Is Sunshine the New Liquid Gold for the Middle East?

solar panels

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 owns over 60% of the world’s oil and 45% of the globe’s natural gas meaning 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 energy sources 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 oil discovery due to rapid infrastructure development. The dry and hot climate of countries like Kuwait, UAE, and Saudi Arabia mean water is scarce. Hence, countries met their increasing large water requirements through massive desalination plants drawing water from the seas. 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 set up solar farms to convert solar power into usable electricity. In the past decade, MENA undertook multiple massive solar power projects. At the end of 2018, MESIA (the 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, increasing 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 huge 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 (Photovoltaic) has fallen, the value of the electricity generated fell even quicker. Solar power has to compete with other renewables, so a power source 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 globally, HH Mohammed bin Rashid Al Maktoum Solar Park is currently being constructed to invest a whopping AED 50 billion ($ 13.6 billion). Still, 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. The other Gulf States are prime territories for solar power generation. As solar production increases and greater applications are found across different fields, further innovation will only bring down costs. As the liquid gold underground runs out, perhaps the Arab world will turn to harness the gold in the sky.

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