Middle East awaits dawn of solar power age

Robin Mills: the region is blessed with abundant sunshine, yet there is a scarcity of viable projects to take advantage of this.

On Saturday, Burj Khalifa dimmed its lights to mark Earth Hour, along with millions of people across the region. But when it comes to solar power, the Middle East needs to turn the lights on.

Germany, the world's leading solar market, has had a bad year in 2014 – it installed only 3.3 gigawatts, less than half the year before. Yet across the whole Middle East, excluding Turkey and Israel, there are not even 0.2 gigawatts of solar capacity. In conventional power, mostly from burning gas, the UAE alone has more than 20 gigawatts.

Current circumstances are uniquely favourable for expanding solar power. Photovoltaic (PV) costs continue to fall, making it ever more attractive than oil or expensive imported gas. Solar power these days is not a particularly complicated technology, and does not have the safety and political challenges of nuclear reactors. There is a wealth of operating experience from around the globe. With cuts to subsidies elsewhere and the industry struggling with overcapacity, solar companies are searching eagerly for the next big market.

Abu Dhabi's groundbreaking Shams-1 solar plant was inaugurated almost exactly a year ago. But it has taken a long time for its successor to emerge: companies first bid for Noor-1 in 2011. But with regulations remaining unclear, it is now unlikely that the project will even go ahead this year.

Dubai started later but is catching up fast, based on a sound and cohesive regulatory regime, leadership support and a long-term, step-by-step plan. The next phase of the Mohammed bin Rashid solar park near Bab Al Shams should be ready next year. And energy-poor Jordan is also doing well, showing investor-friendly continuity and concluding its first large agreements last week.

Both Dubai and Abu Dhabi have been working on regulations for householders to install their own PV systems, with Abu Dhabi running a small pilot project. But while solar panels are now a standard feature of urban roofscapes in cloudy Germany and Britain, they are almost invisible in the sunny Gulf.

Saudi Arabia has been even more frustrating. In 2012, the kingdom announced plans for some 40 gigawatts of solar power, costing US$109 billion, in the period up to 2030. The King Abdullah Centre for Atomic and Renewable Energy then ploughed through an extensive process of consultation– aiming not only to generate solar power, but also to create local industries and employment. Still, the Middle East Solar Industry Association believes the policy and funding framework needed to light up the Saudi solar programme is not in place, and unlikely to appear this year.

Such unfulfilled expectations are dangerous. Solar companies – often struggling with poor margins elsewhere and without the deep pockets of oil companies – set up in the region but lose faith and withdraw staff after waiting years for projects. It will be harder to entice them back next time.

One of the lessons from the German experience has been that it is vital to create an ecosystem of solar developers, suppliers and installers, to reduce costs and ensure consistent quality. This will not emerge while solar companies continue to struggle with stop-start activity. Much better a steady stream of smaller projects, than an expected tidal wave that never arrives.

Middle East governments need to set consistent policies and pricing schemes, not ad hoc provisions, to allow solar power to compete fairly. If subsidies on electricity prices are not removed, at least they should be made transparent so householders and businesses can make an economically sensible decision on installing solar panels.

Conditions have never been more favourable for the solar industry to boost the region’s energy supply, environment and economy. But the Middle East needs to find more responsive and flexible commercial models, or the lights will stay off on its solar dawn.

Robin Mills is the head of consulting at Manaar Energy, and the author of The Myth of the Oil Crisis

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