Although countries in the Middle East and Africa (MENA) are well-positioned to become potential suppliers of clean energy, the region requires stable regulations, significant investments and advanced technology to realize the potential needed for energy transition, according to a survey conducted by international management consultancy Roland Berger.
During a recent energy event hosted by Siemens Energy, 400 energy leaders were asked for their opinion on the importance and progress achieved on energy priorities from “driving exit strategies for coal” to “resilience of energy systems.” Based on their responses, the MENA region scored only 26% in the Energy Transition Readiness Index, which is a surprisingly low score given the enormous green energy investment in the region and recent spike in activity from oil and gas companies.
‘Energy trilemma’
Over the past decades, energy discussion in Africa have been focused on ‘energy trilemma,’ which basically means balancing affordable, reliable and clean energy. For African countries, access to eergy remains critical.
In this region, energy transition represents a significant economic opportunity but its benefits must be distributed throughout society, according to Roland Berger.
“Educating and upskilling of the population can form a basis for this, enabling broad participation in the economic opportunity. The energy transition is a unique opportunity to drive broad socio-economic development. At the same time, the specific needs of each country must be considered in order to fully tap the societal potential and ensure no one is left behind,” the report said.
Expansion of renewable energy
Expansion of renewable energy has the greatest potential impact, according to survey participants. This is an area where technology is already mature and implementation therefore relatively straightforward, the survey showed.
In the Middle East, key economies have set ambitious targets for clean, renewable capacity. For instance, Saudi Arabia is looking to scale up the share of gas and renewable energy in its energy mix to 50% each by 2030 and aiming for installed capacity of 59 GW by the same year. UAE has also set ambitious targets for 2050: to improve energy efficiency by 40%, reduce emissions from the power sector by 70% and increase the share of renewables in the energy mix to 44 percent.
Survey respondents said that progress on the energy priorities overall was fairly advanced, although dedicated efforts would be needed to achieve the 2030 climate targets. Mostly, progress has been made on accelerating renewables and achieving a fair energy transition, the survey found.
Energy transition: action plan
Survey respondents identified policy, funding and technological innovation as the three key areas where action is required.
The energy transition needs a clear and consistent policy framework as business and financial institutions often have to make long-term, irreversible investment decisions. Building the required infrastructure for decarbonization also requires front-loaded funding at the development stage of projects, which is currently readily available in the Middle East, especially for renewable energy projects.
Technological hurdles exist for emerging technologies such as carbon capture and storage and long-term energy storage. According to the survey, technology is not commercially available on the scale required to facilitate the energy transition.
