Going Green in the GGC

Though fossil fuels remain the primary energy source in Gulf Cooperation Council member states, development of renewable energy is a growing and necessary component of their energy mix, a Middle Eastern logistician said.

“Renewables are not just a serious value proposition for the region, but they have become a central element of energy planning for most countries in the regions, even those particularly considered big oil producers,” said Mohammad Jaber, chief operating officer, Agility Project Logistics, during a session at Breakbulk Middle East in Dubai.

Energy-intensive industrial expansion, growing populations with high incomes and high living standards have resulted in significant growth in demand for electricity across the GCC. Total energy consumption has doubled since 2000 and quadrupled since 1990. Industry accounts for nearly half of total demand; transportation accounts for one-third and growing, Jaber noted.

“This surge in domestic energy consumption, has challenged policymakers to meet demand economically, without compromising current and future hydrocarbon export revenue, while also managing their countries, carbon footprint,” he said.

 

Energy Vision

Power demand in the region is expected to grow 3.3 percent annually in the Middle East through 2035, he said, while populations are growing even faster, with Kuwait, Oman, Qatar, Saudi Arabia and the UAE expecting a 3.5 percent growth rate.

The Middle East region will need to boost its installed capacity from 277 gigawatts currently to 483 gigawatts by 2035. About one-fifth of that is expected to be renewable energy, compared with only 5 percent today. This would require 61 gigawatts of solar power and 27 gigawatts of wind energy to be added.

“Renewable energy, alongside energy efficiency has gained significantly in appeal in the region, in particular in response to the dramatic, parallel fall in renewable energy technology costs relative to fossil fuels,” Jaber said.

Despite the renewables push, gas would remain the largest source for power generation in the region, representing 60 percent of installed capacity, he said. Still, the shift would create a 23 percent reduction in oil, or 354 million barrels of oil equivalent, while reducing the power sector’s carbon dioxide emissions by 22 percent.

“The Middle East countries have set some impressive targets but within reach. Embracing the region’s abundance of renewable energy resources, is key to long-term economic and social prosperity,” Jaber said.

 

GCC Project Pipeline

Plans and targets for the development of renewable energy “are gradually being translated into concrete policies and projects, and the short- and medium-term outlook is promising, particularly in the GCC’s biggest energy markets, Saudi Arabia and the UAE,” Jaber said.

He highlighted some key projects within the region that are either active or were recently announced.

UAE. “Where the market for renewables is most mature,” the UAE implemented its Energy Strategy 2050, “the first unified energy strategy in the country to become law,” in 2017, Jaber said. UAE has a clean energy target of 44 percent by 2050, and to cut carbon emission by 70 percent. Its energy initiative is also expected to save the country US$191 billion by 2050.

The UAE is also the largest and fastest-growing solar market in the GCC, with nearly 79 percent of the installed solar photovoltaic, or PV, capacity. The four-phase, US$3.87-billion Mohammad bi Rashid Al Maktoum Solar Park is reportedly the world’s largest concentrated solar power plant.

UAE’s second nuclear power reactor, which is under construction, and its four units are expected to provide 5.6 gigawatts of electricity and save up to 21 million tons of carbon emissions each year, equivalent to removing 3.2 million cars from the roads.

Saudi Arabia. Jaber said Saudi Arabia’s renewable energy plans date back to the 2000s, but they resurfaced as part of its economic reform drive in 2015-2016, with new plans, targets and institutional reforms.

“In Saudi Arabia, where a changing policy focus is assigning greater priority to renewables,” plans are to attract US$30 billion to US$50 billion to install 9.5 gigawatts of renewable capacity by 2023, Jaber said. By 2030 it plans to produce 70 percent of its power from natural gas and 30 percent from renewables, nuclear and other sources.

“Saudi Arabia saw some of the world’s lowest tariffs being submitted for its commercial-scale solar project,” he said. As competitive costs of wind improved, wind turbine capacity in the region grew from 81 megawatts in 2007 to 322 megawatts in 2016, according to the International Renewable Energy Agency.

Its projects include the US$302 million Sakaka solar PV facility, which will be developed as an independent power producer model; and the US$500 million Dumat Al Jandal wind product. Both projects were awarded under public-private agreements with the Saudi Power Procurement Co.

Saudi Arabia also expects to accelerate its nuclear energy program, to generate about 17 gigawatts from nuclear energy through 16 nuclear reactors over the next two decades, Jaber said.

Oman. The sultanate is commissioning new renewables projects in an effort to diversify its energy mix. Partial privatization of downstream services is expected to generate domestic and international investment opportunities, Jaber said.

In May, the state-owned Oman Power and Water Procurement Co. said it will develop six new projects by 2024 – three solar and three wind. The projects will be independent power producers with combined capacity of 2.65 gigawatts. The three PV parks will be located in Ibri, Manah and Adam; while two of the wind facilities will be in Dhofar and one in Duqm.