Joint Forces for Solar MENA solar market reflections Q1 2020 – What is a reasonable price for solar?

After the launch of the Joint Forces for Solar Middle East & North Africa Committee in 2019, the inaugural committee meeting took place in the framework of the World Future Energy Summit in Abu Dhabi, UAE. Characterized by a lively and frank discussion about the status-quo and future challenges of the MENA solar markets, our regional top-level experts outlined a vast number of challenges including corresponding solutions on how these can be tackled in the short- and medium-term. With this post, we at JF4S want to take the opportunity to reflect the major insights that have been observed in Q1 2020.

• There is an urgent need for sustainable solar market growth in the region. This can not only be shaped by the utility scale segment, but a distributed generation segment needs to be fostered. For a sustainable market to thrive, the industry has to avoid a boom and bust cycle scenario.
• When it comes to the renewable energy industry, it is important to develop an Eco-System of multi-stakeholder groups.
• Media announcements and interpretations are misleading the public. Example: Pricing for large utility scale projects are taken into consideration for commercial and industrial projects, which is biasing the viewpoint for third parties. Hence, education is a crucial part to develop a sustainable market.
• The MENA market dynamics bear a considerable risk for small to mid-sized EPCs. There is simply no chance to compete with the “big boys” in tenders price wise thereby affecting the development of the eco-system in these markets.
• Regulations have to come in place for the C&I segment. Tenders should be designed on smaller scale to increase attractiveness throughout the involved industry stakeholders. We need to understand from the regulator and from the utility what is preventing them from activating such regulations for solar – is it a fear of revenue loss or grid impact?
• Challenge: Rooftop segment in Dubai is capped. Currently, governments are seeking the cheapest electricity resulting in business dominated by utilities.
• The fact that governments do not always recognize the off-takers’ value is destructive for a sustainable growth path across all segments.
• We have the responsibility to advise governments as industry leaders. Huge yearly losses are incurred by lacking regulations. High potential to foster the local job market and develop expertise in the renewable energy domain.  
• In addition to simple cost considerations, it is important to also focus on the spill-off effects like job creation. Each MW in the small commercial and industrial segment is creating 3-4 jobs in the region.
• Technical training is vital and the expertise needs to be developed. It is not possible to deploy solar staff straight away.
• Nevertheless, it was mentioned that sustainable long-term job creation is mainly coming from the residential and small commercial segments.
• It was pointed out that local manufacturing is a valuable tool to create trust and convince governments of the positive effects of solar energy (supplier view). In contrast to that, it may be too late to open production sites at this stage as it will be a loss-making case (EPC view).  

With this pro-active and successful start into the year, Joint Forces for Solar looks forward to continuing its mission to foster the diffusion process of renewable energies in the region and beyond. Special thanks to our valued JF4S partners for their great contribution and ongoing commitment!