Although the Middle East is home to some of the largest exports of oil and gas in the world, with a rising population and an 85 percent predicted increase in energy consumption over the next two decades, the region has started to embrace the development of renewable energy. The reason for this is two-fold, as the expansion of renewable resources throughout the Middle East will both decrease its carbon footprint in line with the goals of the Paris Agreement and reduce the domestic consumption of oil, thereby increasing profits from oil exports and diversifying the region's energy mix. In recent years, Saudi Arabia and the United Arab Emirates ("UAE") have been leading the charge in the Middle East in the investment in and development of renewable energy.
In 2017, the UAE announced its "Energy Strategy 2050," which outlined its plan to diversify energy production over the next three decades, with a goal of 44 percent of its energy mix coming from renewable energy sources by 2050. Solar development will play a key role in achieving this goal. For example, in 2013, two solar projects were commissioned in the UAE: The Shams Solar Park and the Mohammed bin Rashid Al Maktoum Solar Park (Al Maktoum Park). The Shams Solar Park, a 100-megawatt ("MW") concentrated solar power plant, was the first solar plant to be built in the Middle East. The Al Maktoum Park, which should be complete in 2030, is a massive undertaking. Upon completion, it will cover a 20-mile area outside of Dubai and will have a capacity of 5,000 MW. The Al Maktoum Park is currently in the third of the project's four phases of construction. The third phase consists of the development of 800 MW of solar energy and is expected to become operational by 2020. With this as a backdrop, it is estimated that in the coming years, the UAE will invest nearly $165 billion dollars into the development of clean and renewable energy.
Not to be outdone, Saudi Arabia has announced investments of more than $350 billion in renewable energy in the last six years. While it has faced criticism over the lack of construction of renewable projects resulting from these investments, it has recently implemented various steps to increase its renewable energy production and, in particular, to meet an aggressive renewable energy goal of 9.5 gigawatts ("GW") by 2023 and 60 GW by 2030. In 2018, the Renewable Energy Project Development Office, which was formed as a part of the Ministry of Energy and tasked with developing the framework to meet these goals, awarded the first utility scale solar project, a 300-MW solar photovoltaic plant, to ACWA Power ("ACWA") and the first utility-scale wind project, a 400-MW wind plant, to a joint venture owned by Masdar and EDF Renewables ("EDF-Masdar"). ACWA has secured $320,000,000 in financing for the solar project, which is expected to reach commercial operation by the end of 2019. EDF-Masdar has announced construction of the wind project will begin in the first quarter of 2019. Both projects have associated power purchase agreement with the Saudi Power Procurement Company, for 20- and 25-year terms, respectively.
Although the UAE and Saudi Arabia have the grandest renewable energy ambitions in the Middle East, they are not the only Middle Eastern nations that have turned their attention to renewable energy development. Qatar, for example, has recently announced a target of producing 20 percent of its energy from solar energy by 2030. It has an operational 300- MW integrated PV manufacturing plant and is in the bidding process for a 500-MW solar power plant.
While the renewable energy industry in the Middle East is in its infancy, particularly when compared to the Unites States, Europe, and China, given the aggressive investment and initiatives from major players in both the government and the oil and gas industry, we may finally see a diversification in the Middle East's energy sector.
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