Developing a Solar Sector
Imtiaz Mahtab says the Middle East needs to forge ahead with plans
Imtiaz Mahtab, EVP at Air Liquide MENA and VP of Mesia, says the Middle East needs to forge ahead with plans to build a gigawatt level solar PV sector.
Developing a solar sector rests essentially on four pillars: strong market fundamentals; technology or products to serve the market; a vibrant financial market or financing mechanism to deploy those products and, most importantly - a stable policy to align the market, products and money to develop a sustainable sector.
This will ultimately ensure both job creation and a healthy fiscal balance sheet while reducing the carbon footprint.
Strong electricity demand in the Middle East, both existing (120 GW of installed capacity in the ME is currently fueled by oil) as well as new capacity (100+ GW is needed in next ten years), represent one of the largest potential markets for solar power world-wide.
The Middle East has the potential to generate power from solar photovoltaic (PV) at the lowest cost in the world (significantly cheaper than in Germany and Japan) and is already 30% to 40% cheaper than the cost of burning oil. I call this surpassing the ‘oil parity’.
Besides utility scale PV projects, the off-grid market also represents a great opportunity for the solar PV hybrid sector. As millions of barrels of diesel are imported during the summer in the Middle East to address peak electricity consumption, companies that use diesel generators can consider these hybrid PV technologies as an alternative.
These market fundamentals have led to a number of global solar companies establishing a presence in the region and with local partners. A vibrant solar sector is in the making as both Research &Development (R&D) and manufacturing (notably in the KSA, Qatar and the UAE)are established to address the needs of the local market with suitable PV products while reducing the cost of the supply chain.
Specific know-know to address both ‘desert conditions’ such as sand, humidity and temperature, as well application specific usage such as desalination is already available and is making progress at local leading R&D institutions (KAUST, KACST in Saudi, Masdar in UAE, Qatar foundation in Qatar).
As these institutions in most cases are backed by their sovereign funds – any new development will have the potential to scale up.
Aspiring students, both from local universities and abroad, are now very eager to contribute to the development of a regional solar sector. Combine that with local entrepreneurs and emerging local and established global solar PV companies, and the Middle East has the potential to create a virtuous solar development cycle for many many years to come.
Lenders are already experienced in financing utility scale projects and with the available liquidity in the region, financing solar PV should not be a major hurdle to overcome. However, there will be a limit to how far a market can progress without a stable policy framework - be it PPA or Feed in Tariff.’
Today the Middle East has less than 300 megawatts of solar capacity installed from a potential pool of 100 gigawatts of solar PV opportunities. Though the plans and ambitions of countries like Jordan, the UAE and the KSA are very encouraging for the sector, the region now needs to forge ahead with its plan to build a gigawatt level solar PV sector.