Renewable Energy in the Middle East Surges as the Energy Transition Accelerates
In the first quarter of 2021, the Middle East region didn’t sign any contracts for oil or gas power stations. However, they contracted for renewable energy projects worth $2.8 billion in 2021. As part of efforts to reduce greenhouse gas emissions and increase energy sources, traditional power plants in the Middle East have stalled. The growing conviction for renewable energy’s cost-effectiveness and need for oil products are the key factors driving the energy transition in the Middle East.
Efforts to adopt clean energy have already accelerated and reached a tipping point. In the Middle East, the main issue is how quickly the energy transition takes place.
In the Middle East, the potential of renewable energy projects is quite promising, as projects worth $104 billion have been mapped out. Some contracts worth $21.5 billion are in the tendering stage, expected to produce optimal contract outcomes in 2020. The Middle East countries are proactively embracing clean energy by developing plans and signing contracts that are either in preparation or are in advanced stages of design.
Similarly, Saudi Arabia’s investment in renewable energy projects is worth $18 billion, offering the highest potential because $13 billion of projects are in the tendering process. Contrarily, UAE has left behind Saudi Arabia by deploying renewable energy but has $370 million of projects only in the tendering phase.
In the Middle East, green hydrogen is another rising element that is fueling up the transition. The electricity produced by hydrogen fuel doesn’t release carbon dioxide and emits only water mist. Further, conventional gas-enabled plants can be decarbonized with hydrogen because it produces a low-carbon economy. Since green hydrogen has become a hot topic in the renewable energy sector, it is difficult to ignore its emergence. In recent years, green hydrogen contracts worth $42 billion have been planned for the Middle East and are expected to be announced soon.
Energy transition has been prioritized by oil producers affected by the falling prices of oil beginning in 2015. Transitioning away from fossil fuels is a significant challenge for the entire region. To achieve net-zero carbon dioxide emission, improve energy efficiency, and expand energy sources, all aspects of life must be reformed.
On the other hand, energy demand has increased to a considerable extent with the impact of the pandemic. To cope with the rising consumption, most of the countries are planning to work on solar and wind energy projects. Currently, Saudi Arabia, Abu Dhabi, and Dubai are considered to have the most affordable solar projects in the world. Since Dubai is aiming to produce 75% of its electricity from renewable energy by 2050, the government has indicated a strong desire to achieve its clean energy targets with Dubai. In the Middle East region, the transitioning to and investments in renewable energy has been encouraged by enabling regulations and falling technological costs.