Jul

26

Is Sunshine the New Liquid Gold for the Middle East?

Several countries in the Middle East like Saudi Arabia, Kuwait and U.A.E. have built empires in the sand because of the discovery of a substantial amount of oil in the early 20th century. The oil and petroleum industry boomed during the last decade, with global prices peaking at a whopping $145 per barrel. The Middle East and North Africa (MENA) an alliance of 22 nations which own over 60% of the world’s oil and 45% of the globe’s natural gas which means that as a group, they are one of the main global generators of greenhouse gases and in turn drivers of climate change. Thus a push for more sustainable sources of energy coupled with the latest entry of competitors into the market (e.g. alternatives like shale gas) is gently coaxing the focus away from oil and petroleum.

Electricity consumption has shot up in the region in the decades following the discovery of oil due to rapid infrastructure development. The dry and hot climate of countries like Kuwait, UAE, and Saudi Arabia mean water is a scarce resource so countries met their increasing large water requirements through massive desalination plants drawing water from the seas around. Desalination plants ring the Persian Gulf, the Red Sea and the Mediterranean, representing over 46% of our world’s desalination capacity. Fossil fuels currently power these plants and make up approximately 50% of their operating costs.

Here is where investors are looking to invest in other sources of energy. Due to its geographic location, the Middle East receives more than 3600 hours of sunshine annually so investors are setting up solar farms to convert solar power into usable electricity. In the past decade, MENA is undertaking multiple massive solar power projects. At the end of 2018, MESIA (Middle East Solar Industry Association) reported that the region had started, completed or is currently operating enough projects to generate more than 12,000 MW of energy; an increase in production by 15% from last year. Announcements of new solar power plants are popping up all over the GCC (Gulf Cooperation Council) states. Funds are being committed and contracts awarded on a very large scale however, this does not mean power generation always happens.

Part of the problem is that even though the cost of producing electricity from solar PV has fallen, the value of the electricity generated fell even quicker. Solar power has to compete with other renewables so a power source which is tied to unreliable sunshine becomes less appealing. PV panels only produce power when they receive sunlight, so even a passing cloud renders them unproductive.

Places like the UAE have more than doubled their electricity consumption to 131, 031 GWh (GigaWatt Hour) in the decade between 2003 and 2017. However, if solar power has to make a dent in the electricity market, there needs to be an exponential increase in production. One of the largest single-site solar parks in the world, the Mohammed bin Rashid Al Maktoum Solar Park is currently being constructed with an investment of a whopping AED 50 billion ($ 13.6 billion) but it will only provide 25% of Dubai’s power requirements, even at maximum operating capacity.

The shift from fossil fuels to solar power and other renewable sources is an inevitable natural transition in the 22nd century and MENA, along with other Gulf States are prime territories for solar power generation. As solar production increases and greater applications are found across the different fields, further innovation will only bring down costs. As the liquid gold underground runs out, perhaps the Arab world will turn harness the gold in the sky.

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