The Middle East tripled renewable energy investment last year despite fewer energy dollars being spent globally, with industry insiders calling the region the “Promised Land” of green investment.
The International Energy Agency (IEA) released a report on Wednesday that showed energy investment globally reached US$1.8 trillion last year, down 8 per cent from $2tn in 2014. Investments in renewables made up about 17 per cent of that figure, the highest source of power investment.
But as less money is funnelled into the energy sector overall, Mena as a whole is markedly gaining speed in renewables over the past 12 to 18 months, according to David Charlier, a partner based in Dubai at law firm Ashurst.
The firm, which was awarded an advisory position on Dubai’s newest solar project, said that the growth in the region’s renewable energy sector has resulted in more inquiries from clients spanning from governments to developers and financiers. “The proportion of our utilities sector work which relates to renewable energy has grown from around 20 per cent five years ago to well over 50 per cent now,” said Mr Charlier.
This can be seen in the movements made by the UAE in both Abu Dhabi and Dubai, but also with other GCC countries such as Kuwait procuring the Kabd waste to energy project and Saudi Arabia’s recent renewable energy commitments. Mr Charlier pointed to Jordan and Morocco actively expanding both wind and solar plans, and while Egypt is facing currency issues, some projects are still moving ahead.
For ata renewables of Spain, the region has taken on a whole new meaning. Belen Gallego, head of business development at ata, said that the company – which currently has 17 gigawatts of projects under its belt – had been watching this region for a while. “Much has been said over the years and a lot of promises made, but it seemed like one of those markets that took a long time to solidify,” she said. “It seems that now in the past couple of years things are getting built and for us, the region is finally the ‘Promised Land’.”
Ata is waiting for a couple of projects to materialise and once that happens, it will make moves to open an office in the UAE to serve the region. Ms Gallego said that this could happen as soon as the start of next year.
The IEA said that outside Asia, non-OECD countries in Africa, Latin America and the Middle East accounted for only 8 per cent of renewable energy investment last year. However, it is important to note that these areas have some of the world’s lowest global power purchase prices, which means less money is needed for investment.
In June, Dubai beat world records again with the lowest prices of solar energy at 2.99 US cents per kilowatt hour (kWh) – cheaper than the International Renewable Energy Agency’s calculation of power generation via natural gas at 5 cents. And then Chile came in over a month later, announcing solar power at 2.91 cents per kWh.
Ms Gallego said that the Middle East’s cost of generation has decreased so much that it is on a par with that of fossil fuels, and there is no going back. “The large majority of what is going to be built from here on out will be renewables,” she said, adding that the energy matrix was turning towards 100 per cent renewables. “There’s no other way. The cost of generation is simply too low.”
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