Solar momentum building in MENA region

Diesel uncertainty motivating SEC, banks, private sector.

Browning Rockwell, Executive Director, Solar GCC Alliance

Third-quarter solar events highlighted a number of promising trends throughout the region. New initiatives were also revealed to Solar GCC Members in private meetings with government and industry leaders. Here's a quick summary of major developments in the last month:

Solar is moving ahead in Saudi Arabia, with or without K.A.CARE. While there have been no formal announcements for solar tenders in the KSA, there is a growing undercurrent for solar on many fronts. Leading academic institutions are stepping up their research efforts, and grid connection issues are being discussed by government agencies in public and private sector forums.

Other Saudi government institutions are presenting 10-year growth plans with clear renewable targets. During last month's Saudi Solar PV Trade Mission, Ziyad bin Mohammed Alshiha, Chief Executive of Saudi Electric Company (SEC), revealed a plan to spend SAR 80-100 billion over the next ten years to add 9-11 GW of renewable energy capacity, including 6 GW of PV and 1 GW of CSP. 

Even more funds are slated for infrastructure: transmission, smart grid / smart meter expansions, and new business development. SEC wants to launch the plan as soon as possible, probably in 2015. All this is in addition to an ambitious plan for solar-powered water desalination plants, also in the works.

K.A.CARE is expected to reveal more details about its solar support program by the end of this year. The program will most likely have a PPA structure, with SEC as the off taker of the power.The Kingdom aspires to supply energy to the region, similar to how things work in Egypt.

Solar/diesel hybrid systems for self-consumption power are becoming increasingly attractive to the private sector, which is currently dependent on diesel fuel and its uncertain future availability-regardless of the subsidy. The concept of solar as a hedge against future energy cost increases is beginning to resonate in the Kingdom. SEC and Saudi Aramco are likely to team up to get the first projects off the ground.

O&M questions are the key issues holding major stakeholders back. Operating expense estimates range from 2-10% of capital expenditure. Sand and dust storms make cleaning requirements a key issue in this market. New desert-oriented panel designs and waterless cleaning technologies should quickly reduce costs and concerns. 

KACST certification, based on a special desert protocol, will be required for all modules in the KSA. KACST already has its own solar module production line, separate from its R&D department, with 14 MWp capacity. Cells are imported. All modules will require a Certificate of Conformity, also called a SASO. The aim is to establish a certification standard for the entire MENA region, not just Saudi Arabia.

Financing options are likely to improve soon as solar becomes more mainstream and support increases for green initiatives. Securitization options such as Solar Yieldcos may help accelerate the process. Saudi Arabia's 13 banks are extremely conservative, but all have IPP experience and massive liquidity is available. Most are waiting for the first projects to get on the ground. Once a few get in and the first PV plants are operational in the Kingdom, it's likely the others will quickly follow suit.

 The general feeling among key stakeholders in Saudi Arabia is that it may take perhaps another 6 months to a year before the market takes off, but once it does, it will develop very fast.