14 Jun Chinese investment boosting Middle East renewables
Following a grant worth US$310 million from Hanergy, a Chinese Energy Enterprise that produces thin-film solar technology, Jordan will expand its power grid and increase its renewable energy production by 1 Gigawatt. As a result of Hanergy’s assistance, Jordan will also achieve its goal of increasing renewable energy capacity to 40% (1.8 Gigawatts) by 2020.
Jordan began removing fossil fuel subsidies and created the country’s Renewable Energy and Efficiency Fund a decade ago. This signalled the move to cleaner energy, and other Middle Eastern countries are also looking seriously at them. A report published by The Climate Group earlier this year (reported on 23 April) discussed the potential of the region to become a global green economy hub.
Their analysis, which was supported by the International Renewable Energy Agency, gave an overview of the current and future renewables landscape and explored the role that the United Arab Emirates (UAE) would play in reshaping the world’s energy future, given the lessons it was learning from flagship projects in Abu Dhabi and Dubai in terms of the best opportunities and ways to upscale renewables. The report also highlighted the increasing adoption of solar energy technologies as evidence of the growing appetite of the private sector.
Another report commissioned by the National Bank of Abu Dhabi which was prepared by the University of Cambridge and PricewaterhouseCoopers published in March this year showed that the future of the energy sector in the Middle East was in renewables, which it said were already cheaper and more reliable than oil.
The report discussed the worldwide evidence with respect to the future of energy in the context of the Gulf region (the Kingdom of Bahrain, Kuwait, Qatar, Sultanate of Oman, the Kingdom of Saudi Arabia and the UAE) in order to provide a basis for the financial services sector to consider how they should best provide products and services that will support the growth of the low carbon economy.
The University of Cambridge and PricewaterhouseCoopers report argued on the basis of four pillars. Firstly, it stated that the scale of the opportunity was significant, pointing to the US$150 billion invested in solar generation and US$100 billion in wind generation worldwide last year. The largest new demand for energy will come from the “West-East Corridor” (Middle East, Africa and Asia) due to the rise of mega cities, rapid industrialisation and increasing middle class wealth (and the associated expectations), and therefore, as the report pointed out, rapid deployment and innovations that can satisfy the needs of large populations (some in off-grid areas) will be essential.
Secondly, the report stated that there are proven cost effective and available technologies that can realise these opportunities now. In addition, these technologies balance the economic, supply, sustainability and social requirements of consumers, policymakers and investors. The report also discussed the global perspective that investors and developers alike see in renewable projects, with Government targets putting solar and wind energy at the forefront of energy developments in the Middle East and creating local market opportunities.
Lastly, the report discussed the collaborative approach that policymakers and financial institutions would be required to take to realise these opportunities and that traditional finance models can be reinforced to support the more frequent and rapid deployment of renewable technologies. New approaches that were emerging included securitisation, aggregation and green bonds, all of which could be adapted for use in the Gulf region.
Director and Key Spokesperson on the Middle East for The Climate Group Eduardo Goncalves stated that we are now seeing the end of an oil age, a point also made by Former Oil Minister of Saudi Arabia Sheikh Ahmed Zaki Yamani. Saudi Arabia and other oil-producing states and regions are seeing that the green economy is where the smart business is, and that the latest developments prove that renewables are the direction for the regions energy markets.