Interest in renewable energy among the Arab public remains very limited, given the dominance of the hydrocarbon industry over the economies of the region. This way of thinking among the public has not changed, despite the major transformations in the region, which are pushing energy consumption ever higher, such as high annual population increase, growth of cities and their needs, improved living standards, and rising usage of air-conditioners and electrical appliances. Investing in renewable energy first requires establishing a broad and comprehensive study of what already exists, or what is currently under construction. Something like this has been achieved last month, with the release of the Middle East and North Africa (MENA) Renewables Status Report, produced by the International Renewable Energy Agency (IRENA), in collaboration with the Ministry of Foreign Affairs of the United Arab Emirates (UAE) and the Renewable Energy Policy Network for the 21st Century (REN21). The report provides a comprehensive overview of renewables in the region. Here, we will attempt to tackle in brief the Arab investments in this sector, bearing in mind that investments in renewables now amount to to tens of billions of dollars annually. World Bank forecasts indicate that the increase in energy consumption in MENA by 2040 will require investments of up to $30 billion annually, or 3 percent of the GDP. Another study for 2013-2017 indicates that $137.5 billion needs to be invested in power generation, including $63.1 billion in the GCC, $21.4 billion in Iran, and $53 billion in the rest of the countries in MENA. Most studies indicate that increased electricity consumption in the region will necessitate investments in renewables to avoid shortages in the future. According to the Bloomberg New Energy Finance (BNEF), new investment in renewables in the MENA region totaled $ 2.9 billion in 2012, an increase of almost 40% over 2011. IRENA's report indicates that overall investments in renewables in MENA in 2009-2012 amounted to $6.86 billion, including $923 million in Egypt, $103 million in Iraq, $132 million in Libya, $88 million in Saudi, $915 million in the UAE, $2215 million in Morocco, $57 million in Tunisia, $136 million in Iran, and $2260 million in Israel. Annual investments in renewables in MENA countries rose from about $439 million in 2004 to about $2870 million in 2011. Ministries and electricity companies both took initiatives to invest in renewables, in collaboration with specialized international development banks. But increased demand for electricity has also prompted private companies to invest in this sector, especially through projects that operate outside national grids (off-grid), but which feed back into the latter when possible. IRENA's report concludes that private projects in agricultural and remote areas far from major cities have helped reduce pressure on national grids, especially at peak times, in addition to supplying electricity to agricultural areas with small populations, and for irrigation and desalination projects. In 2012, for example, a German company constructed an off-grid project in an agricultural area in Wadi al-Natrun, Egypt, producing 50 kilowatts from a solar power station, in addition to four wind turbines and a battery storage system that can provide 24-hour power. The energy goes to desalinating groundwater and local irrigation. As regards long-term electricity projects, several European development institutions, such as the European Investment Bank (EIB), the Agence Française de Développement (AFD), and international organizations such as the World Bank, the United Nations Development Programme (UNDP), and the African Development Bank have helped provide long-term low-interest loans to fund projects in renewables, in addition to Arab development funds. IRENA's report also argues that reforming and modernizing electricity-related regulations and policies in the region may open up space for more independent power producers to generate additional power at prices, quantities, and timing that can be agreed upon. Even if these begin with relatively limited capabilities and capacities for the time being, it will be possible to use them locally in remote low-population agricultural areas, and feed power into the national grid though power purchase agreements, as is happening in Saudi Arabia and Morocco. It is worth mentioning that the World Bank has invested around $2.1 billion in 17 power generation projects involving both renewable and conventional energy in MENA up until 2010. IRENA's report also concludes that investments in renewables in MENA have increased noticeably in recent years, especially since 2012. The report maintains that the region, by 2020, based on current plans or projects under construction, will see several large-scale projects in renewables, which means that power generation through renewables in MENA will play an important role in the next five to twenty years, with a major stake for the private sector. The report did not overlook the challenges and difficulties that will face the private sector's entry into power generation. First of all, there will be the need to develop clear regulations and policies, define the extent of government subsidies and their influence on prices, and probe public opinion reaction to private sector participation with governments in power generations, not to mention political risk arising from involving private investments in infrastructure that would have been hitherto the exclusive domain of governments. However, it is clear that the countries of the region have started to take renewables seriously, both at the level of government and the private sector. But the main question here is this: Will the stakeholders involved plan rationally and scientifically to build up sufficient energy to generate power and put an end to the farce of power shortage, and its damage on people and the economy? * Mr. Khadduri is a consultant for MEES Oil and Gas (MeesEnergy)
