Today Gulf region is at the crossroads as the oil slump extends into its third year. A shift to renewable energy will not only reduce the cost of power production and carbon emissions but also free up more oil for exports. Renewable power is going to be a significant contributor to the economic progress of the region and so they believe that it is time to sit up and take notice of this sector.
But where the Gulf region stands in comparison with the rest of the world in this segment?
Globally, renewable power generating capacity saw an increase of 9 per cent in 2016 compared to the previous year. Investment flow towards renewables has been steady with the spending exceeding $200bn every year for the past seven years. New investment of $264.8bn was seen in 2016 with the main focus on solar power closely followed by wind power. In the same year, renewables accounted for an estimated 62 per cent of net additions to global power generating capacity.
The total power generated through renewables in the Gulf has risen from 20 GWh in 2010 to 620 GWh in 2015. But it constitutes to less than 1 per cent of the total power generated in the region while the global figure is at 23.3 per cent.
This puts into perspective the current state of renewables in this region. While there is a huge scope for improvement, we need to take into consideration the fact that historically, power generation through fossil fuel has been cost-effective for Gulf countries that have an abundance of these resources. However with advancements of renewable energy technology and declining costs in the recent years, renewable energy now looks more economically viable.
Renewable energy potential is high in the Gulf, particularly for solar projects with nearly 90 per cent of the investments in region flowing towards them. Solar insolation levels in the region are among the highest in the world (as high as 6.5 kWh/m² per day, according to the IRENA Yearbook 2016) making it a favourable region for solar power generation.
Saudi Arabia, the world’s biggest exporter of crude oil, is moving towards the construction of its first utility-scale wind-power project at Dumat Al Jandal. It also plans to develop 30 solar and wind projects over the next decade as part of a $50bn program to increase power generation and reduce oil consumption.
Kuwait, one of the earliest advocates of renewable energy in the Middle East, plans to meet 15 per cent of its energy requirements from renewable resources by 2030.
The UAE is investing $163bn in clean energy projects to ensure that half of the country’s power needs are generated from renewable sources by 2050. Dubai’s 13MW first phase of the Mohammad Bin Rashid Al Maktoum Solar Park received the International Renewable Energy Certificates (I-REC) issued in 2017, making it the first in the region to adopt the I-REC system. I-REC is a voluntary system for international trade in renewable energy certificates.
The signs are pretty clear that the path has been paved for the transition from oil and gas towards renewable energy sources in the Gulf region. Naturally favourable geographic conditions and a reduced cost of power generation favour the paradigm shift from total non-renewable energy dependency towards a more balanced dependency between renewable and non-renewable sources.