© OECD/IEA 2015 © OECD/IEA 2015

Renewables in the MENA region

Cédric Philibert Renewable Energy Division

International Energy Agency

Moroccan Pavillion at COP21 Le Bourget, 5 December 2015

© OECD/IEA 2015

The future arrives for Five Clean Energy Technologies. Changes since the time of COPenhagen are facilitating COP talks in Paris.

Innovation is driving costs down

Source: Ernest Moniz, US Secretary of Energy, IEA Ministerial, 18 November 2015

2

© OECD/IEA 2015

Renewables set to account for almost two thirds of global net capacity growth over the medium-term, but in MENA they comprise less than 15%

Renewables to dominate new global generation capacity…but not in MENA

Net additions to power capacity 2014-20, world vs MENA region

Analysis from the IEA Medium-Term Renewable Energy Market Report 2015 and the New Policies Scenario of the World Energy Outlook 2015.

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World Middle East North Africa (MENA)

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et ad

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Fossil fuels Nuclear Hydropower Non-hydro renewables

© OECD/IEA 2015

Lowest wind and PV prices now found in MENA countries

Price competition, long-term contracts, good resources and financial de-risking measures create lower-cost deployment opportunities in newer markets

Long-term contract prices for new renewable power to be commissioned in 2016-2018

Utility-scale solar PV Onshore wind

Chile USD 65-70/MWh

Brazil USD 81/MWh

United States USD 65-70/MWh

India USD 88-116/MWh

United Arab Emirates USD 58/MWh

South Africa USD 65/MWh

United States USD 47/MWh

Brazil USD 49/MWh

South Africa USD 51/MWh Australia

USD 69/MWh

Turkey USD 73/MWh

China USD 80–91/MWh

Germany USD 67-100/MWh

Egypt USD 41-50/MWh

Jordan USD 61-77/MWh

Uruguay USD 90/MWh

Germany USD 96 /MWh

Canada USD 66/MWh

This map is without prejudice to the status or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area

© OECD/IEA 2015

Even with low oil and gas prices, renewables can be competitive

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USD/MWh

USD/MMBTU

LCOE New OCGT

LCOE New CCGT

Japan: avg contracted spot LNG, Jan 2015

USA: avg HH spot, Jan 2015

EU: avg NG import, Jan 2015

Japan: avg contracted spot LNG, Mar 2014

Range of solar PV costs from previous slide

Range of wind costs from previous slide

Weighted average annual renewable investment costs, historical and projected

Note: Based on EGC median case, LCOE for OCGT is calculated using a 15% capacity factor and 7% discount rate and LCOE for CCGT is calculated using a 65% capacity factor and 7% discount rate. No carbon pricing is included in LCOEs.

© OECD/IEA 2015

Increasing momentum for solar and wind

Non-hydro renewables grow by almost half over 2014-20, driven by fast growing power demand, excellent resources, diversification needs and increasingly attractive

economics

MENA historical and forecasted non-hydropower capacity additions

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Bioenergy Onshore Wind Offshore Wind Solar PV STE

© OECD/IEA 2015

But progress concentrated in a few key markets

Countries where meeting power demand relies on imported fuels have been the first-movers in creating a supportive enabling environment for renewables

Forecast additions (2014-20) versus growth under renewable power plans

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Plans Forecast (2020)*Combined estimate for Dubai and Abu Dhabi

80% of MENA non-hydro renewable growth

© OECD/IEA 2015

MENA profiles yield different drivers

Drivers depend on expected demand growth, self sufficiency in meeting total energy demand, reliance on fossil fuels

Energy security very strong driver for RE in importing countries

100% 80%-90% Less than 80%

Power generation from oil & gas (%):

Bubble size: Electricity demand (TWh) 2012

© OECD/IEA 2015

Solar PV annual capacity additions (GW)

MENA expected to emerge as one of the fastest growing PV markets

This map is without prejudice to the status of or sovereignty over any territory to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

© OECD/IEA 2015

Flexibility of other power system components

Grids Generation

Storage Demand Side

System-friendly design

Variable RE will need more flexibility

© OECD/IEA 2015

Solar thermal electricity: Morocco leads on the south shore

Noor 1 (160 MW) at Ouarzazate soon to be inaugurated. Noor II and Noor III (Tower) to follow

© OECD/IEA 2015

Heat storage: CSP plants deliver electricity on demand

Built-in thermal storage allows to generate solar electricity when the sun sets and customers turn the lights on

© OECD/IEA 2015

Solar heat takes off cautiously

Solar heat has great potential in the MENA region but deployment is still limited to a few countries

Solar water heaters in Israel

© OECD/IEA 2015

Solar heat for industry is not a new concept

1907, Egypt (Shuman)

2014, Morocco (Italcementi)

© OECD/IEA 2015

Solar ovens for artworks

Potteries from Safi (Morocco) cooked in the solar oven at Mont-Louis (French Pyrenees)

© OECD/IEA 2015

Mirrah, 1 GWth under construction

Parabolic troughs protected from winds & dust in greenhouse (Glasspoint)

… for enhanced oil recovery operations

© OECD/IEA 2015

RE Technology Collaboration Programmes

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IEA supports 10 Technology Collaboration Programmes dedicated to renewables and hydrogen,

and is ready to support new initiatives

Numbers of RE TCPs in

which countries take part*

*including 4 through sponsors

© OECD/IEA 2015

A decisive moment for the future of renewables

With enabling frameworks and excellent resources MENA countries have the potential to leapfrog to very affordable renewables – as Morocco demonstrates as with solar thermal and wind power.

But the low oil price environment can pose a risk to policy commitments, particularly in energy exporters

Overall, greater policy ambitions are needed to realise the region’s huge renewable potential

A more secure and sustainable energy system requires continued progress in phasing out fossil fuel subsidies and clear policies

Technology cooperation is key to promote innovation; the IEA stands ready to cooperate with MENA countries