Saudi Arabia is poised to become a regional leader in wind power by the early 2020's, according to new research by Wood Mackenzie Power & Renewables on Monday.
According to the report, Middle East Wind Power Market Outlook 2019-2028, developers will build 6.2 gigawatts (GW) of wind capacity – 46 percent of the region's total wind capacity addition between 2019 and 2028.
However, despite growth projections and imminent regional leadership, Saudi Arabia will fall short of its current 2030 renewables target.
In January 2019, the Saudi government upwardly revised its renewable energy targets resulting in enhanced visibility through 2030.
It earmarked 70% of target renewables capacity for the Public Investment Fund (PIF), the Saudi sovereign wealth fund, while the remaining capacity is to be awarded through Saudi Arabia's Renewable Energy Project Development Office (Repdo).
"The new mechanism highlights concerns that will define the future of Saudi Arabia’s wind market," according to Wood Mackenzie.
- Volatility in Middle East wind market to remain
Regional volatility is expected to remain,nonetheless, strong positive growth driven by Jordan and Iran in 2018 is expected to reverse in 2019. The outlook shows regional demand returning to steady growth post-2020.
Sohaib Malik, Wood Mackenzie Power & Renewables senior analyst, said that in 2018 developers added 185 megawatts (MW) and 63 MW of wind capacity in Jordan and Iran, respectively, compared to 53 MW of capacity across the entire region in 2017.
He said the completion of the 89 MW Al Fujeij and the 86 MW Al Rajef wind projects in 2018 indicates that Jordan has 375 MW of the region’s operational 675 MW wind capacity.
"Iran followed with 278 MW of installed capacity at the end of 2018. A slowdown in 2019 is expected, as project development activity softens in Iran. Additionally, delays in awarding the 400 MW Dumat Al Jandal project in Saudi Arabia will limit annual capacity additions to 184 MW," he stated.
- Solar PV in the Middle East
According to the report, the outlook for solar photovoltaics (PV) in the Middle East, when compared to wind, is much more positive – boasting an ideal environment for development.
Malik said that compared to only 6GW of wind power capacity, developers would add 53GW of PV capacity through 2024.
"Solar PV has become a natural choice for many countries in the region, which is endowed with world class solar energy resources. The increased focus on solar energy is demonstrated by ambitious PV targets across the region," he said.
"As the countries with stable macroeconomic outlooks began auctioning larger projects (Kuwait, Saudi Arabia and U.A.E.), developers offered some of the world’s lowest solar PV tariffs. As such, it will become increasingly difficult for wind to compete with PV in low wind countries including Bahrain, Qatar and the United Arab Emirates," he concluded.
By Gulsen Cagatay