REGIONAL I MENA
developed sites. The first full round seeks to produce around 2-3 GW and the second currently aims for between 3-4 GW.
In Saudi Arabia, renewable energy developers are able to choose and source their own sites. This is a novel approach which presents a new challenge for bidders. It will involve securing development assets, such as all real estate and access rights, all consents and a grid connection. These must be secured so that they are bankable on a non-recourse basis. Even if initial project finance is provided on balance sheet, securing assets on such a basis would also be prudent in case the developer wishes to exit the market further down the line. Not doing so can severely restrict marketable exit options.
Land ownership is not straightforward in the Kingdom. A registered land system only exists in a limited part of Saudi Arabia. Developers need to plan carefully in order to secure property rights to a bankable standard.
The introduction of localisation under the
K.A.CARE programme has raised some concern from a bankability perspective. Although local contect is not likely to be a mandatory requirement in the initial rounds, it is obvious that bids will be looked upon favourably if they demonstrate greater local support.
However, as that the industry is still in nascent stages, if the required level of local support is excessive, especially given that the local supply chain is not particularly developed, the bankability of projects may not be great. Ideally
K.A.CARE will balance its aspirations against reality, i.e. the creation of a stable and bankable infrastructure for the supply of renewable energy. With the option to source their own sites, developers have the opportunity to partner with or approach other parties, which can include other companies or local municipalities. Nevertheless, the
K.A.CARE programme helps to establish a local supply chain w hich will inevitably help to develop the domestic renewable energy industry.
Jordan
Jordan has also launched an official procurement and tender programme for developing renewable energy projects. Saudi
Arabia it too has established the concept of self courced sites. This approach really frees up the potential for development of the renewable energy infrastructure.
As mentioned previously, it is paramount to secure bankable development assets for security of development for funding, and for exit options. Interestingly, international banks are involved with all current projects in Jordan. Local banks have yet to fully engage with renewable energy projects, perhaps due to the infancy of the market. Nevertheless, as the market matures it is likely that this will change.
Qatar
Qatar is the largest energy supplier of liquefied natural gas globally and also a major oil supplier. However, the State’s overall energy demand is growing rapidly and over the next few years will be amongst the highest in the world. This places it in somewhat of a similar situation to Saudi Arabia, in that the motivation for establishing renewable energy projects is partly a function of weighing up the costs of renewable energy over export losses.
Qatar has announced that it aims for 20% of its electricity demand to come from renewable sources, the majority of which will be from solar energy.
Although Qatar has yet to procure any renewable energy capacity, a tender has been proposed for a 200 MW solar energy project. A pilot project of approximately 10MW is expected to be launched by early 2014.
Plans have been announced that Qatar will seek tenders for an 1,800 MW solar energy plant in 2014. This will be used to fuel desalination plants, catering for 80% of the country’s desalination needs and significantly reducing fossil fuel consumption.
United Arab Emirates (UAE) The UAE finds itself in somewhat of a peculiar situation. Despite holding a large segment of the world’s fossil fuel resources, it is also reliant upon imported gas from Qatar for electricity production. Electricity demand in the UAE is expected to grow at over 10% annually which could put a considerable strain on both imports and exports. The largest Emirates are Abu Dhabi and Dubai who are both reconsidering their energy strategy and mix.
Both Emirates have fairly significant plans in terms of renewable energy production. Abu Dhabi plans to produce 7% of total energy demand (approximately 1.7 GW) from renewable resources by 2020, with Dubai striving to produce 1% by 2020 and 5% by 2030. The Dubai water and electricity authority has just launched an request for proposal (RFP) for advisory assistance with the second phase of its 1 GW solar programme which suggests policy is moving again.
Masdar, a government owned entity, has driven the development of renewable energy in Abu Dhabi. In Dubai, similar state initiatives have investigated current projects. Unlike Jordan and Saudi, neither Emirate has implemented a direct proposal option. However, with the large amount of state endorsement along
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www.solar-uk.net I Issue III 2013
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