Green energy boom report in Middle East

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Green energy boom report in Middle East

By Greentech Lead Team: Talk of a Middle Eastern green energy
boom is likely to prove no more than a mirage with little hope of the region
saving clean technology companies from the shrinking project pools of Europe.

Instead India, China and Latin
America offer some hope for green energy companies struggling in a European
market drowning in debt and a North American market awash with gas.

“We expect some growth will
happen here in the Middle East but it will take time for this to become a
robust industry,” Juan Araluce from Danish wind energy giant Vestas told Reuters
at the World Future Energy Summit in Abu Dhabi.

Vestas estimates renewables accounts
for only 0.2 percent of power production in the Middle East and North Africa
(MENA), compared to a global average of around 3 percent and many European
countries already well into double digits.

“It is not even one tenth of
the world average, which is already low, and if we split between the Middle
East and North Africa much of the 0.2 percent happens in North Africa. But it
should also be looked at as a huge opportunity,” the head of Vestas’
Mediterranean operations said.

The world’s leading turbine maker
has just 600 megawatts (MW) of installed wind capacity from Morocco to the
Arabian Peninsula, compared to 3,650 MW of turbines it has supplied to Spain
alone.

Vestas, which in early January
announced plans to cut over 2,300 jobs in a bid to restore profitability, faces
stiff competition from Chinese and Indian turbine makers in Asia but expects
much more growth in Brazil and Mexico than in MENA.

Solar power has not fared much
better in a region of intense and prolonged sunshine and vast expanses of
largely uninhabited land for photovoltaic (PV) panels.

Major oil exporters Saudi Arabia and
the United Arab Emirates have built a few small solar plants and have plans to
build more. But active solar projects are still rare, with Saudi Arabia
building less than 100 MW in the last three years.

Egypt has one of the most ambitious
regional goals, having set a target of 20 percent of its electricity from
renewables by 2020, but even that target has been passed by the European Union
average, with Spain already getting over 30 percent from green sources in 2009
and Italy 23 percent, according to EU figures.

Abu Dhabi green vehicle Masdar has
made significant renewable energy investments in countries where political and
public support for clean energy brings with it big incentives.

Back home, it has only around 10 MW
of solar capacity up and running at the famous but far-from-finished Masdar
City, with a 100-MW concentrated solar plant – the world’s biggest – under
construction and another 150 MW planned nearby.

The UAE’s richest emirate is taking
the lead in the energy hungry Gulf, targeting 7 percent of electricity from
alternative sources by 2020. But that 10-year goal was exceeded by 21 of the 27
EU member states three years ago.

The calm summer air of the Gulf may
not be suited to large scale wind farm development and the strongest winds
typically blow in winter when demand for electricity is at its lowest.

But supporters argue more should be
done to encourage large scale projects to harness solar power in a region where
electricity demand is tied to the power of the sun through air conditioning.

Recent falling costs of solar power,
excellent fit to demand patterns, and rising regional gas prices, mean that PV
is now economically viable or close to it in most MENA countries, according to
a new report commissioned by the Emirates Solar Industry Association (ESIA).

The report called on governments to
rationalize energy pricing in a region where gas is often sold at well below
cost while millions of barrels of oil burnt in power plants are supplied at a
fraction of international prices.

“Saudi Aramco and (UAE oil
firm) ADNOC have a choice for every new barrel of oil they produce. They can
give it to an electricity company for five dollars a barrel or give it to Japan
for $105 a barrel,” said Daniel Zywietz the managing director of Ambata
Capital Middle East, an advisory group for renewable energy projects in the
region.

The International Energy Agency
estimates that the Middle East accounts for almost half of the $409 billion
that the world spends annually on fossil fuel subsidies.

Artificially low fossil fuel prices
make renewable energy technologies, which already rely on subsidies in other
parts of the world, even more unattractive in the Middle East.

“In the Middle East the
leadership is interested but there’s no momentum because conventional energy is
accessible,” said Tulsi Tanti, chairman of Indian wind power giant Suzlon.

But fuel subsidies have also helped
drive excessive demand growth in a region where only Qatar has a lot more gas
than it needs while its neighbours increasingly rely on costly gas imports or
burn more of their own oil – factors that should help drive green energy
growth.

Oman, whose fossil fuel production
is unable to keep pace with rapidly rising internal demand and which aims to
get 10 percent of its energy from renewables by 2020, has attracted a group of
German private investors who plan to build 400 MW of solar power capacity the
small non-OPEC oil and gas producer.

The $2-billion project, which
includes facilities to manufacture solar panels for export, could help the
spread of solar power in the region, eventually. Like so many renewable energy
projects, the timeline for building the Omani plants is unclear.

“If you are looking at the
speed of things, we always have to keep in mind that yes big projects take time
but at the same time if you do them well, the renewable sector can actually
accelerate quite quickly,” said Frank Wouters, director of Masdar Power.

So too is the completion of the
UAE’s Masdar City, hailed as the world’s first carbon-neutral city when
construction began in 2008 and whose early stages of development are already a
must-see for visiting heads of state.

But the ambitious project may also
have been set back by the financial problems that have weighed on projects
around the world over the last few years.

Four years on, only the Masdar
Institute Campus and the futuristic pods of its Personal Rapid Transport (PRT)
system are operational and completion of the city of 40,000 people and 50,000
commuters is not expected until 2025.


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