Embracing Solar Power – What can MENA nations learn from the World?

Arab Business Review
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5 minutes
  • MENA countries have come out with ambitious solar energy targets that can created a stir in the global solar markets.
  • The targets are justified considering the advantages of solar energy adoption of these countries
  • However, with solar energy revolution loosing direction at the global level, the MENA countries have the luxury of learning from the mistakes made by early adopters. 

As discussed in our previous article on renewable energy in Middle East, the region has come alive to the idea of adopting renewable energy and solar energy is the form of renewable energy which most countries are keen on investing-in in a big way. According to the Mena Solar Energy Report 2014, published by MEED, the region is expected to have solar capacity of 15,000 MW of solar energy by the end of the decade. This is significant growth compared with current installed capacity of 271 MW as of January 2014.

Source: GreenProphet.com

Adoption of solar energy brings along many advantages for Arab countries, some of which are:

  • Long term energy security
  • Efficient utilization of higher irradiance
  • Environment friendly energy
  • Employment generation
  • Attract foreign investment
  • Access to latest technology

The solar power revolution in the region was started mainly by net-oil importing countries such as Turkey, Morocco, Tunisia, and Lebanon and now nearly all the countries have joined in led by Saudi Arabia. Most countries have pretty ambitious targets, and see solar power taking a meaningful place in their energy mix. While these targets underline the right intent of MENA governments towards solar energy, achieving these targets in the most beneficial way is going to be a challenge for most of these countries.

Globally, the solar power revolution is sort of loosing direction, with projects in several countries failing due to poor economics, policy instability, and quality issues. Big solar power promoters such as Germany, US, Japan, and Australia are discovering that successful, profitable and sustainable adoption of solar power is easier to talk about than to achieve.

  • Germany, the world’s flag bearer for solar power adoption is already witnessing a decline in newly installed capacity as the subsidies phase out in the coming years. According to a Forbes article, even after years of solar power subsidies Germany’s residential electricity cost is about USD 0.34/kWh, one of the highest rates in the world. About USD 0.07/kWh goes directly to subsidizing renewables, which is actually higher than the wholesale electricity price in Europe. To make matters worse, billing rates are expected to rise another 40% by 2020. As a result, more than 300,000 households per year are seeing their electricity shut off because they cannot afford the bills. The subsidizing approach has clearly not worked for Germany.
  • United States where the solar panel generating capacity exploded from 83 megawatts in 2003 to 7,266 megawatts in 2012 is now discovering that the poor quality solar PV panels from China are failing raising a big question on quality and sustainability of the installed capacity. SolarBuyer, a company based in Marlborough, Mass., discovered defect rates of 5.5% to 22% during audits of 50 Chinese factories during 2012 and 2013.
  • In Japan, when public confidence in nuclear energy weakened after Fukushima disaster in 2011, the government turned to solar energy giving huge subsidies which led a rush of developers with plans to deliver solar energy equivalent to 21 nuclear reactors. However, due to lack of experience and expertise the developers are now facing issues such as lack of funds, grid capacity limitations, land permit issues, wait lists for Japanese brand equipment and a shortage of qualified technicians. As a result only around 20% of the projects are able to supply energy to the grids and the deficit is expected to cost the utilities USD 3.5 billion annually on coal and gas imports.
  • In Australia, another proponent of solar energy for a long time, the government is looking to withdraw its earlier announced renewable energy targets midway. This policy instability has killed investor confidence in Australian renewable energy sector and several projects and under a risk of being scrapped or lay unfinished due to lack of investment.

As the MENA governments start to traverse the solar path it is essential for them to learn from these global experiences and they have in place proper policies and initiatives that can help them avoid known failures. The major check-points that come out of the above examples are:

  1. The policy focus should be on increasing efficiency of solar power projects and not solely rely on subsidies through feed-in tariffs. Achieving this should be easier than in countries such as Germany and Italy, because the Arab region gets one of the best solar irradiance in the world.
  2. The quality of solar installations should not be compromised for cost, and there should be proper control over the quality of equipment being used. Qatar Solar Energy Company has presented the perfect example in this case by setting a solar PV manufacturing plant which will satisfy local demand as well as give them complete control over quality of equipment.
  3. Transparent tendering and ongoing monitoring process is essential, to ensure that projects are awarded to only capable vendors are completed within planned time and cost.
  4. Policy stability is required to attract and sustain investor confidence.

The Sun has always shown brightly over the Arab world and it has the potential to remain an energy leader in the world – only if realized properly.