BY Vicente Lopez-Ibor Mayor
With the region now increasingly open to the prospect of solar energy, Arab Gulf nations must overcome a number of practical challenges before realizing such a transition. Kuwait and Oman aim to produce 10 percent of their energy from renewables by 2020. Saudi Arabia plans to invest $109 billion on solar energy and acquire a third of its power from the sun by 2032.
Initial interest in solar investment came at a time when exporting oil was profitable, but consuming it for domestic electricity generation was costly, making renewable energy an attractive domestic alternative. However, lower oil prices now make renewable investment costlier for oil-dependent Gulf Cooperation Council (GCC) governments.Gulf nations, are consequently continuing to consume fossils fuels to cover most of their energy needs, but this, too, comes at considerable expenses since it stretches production capacity. The most effective way to overcome this predicament is to address the consumption problem.
The Consumption Problem
The six GCC countries consume more energy than all of Africa, with unsustainable energy subsidies at the heart of the problem. Based on current projections, the region’s domestic fuel demands could double by 2024. For countries like Saudi Arabia, that means most of its energy production will be consumed domestically. This could have staggering economic consequences on the national and global levels. According to some estimates, Saudi Arabia could become a net energy importer by 2020-2038 if current consumption rates persist.
This poses a major predicament. On the one hand the region is witnessing dwindling financial resources—partly because of domestic consumption. On the other hand, it must direct those dwindling financial reserves towards a clean energy transition. This will alleviate the strain of domestic consumption. And the longer Middle Eastern countries wait, the more growing domestic consumption will strain national budgets.
Technical Innovation and Expertise
As the region begins to commission large pilot projects, newer technical and logistical challenges are emerging. Middle Eastern dust and sand storms could, for example, create major challenges to the efficiency and maintenance of solar energy infrastructure. What’s more, parts of the Middle East’s Direct Normal Irradiance (DNI)—a measure of solar radiation—is significantly less than that of Spain and some southern U.S. states. Previous Middle Eastern DNI measures were overestimated (by as much as 15 percent in the UAE). That means for any large scale solar energy projects in the region to be commercially viable, energy efficiency will be pivotal.
To achieve this level of efficiency, technological innovation and advancement is key. Morocco’s example demonstrates how leveraging technical expertise can pay big dividends. Morocco has pursued Concentrating Solar Power technology, which is expensive. But it crucially integrates solar energy storage, something that makes it possible to export excess energy to Europe.
The Arab Gulf must demonstrate similar aspiration and creativity in its own solar ambitions.
A Fraught but Worthwhile Journey
In summary, the journey towards a clean energy future is fraught with obstacles for Arab Gulf states. But providing the bitter short-term pill of reduced subsidies and increased clean-energy investment can be swallowed. It will place the region on a strong footing—particularly after any rise in oil prices.
The writer is the co-founder and chairman of Lightsource Renewable Energy Limited, and former commissioner of Spain’s National Energy Commission and a former special advisor to the European Energy Commissioner.