UAE. While developed countries remain focused on slowing demand and cutting costs, an insatiable hunger for energy within the emerging markets such as those in the Middle East and North Africa (MENA) now appears to be the driving force behind renewable energy investment, according to Ernst & Young’s latest quarterly global renewable energy Country Attractiveness Indices report (CAI).
The indices provide scores in 40 countries for national renewable energy markets, renewable energy infrastructures and their suitability for individual technologies.
The balance of power is clearly shifting, with the MENA region, Eastern Europe, Southeast Asia, and Latin America, now representing the immediate future for renewable energy as the industry adapts to a transformed world.
Countries such as Argentina, Hungary, Tunisia, and Ukraine have been included for the first time within the indices, all sharing an acute need for more renewable power.
Growing energy need to push MENA’s Cleantech agenda
The MENA region is primarily dependent on hydrocarbons for its energy needs as they are a principal source of energy for the region and are critical to its economic development. However, abundant energy resources coupled with low prices driven by government subsidies continue to contribute to substantial energy consumption.
Bassam Hage, MENA Markets Leader, Ernst & Young, says: “MENA’s huge investments in the energy intensive industries, rapid infrastructural and real estate developments, growing population and water consumption are augmenting energy needs. Considering the finite nature of fossil fuel reserves and their importance in the region’s economic development in terms of large export revenues, the need for their preservation is coming to the foray. Hence, efforts are underway to develop alternate energy sources in order to fulfil domestic energy consumption and to conserve valuable energy reserves. Although the current usage of alternative energy in the MENA region is minimal, significant alternative energy projects are underway and many of them are in the planning stage. These efforts are expected to take significant time to bear their fruits.”
Policy and job creation are strong drivers
Growing regional investment in cleantech and renewable energy projects are also aiding the development of an alternative energy infrastructure in the MENA region that has a potential to be the next big engine for job creation
Nimer AbuAli, MENA Head of Cleantech says : “Policy remains the single most important driver for clean energy investments. International experience suggests that critical factors for building a new industry sector include the development of a comprehensive policy and regulatory framework to support the clean energy sector. Also, renewables tend to be a more labor-intensive energy source than the still-dominant fossil fuel, which rely heavily on expensive pieces of production equipment. A transition toward renewables thus promises potential job gains.”
Entry of newer players
Gil Forer, Ernst & Young’s Global Cleantech Leader, explains: “The mature renewable energy markets of Western Europe and the US have been hit by a perfect storm of reduced government incentives, restricted access to capital, and increased competition from abroad. At the same time we are seeing growing support for renewable energy in emerging markets. Such countries, with a strongly growing energy demand, are seizing this opportunity to leap-frog fossil fuel generation to secure a low carbon and resource efficient future in renewable energy, with 15 emerging markets being added to the CAI in the past two years.”
Prominent MENA examples
Many countries in the MENA region have made clear commitments to increase the percentage of alternative energy in the mix of power generation to meet the growing demand.
Abu Dhabi’s Masdar initiative, Dubai’s announcement of a US$3.26 billion investment in solar power over the next three years and Saudi Arabia’s US$800 million invested in solar energy generating plants are just a few of the projects currently in the pipeline.
Solar thermal energy has been a particularly popular investment with several large projects on the way in Abu Dhabi, Algeria, Jordan and Morocco.
A US$100 million Saudi factory to produce poly silicon is also one of the prominent MENA initiatives in cleantech.
Hage concludes: “A lot of projects are expected to begin over the next 12-18 months, which will change financier perspectives. Oil-rich nations see solar as a means of protecting wealth by preserving reserves for export, rather than consuming resources locally.”
About Ernst & Young MENA
The MENA practice of Ernst & Young has been operating in the region since 1923. For over 88 years, we have evolved to meet the legal and commercial developments of the region. Across the region, we have over 4,200 people united across 20 offices and 15 Arab countries, sharing the same values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
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About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
For more information, please visit www.ey.com