Time for take-offThe MEED Insight

Renewable Energy Webinar

29 April 2013

The agenda

• The global trends

• Latest ME renewable forecast

• Country reviews

– Morocco

– Algeria

– Egypt

– Saudi Arabia and the GCC

The global trend is dramatic

Renewables13%

Hydro15%

Nuclear11%

Gas24%

Oil3%

Coal34%

2030F: 37,100 TWh

Renewables4%

Hydro17%

Nuclear13%

Gas23%

Oil

Coal43%

2011: 22,100 TWh

Source: Siemens

Existing renewables projects in Mena

Renewable energy is not new to the region

US inventor Frank Shuman commissioned the world’s first parabolic trough solar plant in Maadi, Cairo, in 1913. The 55kW station was set up to drive irrigation pumps.

It provided the first tangible evidence of the suitability of renewable energy in the region.

It was such a success that Shuman was granted 30,000 acres in the Sudan to build a larger version. Shuman himself drew up plans for a 20,000 square mile plant in the Sahara to generate 270 million horsepower, equal to all the energy generated in the world in 1909.

Unfortunately, WWI intervened and the plans never materialised...

Until now that is….

A primarily EU initiative, the basic idea of the DESERTEC Concept is to generate electricity from renewable sources at the places where they are most abundant.

A high-voltage direct current grid carries the electricity generated from renewables over long distances with a minimum loss of power, making it available wherever it is needed.

This can provide the world with an economical, safe and sustainable supply of clean electricity.

The Middle East is a prime candidate for renewables

The MENA region has some of the highest solar irradiation levels in the world, as well as vast tracts of uninhabited desert to build capacity on.

Its solar potential is enormous. Technically, it could meet its own and the rest of the world’s power requirements through solar energy.

Studies in Oman have shown that concentrated solar power (CSP) infrastructure covering just 0.1 per cent of its land mass, would generate sufficient power for all the sultanate’s annual electricity demand.

The region’s wind potential is also considerable. From Morocco in the west to Oman in the east, there are numerous locations with excellent wind profiles and high wind speeds.

Graphs sources: Meteonorm and MEED Insight

But so far has done little about it

0

10,000

20,000

30,000

40,000

50,000

60,000

Existing renewable energy capacity, 2012 (MW)* Total installed generating capacity, 2012 (MW)

The share of renewable energy capacity in the Mena power sector, 2012 (MW)

Source: MEED Insight

Hydro dominates existing capacity

Hydroelectric, 5,603, 82%

Wind, 1,038, 15%

Solar, 192, 3%

The breakdown of Mena renewable energy capacity by source, 2012 (MW)

Source: MEED Insight

Some countries are more ambitious than others

0

5

10

15

20

25

30

Tunisia Libya Egypt Jordan Iraq Bahrain* Kuwait Oman Qatar SaudiArabia

Dubai* AbuDhabi

Mena 2020 official or implied renewable energy targets as a % of total installed capacity

Source: MEED Insight

Saudi Arabia will go from nothing to regional leader

0

5,000

10,000

15,000

20,000

25,000

Libya Egypt Jordan Iraq Kuwait Oman Qatar SaudiArabia

Dubai** AbuDhabi

Mena 2020 official or implied renewable energy capacity (MW)

Source: MEED Insight

The good news is that costs are coming down

Declining capital costs will significantly improve the economics of renewable energy projects.

Technological advances, increased production capacity and economies of scale are already driving costs, with the price of solar panels forecast to fall by 15 per cent in 2011 from 2010 levels.

Indeed some estimates suggest that factory gate solar module prices will drop by 37-50 per cent in the five years to 2015.

The projected decline will result in a significant fall in renewable energy production costs. The US’ Solarbuzzforecasts that the projected cost of solar power generation globally will halve in the 10 years to 2019 to $0.10 a kilowatt hour (kWh), while conventional power generation will edge up to $0.07 a kWh from $0.05 a kWh.

Saudi Aramco has produced a regional forecast, which also states that the cost of solar production will halve to $0.10 a kWh in the period 2010-20 in the GCC. This would make solar power cheaper than diesel-fired generation and place it on a par with gas.

And if the real cost of both oil and gas is factored in, as is generally the case in places such as Jordan and Morocco, then the difference between fossil fuel and renewable energy generation narrows significantly.

Specific country opportunities

Morocco

• Possible tripling in renewable energy capacity by 2020 to 6,300MW

• Regulatory code in place

• Wind the key factor.

Morocco

Morocco offers considerable renewable potential, having some of the highest wind speeds and solar irradiation levels anywhere. On its coastline, solar irradiation levels range from 4.7 kilowatt hours (kWh) a square metre a day to 5.3kWh a square metre a day, while inland they can exceed 5.55kWh a square metre a day.

The kingdom has two major wind corridors. The first runs inland from Tetouan to Agadir, while a second follows the coastline from Tarfaya to Lagouria. Wind speeds in the north on the Atlantic coast average between 8-11.5 metres a second and 7-8.5 metres a second in the south.

To meet peak demand growth that has averaged 6.5 per cent in recent years and to serve the growing needs of an ongoing rural electrification programme, Rabat estimates that installed generating capacity will have to increase to about 15,000MW by 2020, from 6,128MW in 2009.

In addition to a significant increase in wind and solar capacity, the government’s plan includes 1,000MW of nuclear capacity, which is scheduled to be commissioned in 2020.

Algeria

• Potentially the largest renewable energy market in North Africa with more than 4,000MW of new capacity possible by 2020

• Institutional structure in place

• Government has finance to support expansion

Egypt

The most ambitious plans in North Africa and considerable wind potential

Only fraction of plan will be delivered by 2020: about 2,000MW

Financial and governance issues

Egypt

Going forward, wind and solar will be the mainstays of the renewable energy sector. Egypt benefits from very favourable wind conditions, especially along the western coastline of the Gulf of Suez, where wind speeds average 8-10 metres a second and the land is largely uninhabited desert.

Other promising sites include to the east and west of the Nile near Beni Suef and Minya, and the El-Kharga oasis in the New Valley governorate, which has wind speeds in the range of 7-8 metres a second. Solar also offers considerable potential, with Egypt having irradiation levels above 1,800 kilowatt hours (kWh) a square metre a year.

Cairo has high hopes for renewables, which are targeted to make up 20 per cent of the total energy mix by 2020. With capacity projected to increase to 50,000MW to meet average peak demand growth of 7.5 per cent a year, this would mean renewable capacity would have to climb to 10,000MW.

Given that there is virtually no scope for increasing hydroelectric capacity above the current 2,800MW, wind and solar energy will have to deliver at least 7,200MW if the target is to be met.

Saudi Arabia and the GCC poised to revolutionise the sector

• KA CARE policy now being defined

• First round of 600-800MW to be put out to tender this year

• Pluralistic approach to procurement– KA CARE

– SEC

– Saudi Aramco

– Municipalities

– Pilots

Saudi Arabia

In April 2010, a royal decree was issued establishing the King Abdullah Centre for Atomic & Renewable Energy (Ka-Care) to oversee what could potentially be the region’s biggest alternative energy programme. .One of the core components of Ka-Care is renewables, which aims to meet peak load demand. Ka-Care’s focus is very much on solar, which has substantial potential in the kingdom as a result of its high radiation levels and vast land area. Ka-Care is tentatively looking at up to 20,000MW of solar capacity by 2030.

The main driver is the kingdom’s increasing dependence on crude feedstock for power generation as gas becomes less available.

The government estimated in 2010 that unless action was taken, domestic demand for petroleum products would more than double to 8.3 million barrels of oil equivalent a day (boe/d) in 2028, from 3.4 million boe/d in 2010. This would jeopardise the kingdom’s ability to meet global oil demand.

Saudi - solar

Saudi Arabia has considerable solar potential as a result of high irradiation levels and a substantial land area. Its technical solar potential is estimated at 125,000 terawatt hours (TWh) a year, which ranks it just behind Algeria in the Middle East and North Africa (Mena) region.

The kingdom’s irradiation levels are twice the European average at 2,200kWh a square metre a year and, in places, can reach 2,550kWh a square metre a year.

Saudi Arabia currently has no large-scale solar projects, with all existing plants being below 1MW. Even recent projects, such as the first Showa/Aramco plant which was commissioned in August 2011, have tended to have capacities of about 0.5MW.

However, plant capacities are gradually increasing. Showa/Aramco and SEC are now looking to build a 15MW PV plant on Farasan island. Separately, a 3.5MW PV plant for Aramco was under construction by Phoenix Solar in August 2011 besides the King Abdullah Petroleum Studies & Research Centre in Riyadh.

Details of Ka-Care’s solar energy programme had still to be unveiled, with sources close to the agency expecting a formal announcement to be made by the end of 2011. Initially, Ka-Care is expected to procure 4,000MW of solar capacity on an independent power project (IPP) basis. The initial projects are likely to cover a range of sizes and technologies, including PV and CSP, allowing the kingdom to build up experience and establish prices for solar power.

Thank you

Mena Renewable Energy Report 2013

Through this comprehensive report you will gain exclusive insight into:

• Data on existing renewable energy capacity and planned projects

• Renewable energy programme in Saudi Arabia

• Regulations, policies and capacity of finance systems

• Top clients and contractor rankings

• Key opportunities, challenges and much more…

A comprehensive review of trends and prospects in the renewable energy sector across the Middle East and North Africa region

The full report is available to purchase from MEED Insight.

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