At a recent function in Dubai, I found myself chatting with a witty banker from the UK. When he found out I work in the solar industry, his first comment was “well, there is certainly no shortage of sun here”. We both nodded as we looked out at the glaring summer sun. Then came the inevitable follow up question: “Why is it that we don’t see more solar power?” The nodding stops. The sun kept glaring.
It is certainly a valid question. How is it that one of the sunniest regions in the world has one of the lowest levels of solar energy? The Middle East as a whole accounts for less than 0.5 percent of the global solar market. Even the tiny city state of Luxembourg, with a population of just 500,000, generates more solar energy than the entire Middle East.
Is there something wrong with our sun? Is it just a mirage?
Fortunately, solar power is not a mirage. This region has all the ingredients required to become a solar oasis. We have roughly 350 sunny days per year, among the highest in the world. There is also no shortage of space; Saudi Arabia’s Rub Al Khali region alone receives enough solar rays to power the world four times over.
The problem is that we have been so spoiled by the oil and gas reserves beneath our feet that we’ve never had to look up to the sun. Generating electricity from oil and gas has been relatively easy and cost-effective. Plus, production is guaranteed 24 hours per day ,whereas the sun only shines for five to six hours per day. So while the potential of solar power has always been there, fossil fuels have provided a more secure and stable way of generating electricity for our cities.
In the process, as other regions such as Europe started to tap into their solar potential to cushion their imported fuel costs, the Middle East has remained happily reliant on its home-grown hydrocarbons.
Today, everything is changing.
For one, the days of inexpensive, home-grown fossil fuels are gone. Every country in the Middle East, with the exception of Qatar, now has to import oil or gas to cushion its electricity demand during summer months. At the same time, international prices for fossil fuels have skyrocketed. The current cost of importing natural gas is five times greater than it was just ten years ago. Even the mighty Saudi Arabia, with its vast oil reserves, has to import roughly 1m tonnes of diesel per month just to keep up with its growing domestic power demand during the summer. Business as usual is not working anymore.
Meanwhile, the cost of solar has dropped. The price of solar PV panels has fallen by more than 50 percent over the past five years. As a result, solar electricity is now at ‘grid parity’ in many parts of the Middle East, meaning it costs just as much to generate electricity from solar than from fossil fuels. Financially, solar power is now a viable solution.
Technologically, we have seen major improvements in the reliability of solar power. Simple, automated cleaning solutions now enable solar plant owners to guarantee that their energy output will remain high even during hazy and sandy conditions. Storage solutions have also emerged whereby you can store solar power for up to nine hours and dispatch it when needed.
There is also a strong socio-economic case for solar power. Unemployment in the Middle East is among the highest in the world, with one out of four young Arabs out of work. The solar industry offers a bright solution. For every 1 MW installed, there would be ten to 15 jobs created across the entire supply chain, from engineering to manufacturing to construction.
Because of these market changes, we are starting to see a pro-solar shift in government policy across the Middle East. Saudi Arabia has announced that it will install 41 GW of solar power by 2032, enough to meet more than 20 percent of its total electricity production. Kuwait has pledged that 10 percent of its electricity would come from solar, roughly 5 GW. The UAE, Jordan and Qatar have also unveiled solar targets in the gigawatt scale.
Over the next few years, these policies will translate into major infrastructure projects, like the 100 MW Shams project that was recently inaugurated in Abu Dhabi and the 10.5 MW solar PV system commissioned by Saudi Aramco in Al Khobar. Over time we will see projects like these popping up across region, transforming the Middle East into one of the brightest markets for solar energy. Along the way, if I run into that witty banker from the UK, I suspect the first question on his mind will be “can I offer you some financing?”
Vahid Fotuhi is the President of the Emirates Solar Industry Association (ESIA)For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.