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Opportunities around the corner Assessing market development in the MENA region

DRAFT. Co-authors: Usama Said Khalid Klabi. Opportunities around the corner Assessing market development in the MENA region. David Williams, Senior Consultant, Strategy & Policy < david . williams @ gl-garradhassan.com >. MENA, a region with…. … fast growing demand for electricity

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Opportunities around the corner Assessing market development in the MENA region

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  1. DRAFT Co-authors:Usama Said Khalid Klabi Opportunities around the cornerAssessing market development in the MENA region David Williams, Senior Consultant, Strategy & Policy < david.williams@gl-garradhassan.com >

  2. MENA, a region with… • … fast growing demand for electricity • costly alternatives • strong resource • increasingly supportive policy • – all on our doorstep…. … too good to be true? Contents: • The Ambition • The Drivers • The Barriers • The Opportunity DRAFT

  3. IEA forecasts MENA region will see 7% of power supplied by renewables in 2030 The Ambition • 2020 Plans add up to at least 13 GW • Equates to 1.8 GW /yr – more than current total installed • But will this be realised? • Syria • TBC • Lebanon • 10% RES • 1.2 GW • Iraq • TBC • Tunisia • 2.7GW by 2030 • Jordan • 10% RES • 1.2 GW • U.A.E. • 7% RES-E (Abu Dhabi) • Algeria • 15% RES-E • 270MW + “exports” • Morocco • 42% RES-E • 2-2.2GW wind • Libya • TBC • Egypt • 20% RES-E • 7.2 GW • S.A. • 9 GW by 2032 DRAFT

  4. The Drivers 1. Demand for power Population growth and improving economies give a forecasted 7% CAGR in GDP growth to 2017 Creating a forecast of 7% annual increase in power demand to 2020 Capacity Shortages are noted across the region – particularly for peak demand DRAFT

  5. The Drivers 2. Energy Security …not all are so resource-rich The Have Nots… Lebanon (+ 97%) Jordan (+ 96%) Morocco (+ 95%) Tunisia (+16%) Egypt (-21%) Syria (-27%) …often dependent on limited supply sources …but must consider rising domestic demand and declining production - “don’t get high on your own supply!” The Haves…. UAE (-184%) S. A. (-218%) Iraq (-233%) Algeria (-273%) Libya (-362%) DRAFT

  6. The Drivers 3. Costly alternatives …oil remains widely used for power production in the region - plants run from both Heavy Fuel Oil (at global oil prices costing upwards of $120/MWh) and middle distillates (upwards of $150/MWh) DRAFT

  7. The Drivers Egypt map based on dedicated measurements identified 10 m/s + sites on Red Sea coast… 4. Strong Resource … positive signs elsewhere but limited ground-based measurements available Measurement initiatives underway with: Saudi Arabia Algeria ESMAP DRAFT

  8. The Drivers 5. Green Agenda, diversification, export, industrial policy • “Develop inter-related national industries” K▪C▪Care, Saudi Arabia • “Tenders … give privilege to local components” NREA, Egypt • “Jordanian origin…20% increase on tariff”Electricity Regulatory Commission, Jordan Create EU markets for desert power Ensure transmission DESERT-TECH Create NA markets for desert power Create ME markets for desert power Facilitate desert power generation DRAFT

  9. The Barriers 1. Overall Capacity (although growing quickly) ≈ 2. Grid Infrastructure (but developments are planned) • GCC Interconnection Authority • Maghreb Countries Interconnection Project DRAFT

  10. The Barriers 3. Market Liberalisation – single buyers and subsidies • Quantity is controlled and planned by single state-owned buyers • Public build or “BOO” style competitive tenders on public land common (Egypt, Morocco, Jordan) • Subsidised electricity puts financial pressure on off-taker • Government guarantees required 4. Political Risk • Project often in remote areas • Only states on the Arabian Peninsular free of travel warnings • Has influence on cost of financing and contractor options 5. Institutional capacity • Issues noted in Egypt and Jordan DRAFT

  11. The Opportunity Role for European players DRAFT

  12. Thank youDavid.williams@gl-garradhassan.com DRAFT

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