Middle East electric power demand will triple by 2050, says DNV GL report
The rise of solar and wind will create a need for changes to the electricity market fundamentals in the region, says new report
Electricity demand in the Middle East will triple by 2050, accelerating the growth of renewable energy and triggering the diversification of economies away from fossil fuels.
These are some of the findings of DNV GL’s Energy Transition Outlook 2018, which provides an outlook of the global energy landscape up to 2050.
By 2050, solar PV will be the main source of energy in the Middle East and North Africa, generating 39% of total supply. Onshore wind will be second, with a share of 28%. In the past few years the region has seen significant investments in onshore wind energy both in Oman and Jordan and according to the report, in 2030 onshore wind will start to grow rapidly, followed by solar PV.
Primary energy consumption will continue to grow moderately and increase 36% by 2050, this growth will be driven by manufacturing, buildings, and transport up to 2040. In buildings increased uptake of energy-hungry air conditioners will grow as the technologies become affordable for a larger share of the population and average temperatures in the region increase. For buildings, electrification will continue, and natural gas will be displaced by electricity in households, including for cooking so that by 2050, 70% of buildings energy use is covered by electricity.
Renewables uptake is starting to mature; Egypt aims to get 42% of its electricity from renewables by 2025 and Iran 5 GW by 2020. Saudi Arabia, with the largest petroleum reserves in the region, sees renewables as a strategic priority and is investing in 9.5 GW of solar and wind by 2023. Its goal is for 30% of electricity to come from renewables by 2030.
The rise of solar and wind will create a need for changes to the electricity market fundamentals in the region. This requires major regulatory intervention, including policy decisions that are favourable to the renewables market. Market mechanisms such as a reduction of fossil-fuel subsidies are the first step to accelerate the diversification of economies in the region.
Speaking about the findings, Prajeev Rasiah, Executive Vice President, Northern Europe, Middle East and Africa, DNV GL - Energy, said, “The population of the Middle East and North Africa is to set to grow by 40% by 2050. The growth in population, coupled with energy demand changes, and a cost reduction in renewables, means the use of electricity will grow rapidly. Variable renewables alone will provide more than 65% of the electricity by 2050. This shift will have a dramatic impact on the region’s economies and politics and significant technology investments will be needed to meet demand.”
Mohammed Atif, Market Area Manager, Middle East & Africa, DNV GL – Energy added, “We’re already starting to see the impact that renewables are having in the region. In the Middle East and Africa, customers are pioneering clean energy projects, embracing new technologies and harnessing the energetic youth in the region.”
The full Energy Transition Outlook ‘Power Supply and Use’ report is available for a free download at eto.dnvgl.com. This publication is part of DNV GL’s suite of Energy Transition Outlook reports.