In a recently published report, the Saudi Arabia-based Arab Petroleum Investments Corporation (APICORP) has predicted that the Middle East and North Africa (MENA) energy sector will receive investments worth $805 billion over the next five years.

The multilateral development financial institution, in its MENA Energy Investment Outlook 2021 2025, has stated that renewables are slated to claim a significant share of almost 40% of the estimated $250 billion in power sector investments.

The investment of $805 billion between 2021 and 2025 is a $13 billion increase from the $792 billion estimates in last year’s five-year outlook.

The report attributes this modest rise to four factors, of which the accelerated pace of renewables in the region is said to play a key role in registering the numbers. Other influences include strong confidence in the rebound of global GDP, rising energy demand, and the comeback of Libyan projects – which alone accounts for around $10 billion in planned projects.

According to the report, the contribution of must-run technologies such as nuclear and renewables during 2020 started to claim a higher share in the power supply mix in several MENA countries such as Egypt, UAE, Morocco, and Jordan.

The MENA region added about 1.5 GW of solar power in 2020. In 2021, 3 GW is expected to be added, and in the next five years, about 20 GW is expected to be added.

Wind and other sources such as hydropower are also coming into their own as countries step up their energy diversification plans.

The region has high potential, but the growth of renewables would depend on conducive policies and enabling regulations.

The unprecedented decline in the cost of renewable and massive renewable energy targets – which range from 13% to 52% of installed capacity by 2030 – are the two key accelerators fueling renewables penetration in the MENA region.

Putting forth multiple case studies, the report highlighted that Jordan, for example, managed to increase the percentage of power generated from renewables from just 1% in 2012 to around 20%. Morocco’s 4 GW of renewables (wind, solar, and hydro) constitute around 37% of the country’s total generation mix and almost 90% of its current 3.5 GW project pipeline. Egypt’s total installed renewables capacity amounts to around 2.3 GW, including 1 GW of solar PV and 1.3 GW of onshore wind, the study elaborated.

In the UAE, renewables constituted around 6% of the total installed capacity and 3% of the power generated as of 2020. Although it may just miss its short-term targets, the UAE’s solar capacity is projected to grow the fastest in the region, with nearly 5 GW of solar projects in the pipeline, the study said.

Elaborating on the report, Dr. Ahmed Ali Attiga, Chief Executive Officer of APICORP, said, “APICORP’s MENA Energy Investment Outlook 2021-2025 indicates that energy industries are entering a period of relative stability in terms of investments as most MENA countries return to GDP growth in 2021 and the energy transition showing no signs of slowing down. We anticipate a slow but steady recovery of the energy sector from the fallout of the Covid-19 pandemic, supported by continued investment from the public sector and an upswing in demand.”

According to APICORP’s report, the countries that lagged include Saudi Arabia and Oman.

In Saudi Arabia, only 330 MW of utility-scale solar PV projects and just one 2.5 MW wind demonstration project developed jointly by Saudi Aramco and General Electric were operational as of 2020. Even when combined with the tenders under its National Renewable Energy Program, the total renewables capacity of the country totals 3.3 GW, around 24 GW short of its stated target of 27.3 GW by 2024.

Despite ongoing procurement of large-scale utility projects, the report elaborated that Oman is also far from achieving its short-term target of generating 10% of its power from renewables by 2025, with a single 105 MW utility solar PV project and a 50 MW onshore wind project commissioned over the past two years.

As for Iraq, the report stated that the first solar bid round for projects totaling 755 MW capacity was announced in May 2019, and bids of short-listed companies were disclosed in September the following year. Overall, the country aims to reach 10 GW of solar power generation capacity by 2030 and generate 20% of its power from solar.

Coming to hydrogen, the report forecast MENA emerging as a major blue and green hydrogen-exporting region owing to low-cost gas resources and strong renewable energy progress.

A few countries, such as Saudi Arabia and Morocco, have already made headways as low-cost exporters of blue and green hydrogen, net-zero ammonia, and other low-carbon products, while other countries, such as Oman, UAE, and Egypt are attempting to catch up, it added.

In July last year, Air Products, in collaboration with ACWA Power and NEOM, had announced the signing of an agreement to develop a $5 billion (~₹372.7 billion) green hydrogen-based ammonia production facility powered by renewable energy in Saudi Arabia.

In 2018, Aramex, a UAE-based logistics solution provider, had inaugurated a 3.2 MW solar photovoltaic project for its new logistics facility in Dubai, United Arab Emirates. It was the company’s largest solar rooftop project of 3.2 MW in Dubai.