Renewable energy project contract awards in 2021 have eclipsed deals for conventional power plant projects as the region’s energy diversification agenda gathers pace. Middle East Energy Transition reports that there were no contract awards for oil-powered or gas-fuelled power stations in the Middle East and North Africa (Mena) region in the first half of 2021, while in the same period, there were about $2.8bn of renewable energy project contract awards in the region. From 2017 to 2020, the average value of contract awards for oil- or gas-fuelled power stations in the Mena region was about $4.8bn a year, with some $6.2bn of conventional thermal power plant contract awards made in 2020. The stalling of the development of conventional power generation plants in the region is one consequence of an acceleration of efforts to reduce greenhouse gas (GHG) emissions and to diversify the energy sources away from oil and gas. Doubts about long-term demand for oil products and growing confidence in the cost effectiveness of renewable energy are also fuelling the region’s energy transition.
Some $104bn-worth of renewable energy projects are planned, of which about $21.5bn are at the contract tendering stage and are likely to lead to contract awards in 2021 and 2022. Of the remaining $82.4bn of planned projects, only about $4.1bn are at an advanced stage of design, with the vast majority, some $78.3bn of projects, still under study. Many of these may not go ahead or could change substantially in scope. In Algeria, for example, the country’s $42.1bn of planned renewables projects is the region’s biggest pipeline, but some $41.9bn are still under study and may not happen. Opportunities abound, however – particularly in Saudi Arabia. According to the Middle East Energy Transition report, Saudi’s $18bn renewables projects pipeline offers the best prospects, with some $13bn of renewable energy projects at or close to the tendering stage. The UAE, which far outstrips Saudi Arabia in terms of installed renewable capacity, has only $370m of renewables projects at the bidding stage. Cutting CO2 emissions to net zero, diversifying energy sources away from oil and gas, and reducing consumption to preserve resources requires transformation in all areas of life. At the same time, governments must ensure adequate power and water to meet the needs of growing populations and expanding economies.