The MENA region saw over 2 GW of new solar capacity tendered in 2016, and 2017 looks to easily surpass this level as hundreds of billions of dollars begin to flow into green energy in the Arab world.
On April 6th, Middle Eastern nations announced an ambitious energy project to establish an Arab Common Market for electricity. The energy ministers from 14 Arab countries signed a memorandum of understanding, confirming their commitment to the development of an integrated electricity supply system for the Middle East. This announcement in itself is very important, yet it also comes at a time of even larger changes in energy in the Middle East: solar power. A future common electricity market will see an ever increasing role for solar power as countries across the Middle East are heavily investing in renewables.
Ongoing low oil prices together with rising demographic concerns are increasingly motivating MENA states to invest in a more secure and diversified energy portfolio. With an estimated population of 692 million by 2050, the MENA region will require a substantial increase in generating the capacity to meet future energy demands. This point has been hit home this year as Fitch has warned that most oil producers will not break even in 2017, based on a predicted average price of $52.50 per barrel. Most MENA countries need substantially higher prices (ex: Saudi Arabia needs $74) to balance their budgets.
This post was published at FinancialSense on 04/10/2017.
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