arabia, demand is likely to be high over the forecast period. While the Kingdom of Saudi Arabia (KSA) leads the way in terms of planned capacity expansion, Qatar and the United Arab Emirates (UAE) are also important markets. In terms of technology, solar PV is likely to acquire the most traction over the next five years when compared to other options.
Everything is not as good as it seems. Just like the two faces of a coin, this situation in the Middle East also has its own set of challenges. Governments must overcome a number of structural, regulatory, and technical barriers as renewable energy becomes more mainstream in the region. Regulation is a significant challenge for anyone pressing for a speedy transition to renewables. Good regulation guarantees safety and security while preventing chaos. It is conservative by design. However, legislative and regulatory changes are slower and more unpredictable than technology innovation. Lack of support for domestic solar, as well as the abundant supply of oil and gas for electricity generation, are some of the other market’s stumbling blocks. Moreover, market development is projected to be hampered by reasons such as delays in large-scale solar projects and a growing focus on alternative energy sources.
Another major challenge faced by the Middle Eastern countries is the possible impact of COVID-19 on short term developmental projects. All major projects have been delayed because of the unavailability and lack of resources. Contributing to the challenge, the measures to stop the spread of the disease included social distancing and quarantining which did not allow workers to come together.
Supportive government regulations and increased initiatives to meet electricity demand utilizing renewable energy sources while reducing reliance on fossil fuels are likely to be major factors to the market’s growth. Different policies have been developed in different countries to assist the expansion of solar photovoltaics across the region, with the goal of moving to renewables in the future. The utilization of competitive auctions, which account for almost three-quarters of the region’s development and have resulted in record-breaking tariffs awarded to solar PV, is the key policy driver used by the governments in the Middle Eastern belt. Due to high resource potential, economies of scale, and access to low-cost financing and land, bids at the lower end of the spectrum varied from USD 13.5 per MWh to USD 16.9 per MWh in the past year. This pricing strategy, on the other hand, is extremely market-specific, indicating favourable financing conditions and land affordability that may not be replicated in other areas.
The countries in the Middle Eastern region have recognised and acknowledged the benefits and ease that the solar power industry will bring in. To make the most of it, the governments of these countries are also trying hard to develop and promote ways and policies to increase the use and reliability of renewable means.