Renewables: a mixed outlook in the Middle East and Africa

19 April 2018 (Last Updated April 19th, 2018 14:22)

Renewable energy has a mixed market outlook in the Middle East and Africa (MEA) region, like the economies in the region themselves.

Renewables: a mixed outlook in the Middle East and Africa
Major countries in the Middle East and Africa are actively supporting the growth of renewable energy through various mechanisms. Credit: Lollie-Pop

Renewable energy has a mixed market outlook in the Middle East and Africa (MEA) region, like the economies in the region themselves. While some countries are reluctant to develop renewable energy due to abundance in conventional resources and others cannot afford to support the development of renewable energy, some countries are proactively pursuing renewables to reduce GHG emissions and appease international corridors.

As of yet, no country in the region is in the list of top renewable energy markets. However, major countries in the Middle East and Africa are actively supporting the growth of renewable energy through various support mechanisms such as renewable targets, renewable portfolio standards (RPS), feed in tariffs (FiTs) / auctions, net metering and tax exemptions / subsidies. The following table illustrates the current policies and incentives in Middle East and African countries.

Table 1: Renewable Energy Policy, Middle East and Africa
Country RPS FiT Net-metering Auctions/tenders RE target Tax exemption Grants/ Subsidies
Algeria Yes Proposed Yes
Angola Yes
Egypt Yes Only for solar PV Yes Yes Yes
Ghana Yes Proposed Yes Yes
Iran Yes Yes Only for rooftop solar Proposed Yes Yes
Iraq Yes Yes
Israel Yes Yes Yes Yes Yes
Kenya Yes Proposed Yes Yes
Morocco Yes Yes Yes
Mozambique Yes Proposed for wind
Nigeria Yes Proposed Yes
Qatar Yes Yes
Saudi Arabia Yes Yes
South Africa Yes Only at the municipality level Yes Yes Yes Yes
Syrian Arab Republic Yes
Tanzania Yes Proposed Yes
United Arab Emirates Only in Dubai Yes Yes*
Source: GlobalData

* Only in Abu Dhabi and Dubai

 

Most of the countries covered in the Middle East and Africa, namely Algeria, Angola, Egypt, Ghana, Iran, Iraq, Israel, Morocco, Nigeria, Qatar, Saudi Arabia, South Africa, Syria and UAE have renewable energy targets, implying that these governments are actively supporting the growth of renewable energy in their respective countries.  Some countries have capacity targets, while others have targeted to achieve a fixed share of generation from renewable sources. In January 2014, the government of Iran set a target of 5GW from wind and solar power by 2020. In spite of this, renewable energy did not make much progress in the country. Hence, in January 2018, the government again declared a target of installing 1GW of renewable energy projects every year from 2018 for the next five years, up to 2022.

In 2016, Saudi Arabia reduced its 2040 renewable goals from 50% to 10% of the country’s electricity supply. In April 2017, the country declared that it will develop 30 solar and wind projects over the next 10 years as part of the kingdom’s $50bn program to boost power generation and cut oil consumption. UAE initially established a target for renewable energy to supply 1% of Dubai’s energy mix by 2020 and 5% by 2030, and the target was revised in 2015. The targeted fuel mix for 2030 is to produce 61% of total electricity from gas, 25% from renewables, 7% from clean coal, and 7% from nuclear.

The following table illustrates the renewable energy targets of various Middle East & Africa countries.

Table 2: Renewable Energy Market, Middle East and Africa, Target
Country Target of renewable energy
Algeria To install 4,500 MW of renewable capacity by 2020 and a total of 22,000 MW by 2030

 

Angola To achieve installation of :

·          Solar power: 100 MW of installed capacity by 2025

·          Small hydropower (≤10 MW): Installed capacity of 100 MW by 2025

·          Biomass power: 500 MW by 2025

·          Wind power: 100 MW by 2025

Egypt To increase the share of renewable sources to 20% of its total electricity generation mix by 2020.

·          Wind 2 GW by 2020

·          Solar Photovoltaic (PV) 2.3 GW by 2020

Ghana To generate 10% electricity from renewable sources by 2020
Iran To achieve installation base of 5,000 MW of wind and solar energy in 2020.

Installation of 1 GW of renewable energy projects every year from 2018 for the next five years, that is, up to 2022.

Iraq To generate 5% of the total energy from renewable sources by 2030, 13% by 2025 and 17% by 2030
Israel To generate 10% of Israel’s electricity from renewable sources by 2020
Morocco To achieve 52% of its power generation from renewable energy sources in 2030

·          20% using solar energy

·          20% using wind energy

·          12% using hydropower

Nigeria To increase the supply of renewable electricity from 13% of electricity generation in 2015 to 23% in 2025 and 36% by 2030
Qatar To attain 2% of the country’s energy from renewable sources by 2020 and 20% from solar power by 2030
Saudi Arabia To generate 10% electricity from renewable sources by 2040
South Africa To achieve following percentage share of renewable power in total power installed capacity by 2030

·          CSP 1.37%

·          Solar PV 8.91%

·          Wind  13.21%

·          Hydro 4%

Syrian  Arab Republic To meet 4.3% of primary energy demand through renewable energy by 2030.
UAE To produce 25% of total electricity output by renewable by 2030 and 75% by 2050
Source: Globaldata

 

A noticeable observation in this region is the growing popularity of the auction/tender mechanism to develop large-scale renewable projects. Countries such as Egypt, Iraq, Israel, Morocco, Qatar, Saudi Arabia, South Africa and UAE have auction mechanisms for various renewable energy technologies. However, countries including Algeria, Iran, Kenya, Nigeria and Tanzania have already proposed renewable auctions and they are expected to announce within a year. From 2011 to date, six rounds of reverse auctions were held in South Africa. In these auctions 6,376MW of renewable power capacity from 102 renewable projects has been awarded. Out of this awarded capacity, wind power accounted for more than 50%, with 3,365MW capacity, followed by solar PV with 2,322MW capacity.

Israel introduced competitive bidding for renewable energy projects in 2017. In the first tender of solar projects, held in March 2017, the Ministry of Energy allocated approximately 235MW, with the expected target being between 150 MW and 300 MW. All selected projects were to sell electricity to the grid at $0.055/kWh (ILS 0.199/kWh) spanning over a period of 23 years. Saudi Arabia announced its first tender for building 700 MW of solar and wind energy plants in September 2017 as part of its $50bn program to boost renewable energy. Kenya is in the process of moving to an auction-based system from its FiT-based pricing for renewable energy. The process of formulating regulatory instruments and guidelines for energy auctions started in December 2016 and the new system expected to come into force in mid-2018.

Feed-in tariffs (FiT) and net metering are among the other major policy support mechanisms used by governments in the Middle East and Africa to promote renewable energy. Six countries have FiT schemes for various renewable technologies, and Ghana and UAE are the only countries to have proposed a net metering scheme. In Egypt, FiT rates were determined on the basis of two phases held in September 2014 and October 2016. The Egyptian government has decided to do away with the feed-in tariff program for the third phase. The government has therefore decided to introduce a tendering system for renewable energy projects in 2018. As part of the government’s altered policy to have auctions as the sole conduit for developing large-scale renewable energy projects in the country, a tender for 600MW of solar power was issued in December 2017.

The following table illustrates the FiT rates of various Middle East & Africa countries.

Table 3: Renewable Energy Market, Middle East and Africa, Feed-in-Tariffs
Country Technology Feed-in-Tariffs ($/kWh)
Algeria Wind 0.095-0.119 (first five years)

0.069-0.151 (next fifteen years)

  Solar 0.116-0.145 (first five years)

0.085-0.182(next fifteen years)

Egypt Solar PV 0.078-0.143
  Wind 0.04-0.957
Ghana Wind 0.145-0.166
  Solar PV 0.13-0.151
  Hydropower ≤ 10 MW 0.116-0.143
Iran Solar PV 0.098-0.247
Israel Wind 0.36-0.46
  Solar PV 0.31-0.44
Kenya Wind 0.11
  Hydro 0.105

0.0825

  Biomass 0.10
  Biogas 0.10
  Solar (grid) 0.12-0.20
Mozambique Biomass 0.063-0.090
  Wind 0.064-0.125
  Hydropower 0.036-0.075
  Solar 0.124-0.203
Nigeria Wind 0.125
  Small Hydro 0.155
  Biomass 0.155
  Solar PV 0.177
Tanzania Hydro 0.081-0.155
  Biomass 0.117-0.179
Source: Globaldata

 

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