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Mena 'can become a leader in renewables'

Dubai, March 15, 2010

The Middle East and North Africa (Mena) region offers 45 per cent of the world’s total energy potential from all renewable sources that can generate more than three times the world’s total power demand, according to a new study.

The renewable energy industry developments combined with the region’s potential in wind and solar power could create significant advantage for countries that move to capitalise on them, the Booz & Company said in its latest study.

“The renewables in much of the Mena region are underfunded or not funded at all, in part due to the region’s abundant supplies of fossil fuels, pointed out Ibrahim El-Husseini, a partner at Booz & Company.

According to the study, there are several reasons why the region could be a world leader in renewable energy.

Firstly, the region has an advantageous geography and climate and has the world’s greatest potential for solar power generation, the study said.

The Mena region offers 45 per cent of the world’s total energy potential from all renewable sources. If the region achieved this potential, it could generate more than three times the world’s total current power demand, El-Husseini explained.

According to him, the region also has some potential for large-scale wind farms.

Renewables, the study said, could play a major role in meeting increasing demand and could complement the region’s unique energy needs. At present, the region has 146 gigawatts of installed capacity for electricity generation.

“With demand forecasted to grow at more than 7 per cent per year for the next decade, Mena countries will need to build 80 to 90 gigawatts of new capacity by 2017 to meet demand,” explained Walid Fayad, a principal at Booz & Company.

Renewables will also help mitigate the global climate change challenge. Many countries in the region rank among the highest greenhouse gas (GHG) emitters in the world on a per capita basis, due mainly to the use of fossil fuels in the majority of power generation and industrial production facilities, said the study.

'Introducing carbon neutral renewable energy into these countries' energy mix will help reduce GHG emissions and mitigate climate change,' it added.

The study said renewables could also help address the region’s other environmental problems.

'The region is facing rapidly rising pollution levels with an accompanying high costs and widespread reduction in quality of life. It currently has the world’s second-highest air pollution levels, and estimated particulate matter concentration is 50 per cent higher than world average, causing damage costs equivalent to about 0.9 per cent of GDP.'

Clean energy sources that don’t burn fossil fuels and release particulates would significantly improve air quality, the study pointed out.

Renewables, the study said, could generate value in their own right, as well as freeing oil and gas for more profitable uses.

“If renewable energy sources could replace the oil or gas currently used for power generation, the surpluses created could become available for more profitable downstream applications,” explained Tarek El Sayed, a principal at Booz & Company. 'Renewable energy sources could also be a strategic export industry,' he added.

Renewables could enhance the export value of the region’s traditional energy assets. Fossil fuels will remain the dominant source of energy for the foreseeable future.

In addition, Opec’s share of world oil supply is expected to grow from its current figure of 42 per cent to 52 per cent by 2030, according to its 'World Oil Outlook 2008.' Renewable energy initiatives will free more oil and gas for export and enhance oil-producing countries’ position as major energy exporters for the world, the study added.

According to El Sayed, the renewable energy industry could drive economic diversification and create jobs.

'The oil and gas sector contributes 47 per cent of the Gulf's GDP, but only one per cent of employment. Countries struggling with high unemployment rates could generate employment opportunities in renewables, he added.

The study said not all renewable energy technologies will be viable for the region, 'but wind and solar offer the greatest potential.'

On good sites, onshore wind power is already cost-competitive with fossil-fueled generation. The major limitation on wind is intermittency; the wind does not always blow when electricity is needed. This can be partially mitigated by the dispersal of wind turbines over a large geographic area.

“Additionally, planners can capture excess wind-sup¬plied energy by linking wind turbines to hydroelectric plants, which can be used to offset intermittency and absorb wind power surpluses,” commented El-Husseini.

There are two major forms of solar-generated power - Concentrating solar power (CSP) and Photovoltaic (PV) solar power.

CSP uses mirrors and lenses to concentrate solar energy within plants that are utility-scale generators, while PV solar power directly converts sunlight into electricity using semiconductors, and is often used on a smaller scale.

Prevailing desert conditions however result in extreme summer tempera¬tures and high dust levels, both of which have a negative impact on solar energy, the study said.

“Both solar technologies could be deployed widely throughout the region. The Masdar Initiative in Abu Dhabi recently commissioned the first large-scale PV installation in the Mena region. Smaller installations are proliferating, mainly in areas far from the grid,” observed Fayad.

Geothermal technologies use underground heat sources to generate either hot water or steam that can be used directly or converted to electricity. Geothermal potential in the Mena region has not been assessed in detail but is likely to be limited, as there are few geologically active zones in the region.

Biomass energy is generated by burning plant residues or specially grown energy crops; or fermenting wet biomass to create biogas or liquid fuels.

Biomass is unlikely to be a sustainable option in the Mena region, as it can create competition for agricultural lands, and can also have a negative impact on the local environment. Furthermore, the large amount of water necessary to grow energy crops is a concern in the water-constrained region, Booz & Co said.

In the region, conventional energy is generally cheaper than renewable energy. However, this comparison does not account for the fact that conventional energy is significantly subsidized, and that there are external costs of using fossil fuels for power generation, including pollution and opportunity costs, it stated.

Conventional energy subsidies in the region are more substantial than elsewhere, and they provide conventional power with a significant unnatural advantage over renewable energy sources, the study said.

“Subsidizing energy puts an automatic brake on the private sector’s development of renewable energy sources, because such sources need to compete with an energy source that is already very cheap and widely available,” El Sayed pointed out.

The cost of carbon emissions from fossil fuels should be included in the comparison of different options for power generation and Mena countries could monetise carbon credits through the United Nations’ Clean Development Mechanism, the study added.

'The cost of solar power continues to drop, thanks to the development of the underlying technology. If historical trends hold, in the coming years annual cost reductions of 3 to 7 percent for PV installation can be expected,' El Sayed observed.

'As for CSP, it is a much more mature technology, with correspondingly fewer opportunities for optimization. Based on cost assumptions, the unsubsidized cost of solar PV power in the region could become competitive with that of natural gas between 2015 and 2025, depending on gas and carbon prices,' he added.-TradeArabia News Service




Tags: Renewable energy | Mena | potential | Power demand |

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