Sustainable Energy in MENA: Opportunities and Challenges

Tareq Emtairah IIIEE, Lund University Finsolar, 18.2.2016

Regional Overview

•Renewable Energy Installed Capacity

12 GW

•Solar PV installed Capacity

<100 MW

•Countries with specific RE targets

18

•Countries with RE laws6

•Cumulative RE targets for 2030

75 GW

•Arabic Speaking countries in MENA

19

•Estimated population in 2014

360 million

•Estimated nominal GDP in 2012

$2.8 trillion

•Total Electricity Installed Capacity

213 GW

•Annual Growth Rate in Electricity Demand

6%

Energy Dependence

2011 2000

Dependence

Independence

All Arab

MauritaniaDjiboutiJordanLebanonMoroccoTunisiaEgyptSyriaYemenLibyaBahrainUAESaudi ArabiaAlgeriaIraqQatarSudanKuwaitOman

-11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1

Current Energy Trends

Source: OAPEC (2005, 2007, 2012); EIA (2013); World Bank (2013)

134%

148%

186%

80%

100%

120%

140%

160%

180%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GDP

Primary energy demand

Electricity generation

Energy Subsidies

Renewable Energy Installed Capacity, 2014

Non-Renewable94.78%

0,15%0,79%

4,25%

0.02%

Renewable5.22%

Solar

Wind

Hydro

Other

EE potential in MENA countries by sector

9

142 Mtoe 223 Mtoe 297 Mtoe

0%

20%

40%

60%

80%

100%

2012 2020 2025

Services

Households

Transport

Industry

Electricity

Agriculture

Progress Towards Sustainable Energy

Development

EnergyEfficiency

RenewableEnergy

Reports available: www.rcreee.org

Energy Subsidy Reforms 2014

Renewable Energy Targets

0 1000 2000 3000 4000 5000 6000 7000 8000 9000

Egypt

Syria

Morocco

Tunisia

UAE

Algeria

Jordan

Qatar

Sudan

Libya

Yemen

Palestine

Lebanon

Kuwait

Bahrain

Iraq

Total RE targets

Current Installed Capacity

RE Projects underConstruction

by 2020

by 2030

by 2020

by 2030

by 2020

by 2020

by 2020

by 2030

by 2031

by 2020

by 2025

by 2020

by 2020

by 2030

Policy Framework: Renewable Energy

1. IPP Public Competitive Bidding:Wind Target: 1,000 MWWind Tendered: 1,000 MWSolar Target: 1,000 MW Solar Tendered: 510 MW

2. Law 13-09: Third-Party Supply

IPP Public Competitive Bidding

1. Feed-in Tariffs 2. IPP Public Competitive Bidding:

Wind target: 2,500 MW Tendered: 250 MW

Feed-in Tariffs

Direct Proposal Submission: Round 1: 13 PPAs concluded at $0.17 per kWh for 210MW aggregate PV capacity

Round 2: 34 proposal received (50MW each), totaling 1700 MW. Only 4 proposals will be selected (200 MW)Net Metering Scheme

Net-metering combined with grant and bank loan15 MW of PV installed

Net-metering combined with high electricity tariffs

AFEX Renewable Energy 2015 Results

PV Investment Opportunities in the MENA

Utility-Scale power plants

On-grid Residential and

Commercial Rooftop

RE Self-Consumption in

Productive Sectors (On-grid

and off-grid)

Off-grid Rural and Peri-Urban Electrification

Solar PV Pumping

Utility-scale RE Markets

Utility-Scale Markets to Watch

• The NOOR Moroccan solar plan has set a target of a minimum of 2 GW of new capacity by 2020 which is expected to generate investments worth more than $9 billion.

• The first Noor I came into operation end of 2015, is a 160 MW parabolic trough CSP plant with three hours of storage.

• The tariff for the Noor I plant was set in 2012 at around $190/MWh,

• Noor II plant, this price has been driven down to around $140/MWh.

Noor I: Morocco's first CSP plant forges path to tech-led cost cuts

Egypt has set a target of 20% of electricity from renewable sources by 2020 and aims to build up to 2 GW of utility-scale solar projects, 2 GW of wind, and 300 MW of roof top.

The EBRD expects to finance several utility-scale plants and mobilize up to $1.5 billion in debt and equity from other financiers for these ventures. The total project cost is expected to be in the region of $4 billion.

Source: CSP Today Quarterly Update, December 2015

Egypt

• The Masdar Institute Solar Platform is working with technology firms to drive up temperature capabilities, improve efficiencies and reduce the cost of CSP plants.

• Research on sand as high temperature storage medium for CSP

http://social.csptoday.com/technology/uae%E2%80%99s-misp-center-accelerates-pre-commercial-tech-development

Technology Support

Distributed Generation Markets

Sour

ce: M

usta

kbba

lCle

an T

ech

On-grid Residential and Commercial Rooftop

In 2015, the Dubai government has called for all rooftops to be equipped with solar PV by 2030.

RE Self Consumption in Industrial and Commercial Sectors (On-Grid and Off-Grid)

Net-metering and high retail electricity prices• PV installation for self-

consumption already at grid parity

Sour

ce: A

zuri

Solu

tions

Off-grid Rural and Peri-Urban Electrification

Rural Electrification Project• Install 1.1 million individual

solar rooftops in rural areas between 2012 -2031

Sour

ce: L

oren

tz S

olar

Pum

ps

Solar PV Pumping

Solar irrigation program• 400 million dirham (€35 million)• 50% capex subsidy up to 75 000 Dirham

(€6 670) per project• 3 000 PV systems per year• Cumulative capacity of 15 MWp

Policy Framework: Energy Efficiency

7 countries have mandatory EE Building Regulations 8 countries have voluntary EE Building Regulations 1 country has a mandatory Green Building Rating

System

30

• 12 out of 17 countries have national energy efficiency action plans in place

• Jordan, Qatar, Saudi Arabia, UAE adopted minimum energy performance standards for air conditioners

• Qatar and UAE banned import and sale of incandescent light bulbs

Challenges to Scale Up of Investment

• Driving up cost of capital Political Uncertainties

• Undermining consumer confidence Quality Assurance Infrastructure

• Leading to administrative barriers Institutional Capacities

• That meet the three A’s (Appropriate, accessible, affordable)

Few financing options

• To assess markets and create business models

Weak local capacity