Renewable energy accounts for an ever-growing share of worldwide electricity generation capacity. Solar power, in particular, is on the rise globally. Indeed, within a decade solar power could become the most inexpensive source of electricity in many regions, including in the Middle East and North Africa (MENA). This essay examines the growth trajectory of solar energy in the MENA region and its relationship to developments in Asian, notably Chinese and Japanese, solar markets.
The Changing Renewable Energy Landscape
The renewable energy (RE) landscape has undergone several profound changes in recent years, including a surge in investment. There have been significant advances in RE technology, resulting in marked improvements in cost-competitiveness. The cost of solar photovoltaic (PV) energy has declined steadily over the past decade such that the cost per kilowatt hour of solar-generated power is almost competitive with that of fossil fuels. Meanwhile, the geographic focus of investment in renewable energy has shifted toward developing countries, as has its pattern of deployment. Major Asian markets—notably China, India, and Japan—are at the forefront of the global solar boom, and the MENA solar market is expanding as well.
Solar Energy in MENA: Necessity and Allure
The MENA countries face the challenge of a sharply rising demand for electricity, chiefly as a result of population growth, which is concentrated in urban areas and is accompanied by increased economic activity. In addition, the MENA region is one of the most water-stressed parts of the world, a situation that is expected to worsen as the result of continued population growth and projected climate change impacts. Addressing these challenges will require significant scaling up of both traditional and renewable energy generation capacity.
Making renewable energy a more substantial part of the future energy mix is as attractive as it is necessary for the MENA countries. For oil and gas producing states, embarking on this path promises to free up these resources for more profitable uses. For oil-poor states, it promises lower fuel import bills and greater energy security. Additionally, solar-powered desalination  has the potential to help MENA countries address the “water gap” while reducing carbon emissions.
Solar Projects in MENA: A Bright Future?
The solar energy sector in the MENA region is still in a nascent stage of development but is brimming with potential. To be sure, some of the most widely publicized efforts have stalled, as when many corporate investors in the Desertec Industrialization Initiative (Dii)―a plan to build a massive network of solar plants (and wind farms) in the Maghreb that would export power to Europe―withdrew from the project. Yet numerous other solar projects are underway in Algeria, Morocco, and Tunisia―and indeed across the MENA region.
The United Arab Emirates (UAE) has been at the leading edge of solar energy-related innovation and collaboration in MENA. Though Abu Dhabi and Dubai have set rather modest targets for increasing the share of renewable energy in their energy portfolios (7 percent and 5 percent by 2020, respectively), they have nonetheless registered a number of noteworthy achievements. The Shams solar power station in Abu Dhabi—the largest concentrated solar power (CSP) plant outside the United States—became operational in 2013. Two years later, Dubai launched the Gulf region’s first rooftop solar initiative. The same month, the Dubai Electricity and Water Authority (DEWA) moved forward with the third planned phase of the Mohammed bin Rashid al-Maktoum Solar Park. Masdar City in Abu Dhabi, which is aiming to be the world’s first “zero-carbon” city, is the site of the Masdar Institute of Science and Technology―a graduate-level research institution focused on clean technology―and the global headquarters of the International Renewable Energy Agency (IRENA).
Over the past several years, Saudi Arabia has also embraced solar energy in its official pronouncements, characterizing the development of the solar sector as a “must” rather than as a choice for the kingdom. In 2012 it announced a bold plan to develop an integrated PV industry that would generate a third of the country’s electricity within 30 years. However, installed solar energy still accounts for but a mere fraction of the country’s power production, and the solar power production target has already been pushed back once. While seven solar projects have been completed and three more are in progress, and the Saudi commitment to increase solar power capacity appears to be unwavering, it is unclear whether political will is sufficient to create a home-grown PV industry.
Qatar is perhaps the unlikeliest candidate to enter the solar era, given the country’s immense gas reserves. Yet Qatar’s National Vision 2030, which outlines the country’s plans to build a post-carbon, knowledge-based economy, places emphasis on RE development, including solar energy. Qatar’s efforts to develop solar energy have been led by GreenGulf, a local startup launched by the Qatar Science and Technology Park (QSTP), which installed the country’s first solar photovoltaic (PV) system on the roof of the Qatar National Convention Center (QNCC). Kuwait and Oman are likewise taking steps to harness solar energy.
Iran’s first solar plant opened in Shiraz in 2008. Since then, solar power stations have become operational in Yazd (2009), Mashhad (2011), and Zarand (2015), and rooftop solar panels have been installed in over 1,000 locations across the country. Iran’s largest solar power plant—under construction in the Aras Free Trade-Industrial Zone in East Azerbaijan—is on schedule for completion in two years. Meanwhile, as part of its broader effort to boost renewable energy capacity, the Iranian government allocated $60 million during the Iranian calendar year March 2014-2015 to develop PV projects, particularly in rural areas. Iraq, which has struggled to meet electricity demand, is also getting in on the action, seeking investors for three solar power plants to be built in Diwaniya, Najaf, and Maysan Governorates.
Indeed, the MENA region as a whole has become a more dynamic and diverse solar market. Large-scale solar tenders have been issued in at least ten different markets in the Middle East. As laid out in the 2013 National Efficiency Action Plan (NEEAP), Jordan seeks to expand renewable energy from 1 percent of its energy mix in 2010 to 10 percent by 2020. Speaking at the opening of the Powering Middle East Summit in September 2014, Energy Minister Mohammed Hamed noted that the kingdom had signed 12 power purchase agreements (PPAs) to develop solar projects—mainly in the southern Ma’an Governorate—with a total capacity of 200MW. The second round of Jordan’s solar independent power producer (IPP) tender, totaling 200MW, drew exceptionally low bids that could bode well for the future of the RE sector in Jordan, and indeed for other MENA countries.
Egypt is also making a strong push to develop solar capacity. There are currently eight major projects in various stages of development. At the international Economic Development Conference in Sharm el-Sheikh in March 2015, Egypt’s Ministry of New and Renewable Energy Authority (NREA) signed several deals for solar projects. The next month, at the Middle East Solar Industry Association (MESIA) Trade Mission held in Cairo, NREA signed five binding memoranda of understanding (MOUs) for solar projects to be located in Binban and Aswan.
The Moroccan Solar Plan, launched in 2009, aims to substantially boost the role of solar energy in the country’s energy mix. The Ouarzazate Solar Complex Program (500 MW), the cornerstone of the Solar Plan, is scheduled to be implemented in phases. The first of five plants is almost ready for commissioning. Meanwhile, the World Bank approved financing, and Saudi Arabia’s ACWA Power and Spain’s Ener were awarded contracts for Phase II expansion.
Like Morocco, Algeria has lofty goals for RE, particularly solar and wind energy. The Hassi R’Mel power station, the region’s first industrial-scale solar thermal power plant, began operation in 2011. Most of Algeria’s many other projects are in the planning stages. And Israel, a pioneer in solar technology R&D, though a much smaller market than its neighbors, is also forging ahead with developing solar energy.
The New Balance of (Solar) Power and the Asia-MENA Solar Nexus
The developments in the MENA region have sprung from advances in solar technology and the expansion of markets for solar energy across the globe, which have been driven to a great extent by companies in Asia, particularly in China and Japan. The sheer scale of investment in solar in China is resulting in what might be termed “the China effect”—the acceleration of production improvements and cost reduction of solar technology, which is then available for deployment worldwide. China has over 500 solar panel manufacturing companies. The top three solar panel producers are now all Chinese. Japan has over 500 distributors and wholesalers of solar photovoltaic kits, panels, inverters, mounting systems, and other components.
Having developed cost-competitive products and acquired experience from the business development stage to engineering, procurement and construction (EPC), and plant operation, Japanese and Chinese companies alike are now aiming to grab a share of emerging markets from Southeast Asia to MENA. Indeed, they are increasingly active stakeholders and competitors in the evolving MENA solar market, signing new deals and forging alliances across the region.
Japan entered the MENA solar market in the latter’s infancy. In the early 1980s, the New Energy Foundation, composed mainly of Japanese electric power companies, sent an investigatory mission to the Middle East to study the possibility of exporting solar energy power generation systems. The same year, the New Energy Development Organization signed an agreement with Abu Dhabi to explore the feasibility of solar-powered desalination. Two Japanese companies—Shimizu Construction and Mitsubishi—helped establish the Middle East’s first solar energy research center, in Baghdad.
Three decades later, in the wake of the Fukushima Daiichi nuclear disaster and in the midst of the post-Arab Spring turmoil, Japan—whose energy security still rests precariously on hydrocarbon imports from the Middle East—has renewed its focus on the MENA region and reinvigorated its efforts to cooperate in the development of alternative energy.
Japanese engagement in the MENA solar market has taken several forms. One aspect is collaborative research, as, for example, joint efforts with the UAE on solar thermal technology and with Algeria in establishing the Sahara Solar Energy Research Center (SSERC) at the University of Science and Technology of Oran (USTO). A second aspect is Japanese financial support for solar projects. The Japan International Cooperation Agency (JICA) has extended grants and soft loans to help finance such projects in Egypt, Jordan, and Morocco. Under the current Japanese administration, the electricity sector has become a “priority area” of JICA assistance to Egypt. Solar-powered electricity generation is also a focal point of Japanese overseas development assistance (ODA) and private sector activity in Jordan. During Prime Minister Shinzo Abe’s visit to the region in January 2015, Diamond Generating Europe, a wholly-owned subsidiary of Mitsubishi, agreed to join forces with Qatari and Jordanian counterparts to build and operate a 52.5MW PV facility at Shams Ma’an in southern Jordan. Project co-financing is being provided by Mizuho Bank, Japan Bank for International Cooperation, Nippon Export and Investment Insurance, and Standard Chartered Bank. 
Chinese solar manufacturers went through a turbulent period (2011-2013) marked by overcapacity, crushing debt, and bankruptcies. The companies that survived the industry downturn were those that were adaptable, highly diversified, and opportunistic—and they still are. The resurgence of the Chinese solar sector has been marked by a strong push into emerging solar markets. In early 2014, the National Strategic Alliance for Solar Thermal Energy Technological Innovation (NAFSTE) sent a delegation to the Middle East to gain an understanding of the solar energy status quo in that region and explore possibilities for future cooperation. ReneSola won its first Middle East contract in 2013 to provide solar modules in Saudi Arabia. Shanghai Electric, a state-run Chinese firm, announced in September 2014 that it will invest more than $2 billion in solar power generation projects in Morocco, part of a $16.5 billion commitment in seven Arab countries. A few weeks later, Changzhou Almaden, one of the world’s largest producers of PV anti-reflective coated glass, signed an agreement to build a manufacturing and training facility in Dubai’s Silicon Oasis tech park. In November, Trina Solar reached an agreement with Shamsuna Power to build, operate, and maintain a solar farm in the Aqaba Special Economic Zone (SEZ) in Jordan.
Yingli Solar, the world’s second-largest manufacturer of PV panels, has also been looking to expand its footprint in the Middle East. Over the past couple of years, Yingli has signed module supply deals with Algeria, Israel, and Jordan, as well as a letter of intent with Egypt to serve as the main contractor responsible for construction and financing of a 500MW PV plant.
The Middle East and North Africa is blessed with an abundance of sunshine and strong winds—natural resources that, if harnessed, could produce a vibrant renewable energy sector. However, there is a wide gap between the region’s potential and actual built capacity for wind and solar power.
In recent years, the region has witnessed the rising economic cost of surging domestic energy demand that has spurred efforts to expand solar capacity. Plummeting costs of solar technologies have made solar-generated power commercially viable in many MENA countries. As a result, policy makers throughout the region have crafted, and in many cases, begun implementing strategies aimed at boosting the share of solar in the overall energy mix.
New entrants into the budding MENA solar market have encountered barriers and bottlenecks—cumbersome or inadequate investment and legal frameworks, licensing and approvals processes, bidding and procurement rules, and feed-in tariff structures—that have sometimes led to frustrating project delays and/or cancellations. At least in the short term, such difficulties are likely to persist, causing official targets for boosting solar capacity to be revised or ultimately proving them to have been overly ambitious.
Nevertheless, there are clear signs of progress. Improvements in the investment climate—urged by and rewarded with strong support from bilateral donors and international financial institutions—have led to the inauguration and/or completion of numerous solar projects across the region. Local solar companies such as UAE-based Access Power and Masdar, Saudi Arabia’s FAS Energy and Sun & Life, Qatar Solar Energy (QSE), and the Bahrain-headquartered Terra Sola Group have enhanced their capabilities, widened the geographic ambit of their operations, and forged productive alliances with local and international counterparts.
Asian countries have had a positive influence, both indirectly and directly, on the positive growth trajectory of the MENA solar market. Surging Asian demand for and investment in solar-generated power, led by China and Japan, has helped reduce costs globally for solar technologies. Furthermore, Chinese and Japanese companies, eager to diversify into emerging solar markets, are seeking and seizing new opportunities across the MENA region. These activities serve as yet another indication of the globalization of the solar industry and of the development of Middle East-Asia energy relations. They also signal a more competitive and perhaps a more promising future for solar energy in the Middle East and North Africa.
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