* Solar power potential barely tapped
* Masdar City carbon-free dream far off
* Soaring gas demand could spur solar growth
By Maha El Dahan and Daniel Fineren
ABU DHABI/DUBAI, Feb 2 Talk of a Middle
Eastern green energy boom is likely to prove no more than a
mirage with little hope of the region saving clean technology
companies from the shrinking project pools of Europe.
Instead India, China and Latin America offer some hope for
green energy companies struggling in a European market drowning
in debt and a North American market awash with gas.
"We expect some growth will happen here in the Middle East
but it will take time for this to become a robust industry,"
Juan Araluce from Danish wind energy giant Vestas told
Reuters at the World Future Energy Summit in Abu Dhabi.
Vestas estimates renewables accounts for only 0.2 percent of
power production in the Middle East and North Africa (MENA),
compared to a global average of around 3 percent and many
European countries already well into double digits.
"It is not even one tenth of the world average, which is
already low, and if we split between the Middle East and North
Africa much of the 0.2 percent happens in North Africa," the
head of Vestas' Mediterranean operations said. "But it should
also be looked at as a huge opportunity."
The world's leading turbine maker has just 600 megawatts
(MW) of installed wind capacity from Morocco to the Arabian
Peninsula, compared to 3,650 MW of turbines it has supplied to
Vestas, which in early January announced plans to cut over
2,300 jobs in a bid to restore profitability, faces stiff
competition from Chinese and Indian turbine makers in Asia but
expects much more growth in Brazil and Mexico than in MENA.
Solar power has not fared much better in a region of intense
and prolonged sunshine and vast expanses of largely uninhabited
land for photovoltaic (PV) panels.
Major oil exporters Saudi Arabia and the United Arab
Emirates have built a few small solar plants and have plans to
build more. But active solar projects are still rare, with Saudi
Arabia building less than 100 MW in the last three years.
Egypt has one of the most ambitious regional goals, having
set a target of 20 percent of its electricity from renewables by
2020, but even that target has been passed by the European Union
average, with Spain already getting over 30 percent from green
sources in 2009 and Italy 23 percent, according to EU figures.
Abu Dhabi green vehicle Masdar has made significant
renewable energy investments in countries where political and
public support for clean energy brings with it big incentives.
Back home, it has only around 10 MW of solar capacity up and
running at the famous but far-from-finished Masdar City, with a
100-MW concentrated solar plant - the world's biggest - under
construction and another 150 MW planned nearby.
The UAE's richest emirate is taking the lead in the energy
hungry Gulf, targeting 7 percent of electricity from alternative
sources by 2020. But that 10-year goal was exceeded by 21 of the
27 EU member states three years ago.
SOLAR vs WIND
The calm summer air of the Gulf may not be suited to large
scale wind farm development and the strongest winds typically
blow in winter when demand for electricity is at its lowest.
But supporters argue more should be done to encourage large
scale projects to harness solar power in a region where
electricity demand is tied to the power of the sun through air
"Recent falling costs of solar power, excellent fit to
demand patterns, and rising regional gas prices, mean that PV is
now economically viable or close to it in most MENA countries,"
according to a new report commissioned by the Emirates Solar
Industry Association (ESIA).
The report called on governments to rationalise energy
pricing in a region where gas is often sold at well below cost
while millions of barrels of oil burnt in power plants are
supplied at a fraction of international prices.
"Saudi Aramco and (UAE oil firm) ADNOC have a choice for
every new barrel of oil they produce," Daniel Zywietz the
managing director of Ambata Capital Middle East, an advisory
group for renewable energy projects in the region, said.
"They can give it to an electricity company for five dollars
a barrel or give it to Japan for $105 a barrel."
The International Energy Agency estimates that the Middle
East accounts for almost half of the $409 billion that the world
spends annually on fossil fuel subsidies.
Artificially low fossil fuel prices make renewable energy
technologies, which already rely on subsidies in other parts of
the world, even more unattractive in the Middle East.
"In the Middle East the leadership is interested but there's
no momentum because conventional energy is accessible," Tulsi
Tanti, chairman of Indian wind power giant Suzlon, said.
But fuel subsidies have also helped drive excessive demand
growth in a region where only Qatar has a lot more gas than it
needs while its neighbours increasingly rely on costly gas
imports or burn more of their own oil - factors that should help
drive green energy growth.
Oman, whose fossil fuel production is unable to keep pace
with rapidly rising internal demand and which aims to get 10
percent of its energy from renewables by 2020, has attracted a
group of German private investors who plan to build 400 MW of
solar power capacity the small non-OPEC oil and gas producer.
The $2-billion project, which includes facilities to
manufacture solar panels for export, could help the spread of
solar power in the region, eventually. Like so many renewable
energy projects, the timeline for building the Omani plants is
"If you are looking at the speed of things, we always have
to keep in mind that yes big projects take time but at the same
time if you do them well, the renewable sector can actually
accelerate quite quickly," Frank Wouters, director of Masdar
So too is the completion of the UAE's Masdar City, hailed as
the world's first carbon-neutral city when construction began in
2008 and whose early stages of development are already a
must-see for visiting heads of state.
But the ambitious project may also have been set back by the
financial problems that have weighed on projects around the
world over the last few years.
Four years on, only the Masdar Institute Campus and the
futuristic pods of its Personal Rapid Transport (PRT) system are
operational and completion of the city of 40,000 people and
50,000 commuters is not expected until 2025.
"There's only one building," a Masdar City security guard
said on Tuesday, when asked if the computer-controlled pod would
give a full tour of the city.
(Additional reporting by Stanley Carvalho, editing by William