Published on Arab Voices

The case for solar power in the Middle East and North Africa

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We often hear about the Middle East and North Africa’s (MENA) centrality in global energy markets as it is home to more than 52 and 42 percent of global reserves of oil and gas respectively. The region is also responsible for more than 36 and 20 percent of global oil and gas production.

However, MENA is also the world leader in other aspects of the energy markets, namely energy use and energy intensity (i.e. energy use per $1,000 of output). Between 1981 and 2009 these grew faster in MENA than any other region.  Furthermore, the gap between MENA and other regions is significant (Figure 1). This is especially true in energy intensity, which saw negative growth rates in all regions during 1981-2009, except for MENA.

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These figures highlight the inefficiencies associated with energy usage in MENA, which are partly driven by the fuel subsidies – an integral part of the economies of the region. In 2009 alone, energy subsidies in MENA amounted to about US$170 billion (Iran has the highest, at US$65 billion), constituting around eight percent of MENA’s US$2.2 trillion GDP. These subsidies are not only expensive but also badly targeted; mostly benefiting the region’s wealthiest.

Such inefficient consumption of energy has had adverse affects on the air quality in MENA. Five MENA countries, Saudi Arabia, Egypt, UAE, Iran, and Kuwait are among the top ten countries in terms of PM10[1] concentrations. Moreover, 29 cities in MENA are among the 100 most polluted cities in the world.

One industry in particular bears responsibility for such high levels of pollution in the region: electricity. While MENA’s population and GDP have grown at an average annual rate of 2.4 and 5.5 percent between 1981 and 2009, its electricity production has grown by an average annual rate of 7.2 percent, outperforming all other regions such as East Asia (at 6.2 percent) and Latin America (at 4.5 percent). This rapid growth of electricity production has introduced a significant environmental challenge for MENA because 96 percent of its installed capacity is running on fossil fuels.  Renewables (including hydropower) account for only about 3 percent of its installed capacity, making the electricity sector in MENA one of the least environmentally friendly in the world. This is especially true for countries where the share of oil in electricity production is more than 50 percent: Yemen (100%), Lebanon (94%), Iraq (92%), Kuwait (71%), Saudi Arabia (55%), and Syria (50%).

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While shifting from oil to natural gas is an economically logical strategy for electricity sectors in MENA, it has environmental consequences: 45 percent of current CO2 emissions in MENA are from burning natural gas. Therefore, a shift from oil to ’renewables,’ mainly solar power, is the most environmentally sound and sustainable option.

ImageSolar electricity generation is possible in areas with direct normal irradiance (DNI) above 5 kWh per meter square per day, which is true for more than 85 percent of MENA. In a 2008 study, the Center for Global Development reported that solar power in MENA has the potential of meeting 50 to 70 percent of global electricity demand. Therefore, it is technically and also economically feasible (albeit on  a level economic playing field and over  the long-term) for MENA to meet its internal electricity demand from purely solar power. Furthermore, MENA has the potential to become an exporter of solar energy to Africa and Europe. Europe is an especially ripe and ready market for MENA’s solar power. The European Union’s (EU) energy strategy, as reported in EU-27’s Energy Roadmap 2050 calls for 64 to 97 percent of the EU’s electricity to be supplied from renewable sources by 2050.

Besides its role in reducing pollution and the export potential to Europe, solar power provides a stable and predictable price as it does not depend on highly volatile fossil fuel markets for electricity generation, making investments in this sector highly desirable.

In sum, solar power offers MENA tremendous environmental and economic advantages. To achieve them, solar power would need a level playing field to gain access to MENA’s electricity industry. Removing fossil fuel subsidies would be a necessary first step in this direction.

[1]Particulate matter with diameter of 10 μm or less.



Amin Mohseni-Cheraghlou

Assistant professor of economics

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