Hydrogen leads plans for green recovery from Covid-19
Despite the devastating impact of the Covid-19 pandemic on the Middle East, the outlook for investment in the region’s renewable energy sector is bright.
The long-term rise in demand for energy in the region remains undimmed by the pandemic, while the need to diversify energy sources and decarbonise the economy to combat climate change has put renewables at the top of the energy policy agenda.
At the same time, new technologies, such as green hydrogen, are catching the eye of policymakers and investors.
While the Middle East lags major markets such as China, Europe, and the US in the scale of renewables investment, the world’s largest and cheapest solar projects are now found in Saudi Arabia, Abu Dhabi, and Dubai. While Egypt, Jordan, and Morocco have built significant renewable energy capacity.
The region’s ambition is to be a hub for the development of renewable energy and alternative fuels.
With about 28GW of renewable energy production capacity installed across the Middle East and North Africa (Mena), of which by far the biggest component is hydropower with 21GW, renewable energy represents only 7 percent of the region’s power generation capacity.
But with electricity demand rising at about 5 percent a year, and with a shortage of readily available natural gas supplies, expanding renewables capacity is one of the top policy priorities for governments in the region.
Boosted by falling technology costs and the drive to reduce carbon dioxide emissions, most countries are planning and procuring solar and wind projects. Across the region, governments have set ambitious clean energy targets, with Dubai the most aggressive, aiming for 75 percent of its energy to come from clean sources by 2050.
At the start of 2021, about 98GW of new renewable energy generation capacity was planned across the region, with 39GW of additional capacity due to come on stream by 2025.
Over the past 12 months, the desire for a ‘green’ recovery from the economic impact of the Covid-19 pandemic has provided the impetus for a wave of ventures and projects to produce hydrogen fuel in the Middle East. In particular, tapping the region’s abundant supply of low-cost solar energy to sustainably produce ‘green’ hydrogen from water is generating huge interest from governments and investors.
Hydrogen is the latest alternative fuel to emerge in the Middle East’s renewable energy journey and in many ways is in a similar place to the one held by solar and wind energy a decade ago.
As with solar ten years ago, hydrogen fuel in 2021 is expensive to produce compared with fossil fuels, and there is only a limited market for the low-carbon fuel. But solar energy production costs have tumbled over the past decade, while regulatory changes have reduced the commercial risk of investing in renewables.
It is a trend that will continue, and which is supporting the region’s energy diversification as new technology emerges making clean fuels commercially and technologically viable.
Regulatory reform is the biggest challenge facing renewables. Merging renewable energy, primarily photovoltaic solar power, into power grids requires policy adjustments and new regulations.
This includes ensuring grid flexibility and stability, integrating new technologies such as battery storage and electric vehicles, and establishing commercially attractive business models. Another challenge is to break the link between electricity and water production that is hard-coded into the region’s utilities.
Middle East Renewables 2021 is the latest research report from MEED. It provides a comprehensive country-by-country review of the renewable energy sector across the Mena region with an in-depth analysis of projected investments, policy and legislative frameworks, and the projects planned and underway.
It also details the key government bodies driving the development of renewables in each country.
The report provides investors, contractors, manufacturers, and consultants with a powerful resource that will help them to identify new opportunities, set strategies, and mitigate risk in the renewable energy sector across the Middle East and North Africa.
The report a valuable asset for anyone doing business in the Middle East energy sector.