Chair: Professor Costas Papanicolas Challenges and Drivers for Renewables Deployment in Middle East and North Africa Chair: Professor Costas Papanicolas Speaker: Dr. Dimitrios Mentis

Domestic energy market: supplied with regionally produced fossil fuels Background Home to >50% of the world’s crude oil and >1/3 of its natural gas Domestic energy market: supplied with regionally produced fossil fuels 13 million people still lack access especially in rural areas ca 5% annual increase in electricity demand Share of Fuel Types in Total Electricity Generation by World Region, 2010 Crude oil reserves, 2016 Home to more than half of the world’s crude oil and more than a third of its natural gas reserves, MENA has gained enormous significance as a global producer and exporter of energy. Consequently, the domestic energy market has been supplied with regionally produced fossil fuels. However, MENA experiences a shift away from oil and gas that is being driven by a combination of demographics, economics and concerns over supplies. A fast-growing regional population has caused demand for power to rise about 5% annually since 2000. That has been problematic for the the MENA countries without massive reserves of fossil fuels as they have relied on expensive imports. On top of that, around 13 million people leave without access to electricity. The vast majority of these people are located in rural areas and rely exclusively on traditional fuels to cover their daily energy needs, which in many cases causes harmful effects to themselves and their environment. These facts combined with the potential climate change impact due to water scarcity and reliance on climate sensitive agriculture call for a shift towards sustainable forms of energy. Oil NG EIA Statistics 2017 A Roadmap for Renewable Energy in MENA, Oxford, 2014

Modern and Sustainable Energy 7th Sustainable Development Goal – Ensure access to affordable, reliable, sustainable and modern energy for all COP 21 Paris agreement - Mitigate and adapt to impacts of climate change Significant solar and wind power potential Two key ground-breaking agreements lay the foundation of a transformative approach to sustainable energy planning. Agenda 2030 for Sustainable Development and the 7th goal focus on a concerted global effort to ensure access to sustainable energy for all. Furthermore, the Paris agreement on Climate change calls for actions to mitigate and adapt to climate change. These two agreements are mutually reinforcing.  And this is why MENA states have overwhelmingly endorsed both and will have to develop effective tools to reach their Intended Nationally Determined Contributions, BASICALLY commitments of each country to mitigate carbon emissions.  While only a few nations have large oil and gas reserves, nearly every country in MENA has enough sunlight to support a thriving solar industry and MENA’s coasts are buffeted by high-quality winds, making them ideal locations for wind farms. Global Horizontal Irradiance (Global Atlas, IRENA, 2017) Wind speed magnitude (Global Atlas, IRENA, 2017)

Barriers to Renewables Deployment High initial upfront costs Externalities are usually not considered Cost of integration into stable power systems Regional energy pricing mechanisms Lack of economic incentives and institutional support for alternative energy sources So why have renewable energy sources not been taken up by MENA economies to a larger extent? Key to determining any technology’s deployment is its comparative cost advantage vis-à-vis existing technologies. Renewables have always faced more difficulties than most other energy technologies because of: the lengthy PBP required to recover their high initial capital costs, the absence of any meaningful way to consider externalities in the cost calculations and the additional cost of integrating into stable power systems. Adding to those factors, the existing energy market structures and pricing mechanisms in the region - with some of the world’s lowest domestic prices - impede a sensible cost comparison between renewable and conventional sources of energy. Also, the region has appeared to lack the kind of economic incentives and institutional support needed for alternative energy sources to enter its markets.

Drivers for Renewables Deployment Excellent climatic conditions Reduction of capital costs of renewable energy technologies Energy security Open up the electricity sector to IPPs Intra-regional cross-border energy trade But there are several key drivers that can fuel renewable energy projects in the region. Apart from the excellent climatic conditions, the steep reduction of capital costs of alternative technologies allow energy dependent countries (like Morocco) to shift to low carbon economies and address energy security issues. Further, regulators are beginning to see the value of operation of solar power plants and potential grid integration issues are increasingly being addressed by strengthening electric networks. What is more, these countries should open up their electricity sector to IPPs, which can bring the expertise and financial support to produce affordable renewable energy on a commercial scale. To do so, transparent rules for IPPs within a stable regulatory framework need to be set in place to attract investors. Finally, regional integration could reduce the need for additional generation capacity significantly, representing a substantial decrease in the investment needs.

Examples of Renewables Deployment Public Private Partnerships build large solar and wind power plants RE desalination sustainable water supply Solar pumping sustainable agriculture I d like to close with some successful examples of renewables deployment in the region. In Morocco, for example, a partnership between the government and the private sector is building what will be the largest solar plant in the world. Meanwhile, in Jordan, private firms have already built 12 solar plants and are in the process of building at least seven more, the largest collection of privately owned power plants in the region. Furthermore, the United Arab Emirates, one of the first markets in the world to welcome privately owned independent power producers (IPPs) in the 1990s, has in recent tenders achieved solar power tariff levels at below three cents per kilowatt hour – setting the current world record. With more than 50% of the world’s sea water desalination, solar power plays a significant role in supplying this energy intensive industry and providing clean water to millions of people. The world’s largest solar powered desalination plant is under construction in Morocco. Lastly, solar power is used to pump groundwater in several countries in the region where grid electricity is not available. These are encouraging signs and combined with the previously mentioned opportunities, can foster the development of a vibrant renewable energy industry – laying the foundation for a carbon-free future.

Dimitris Mentis: mentis@kth.se Youssef Almulla: almulla@kth.se For more information... Dimitris Mentis: mentis@kth.se Youssef Almulla: almulla@kth.se Mark Howells: mark.howells@energy.kth.se