While many countries across the Middle East are continuing to pursue oil and gas agendas, responding to the strong global demand for fossil fuels, several countries across the region are also investing heavily in renewable alternatives. For many countries, such as Saudi Arabia and the UAE, oil and gas continue to provide the revenues to support a strong economy and contribute to their national funds to ensure their wealth for the future. However, leaders across the region are aware that oil and gas will not be the main economic drivers forever, and many are now attempting to diversify their economies and expand their non-oil sectors. With extensive experience in energy, the Middle East is seen as the perfect location to develop green energy operations, from green hydrogen to wind and solar power, ensuring the future of the region’s energy security as well as its position on the energy stage of the future.
Like many other countries worldwide, several Middle Eastern states have announced ambitious decarbonisation plans in line with Paris Agreement targets. Based on a 2019 assessment, the Middle Eastern renewable energy market is expected to achieve a CAGR of 13.43 percent between 2019 and 2028, a figure that will likely be much higher following the acceleration of several green energy projects in response to the COP climate summits.
Despite plans to boost oil and gas production in line with global demand, many countries across the region have big plans for green alternatives. The Middle East’s renewable energy capacity doubled to 40GW between 2010 and 2020 and is set to double again by 2024. With high solar irradiation across the region, the Middle East will roll out several solar farms in the coming years. The energy source is expected to account for around 15 percent of the region’s power mix by the end of the decade.
The Middle East is also looking to beat its main competitors – Europe and Asia, to dominate the green hydrogen market. In 2021, the UAE announced several new projects. France’s Engie and Abu Dhabi-based renewable energy business Masdar stated they would be investing $5 billion in the country’s green hydrogen industry, aiming for an electrolyser capacity of 2 gigawatts by 2030. And Dubai launched the region’s ‘first industrial scale’ green hydrogen plant. The UAE has stated it plans to achieve a 25 percent share of the global low-carbon hydrogen market by 2030. Meanwhile, Saudi Arabia announced a $7-billion agreement to produce green hydrogen in Oman’s Salalah free zone with ACWA Power and Omanoil and Air Products. Oman also announced it hoped to establish a hydrogen-centric economy by 2040, with 30GW of green and blue hydrogen.
And since 2021, the region’s green hydrogen market has expanded significantly. Thanks to major investments in research and development, Saudi Arabia has been able to drive down the costs of green hydrogen production to make it more attractive. The state is now aiming to achieve $1 per kg to make it the cheapest green hydrogen producer in the world. And several private companies are looking for a piece of the action, with Siemens identifying 46 viable green hydrogen projects in the region with a combined value of $92 billion. Both the UAE and Oman were identified as showing major investment potential, as well as Saudi Arabia.
And the clean energy plans don’t stop at green hydrogen, as the UAE aims to increase the contribution of renewable energy to its total energy mix to 75 percent by 2050. In Abu Dhabi, the Al Dhafra Solar Project is expected to come online ahead of COP28. The solar farm will have a 2GW capacity and provide enough electricity for 160,000 households. State-owned Emirati companies TAQA and Masdar own 60 percent of the project, with the remainder owned by a consortium of EDF Renewables and China's Jinko Power Technology. The companies hope to create 4,000 jobs through the project. This will be supported by other major solar projects including the $3.9-billion 950-MW Noor Energy 1 farm and the country’s first wind farm – the Hatta Wind Power Project, both in Dubai.
Saudi Arabia also aims to generate 50 percent of its energy from green sources by 2030. This will be driven by the acceleration of solar energy projects across the country, such as the 1,500-MW Sudair Solar Power Plant in Riyadh and the Manah I & II solar power facilities in Manah. Investment in carbon capture and storage (CCS) technologies will also help Saudi Arabia decarbonise its oil and gas operations. And perhaps most ambitious of all, Saudi is aiming to construct a futuristic gigacity called NEOM. The Kingdom aims to spend $80 billion on the development of the megaproject in the northwest of the country, to create a city that will span the size of Belgium. The aim is to create a futuristic space with no cars, roads, or greenhouse gas emissions that will be powered by 100 percent renewable energy, with 95 percent of the land being preserved for nature. Construction on the city has already begun, although experts have doubts over whether the project is achievable.
The Middle East is set to become an energy powerhouse thanks to the ongoing dedication to its long-established oil and gas industry as well as major investments in the future of the region’s renewables. Saudi Arabia and the UAE will likely be at the forefront of the region’s green energy revolution, with massive plans for green hydrogen, as well as solar and wind energy and other innovative green technologies.
By Felicity Bradstock for Oilprice.com
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