The Middle East’s energy and utilities sector is undergoing an unprecedented transformation, with the shift towards renewable energy and digital innovation at the heart of ambitious energy diversification programmes. As governments seek to increase energy security and maximise returns from hydrocarbon resources, utilities are pressing ahead with some of the largest renewable energy schemes in the world.
A number of milestones in the push for clean energy across the region were reached in 2019, including the commissioning of the world’s largest single-site photovoltaic (PV) solar plant, the 1.17GW Sweihan independent power project (IPP) in Abu Dhabi. Shortly after the commissioning of the Sweihan plant in March, neighbouring emirate Dubai reached financial close for a $4.3bn concentrated solar power (CSP) project, the largest single-site power investment project in the world.
The drive to integrate alternative energy resources into utilities networks is set to accelerate in 2020 as governments seek to meet the rising demand for power. Rapid population growth combined with ambitious industrial and economic expansion programmes is resulting in growing need for power, with demand for electricity in the Middle East forecasted to triple by 2050. Energy & Utilities estimates that installed power generation capacity will be required to increase 35 per cent by 2025 just to meet rising demand.
Reducing costs and emissions
With the production of electricity across the region having been predominantly fuelled by oil and gas since the 1970s, utilities are seeking to diversify fuel sources for power generation, with renewables at the core of diversification plans.
While the global targets agreed for reducing carbon emissions at the Paris COP 21 energy conference in 2015 grabbed many headlines around the world, the push for renewables is being facilitated by economics. The drive for clean energy is being driven by the sharp drop in the cost of solar and wind power technologies, with the cost of installing PV solar and wind having fallen by 73 per cent and 80 per cent respectively since 2010.
Much of the fall in the cost of delivering utility-scale renewables plants is being driven by Middle East and North African utilities, with the UAE, Saudi Arabia and Egypt all having set records for solar and wind power tariffs since 2015.