Renewable Energy Readiness Assessment Report: The GCC ...

2011 - 2012

Renewable Energy ReadinessAssessment Report:

The GCC Countries

Organizational and Scientific Co-ordination

&

GCC Renewable Energy Readiness Report 2011 – 2012

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Contents List of Tables ................................................................................................................................................. 3

List of Figures ................................................................................................................................................ 4

List of Acronyms ............................................................................................................................................ 5

Acknowledgements ....................................................................................................................................... 6

1 Introduction .......................................................................................................................................... 7

1.1 Motivation ..................................................................................................................................... 7

1.1 Renewable Energy Readiness ....................................................................................................... 8

1.2 Aim of this Report ......................................................................................................................... 9

1.3 Objectives...................................................................................................................................... 9

2 Energy Demand and the Deployment of Renewables ........................................................................ 10

2.1 Growing Energy Demand ............................................................................................................ 10

2.1.1 Global Energy Mix ............................................................................................................... 11

2.1.2 Future Energy Supply .......................................................................................................... 11

2.1.3 The GCC Energy Scenario .................................................................................................... 12

2.2 Deployment of Renewable Energy Technologies ....................................................................... 13

2.2.1 Drivers and Barriers to the Deployment of RETs ................................................................ 14

2.3 Potential Renewable Energy Jobs in the GCC Countries ............................................................. 15

3 Energy Demand and Renewable Energy Development Initiatives in the GCC Countries ................... 18

3.1 Bahrain ........................................................................................................................................ 18

3.1.1 RET Development Initiatives ............................................................................................... 18

3.2 Kingdom of Saudi Arabia ............................................................................................................. 18


3.2.2 Initiatives for Reducing Supply Side Energy Consumption ................................................. 19

3.2.3 Renewable Energy Program to Displace Fossil Fuels .......................................................... 19

3.3 Kuwait ......................................................................................................................................... 20


3.4 Oman ........................................................................................................................................... 21


3.5 Qatar ........................................................................................................................................... 21


3.5.2 National Research Funding Mechanisms ............................................................................ 23


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3.6 United Arab Emirates .................................................................................................................. 23


4 Methodology: Framework to Assess Renewable Energy Readiness .................................................. 24

5 Analysis of RE-Readiness Factors ........................................................................................................ 28

5.1 Infrastructure .............................................................................................................................. 28

5.1.1 Natural Resources ............................................................................................................... 28

5.1.2 Overall Country Infrastructure ............................................................................................ 30

5.1.3 Existing Grid Capacity .......................................................................................................... 30

5.1.4 Market Infrastructure ......................................................................................................... 30

5.1.5 Electricity Access Rate and Projected Demand................................................................... 36

5.2 Institutions .................................................................................................................................. 38

5.2.1 Public and Private Institutions Supporting RE..................................................................... 38

5.2.2 Key Policies .......................................................................................................................... 38

5.2.3 Renewable Energy Finance ................................................................................................. 42

5.2.4 Macroeconomic Environment ............................................................................................ 44

5.3 Human Capital ............................................................................................................................. 45

5.3.1 Technical and Commercial Skills ......................................................................................... 45

5.3.2 Adoption and Diffusion of New Technologies .................................................................... 48

5.3.3 Consumers, Investors and Decision Makers Awareness ..................................................... 49

6 Summary of Findings ........................................................................................................................... 51

6.1 Identified Gaps in GCC Countries ...................................................................................................... 55

6.2 SWOT Analysis ................................................................................................................................... 58

6.3 Priority Research Areas ..................................................................................................................... 59

7 Conclusions ......................................................................................................................................... 60

8 References .......................................................................................................................................... 62

9 Appendix ............................................................................................................................................. 68


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List of Tables Table 1: Key indicators of the GCC countries and world average (2009-2010)

Table 2: Global competitiveness scores of the GCC countries

Table 3: RE-readiness framework factors and respective weight

Table 4: The GCC countries energy reserve ranks and RE-readiness scores

Table 5: Solar and wind potential in the GCC countries

Table 6: Scoring criteria for competitive advantage of RETs

Table 7: Competitive advantages of RETs and RE-readiness scores

Table 8: Expected electricity demand growth and scores of RE-readiness

Table 9: The GCC countries RETs deployment targets and policy mechanism scores

Table 10: The GCC countries regulatory framework scores

Table 11: World ranking and financial market development scores

Table 12: RE Readiness Scores for Investment in RE Development

Table 13: Macroeconomic indicators, world ranks and competitiveness scores

Table 14: List of organizations and their R&D facilities in the GCC countries on renewable and sustainable energy

Table 15: The GCC countries RE-readiness scores and overall index

Table 16: The SWOT analysis for optimal deployment of renewables in the GCC countries


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List of Figures Figure 1: Average annual growth of renewable energy capacity

Figure 2: Applied methodology for this study

Figure 3: Direct jobs across the PV value chain

Figure 4: Market infrastructure sub-factors readiness score

Figure 5: RE-readiness for pillar 1: Infrastructure

Figure 6: RE-readiness for pillar 2: Institutions

Figure 7: RE-readiness for pillar 3: Human capital

Figure 8: GCC countries’ RE-readiness index

Figure 9: GCC countries’ attractiveness index on renewable energy development pillars

Figure 10 : GCC countries’ strengths and gaps on RE-readiness

Figure 11: RET deployment gaps in Bahrain

Figure 12: RET deployment gaps in the KSA

Figure 13: RET deployment gaps in Kuwait

Figure 14: RET deployment gaps in Oman

Figure 15: RET deployment gaps in Qatar

Figure 16: RET deployment gaps in the UAE


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List of Acronyms AER: Authority for Electricity Regulation

BAPCO: Bahrain Petroleum Company

CDM: Clean Development Mechanism

COP18: 18th UNFCCC Conference of Parties

CSP: Concentrated Solar Power

DLR: German Aerospace Centre

E&Y: Ernst & Young

EWA: Electricity and Water Authority

EU: European Union

GCC: Gulf Cooperation Council

GCR: Global Competitiveness Report

GDP: Gross Domestic Product

GHG: Global Greenhouse Gas

GCI: Global Competitiveness Index

GW: Gigawatt

IAEA: International Atomic Energy Agency

IEA: International Energy Agency

IRENA: International Renewable Energy Agency

KACST: King Abdulaziz City for Science and Technology

KAUST: King Abdullah University of Science and

Technology

KA-CARE: King Abdullah City for Atomic and Renewable

Energy

KFUPM: King Fahd University of Petroleum and Minerals

KISR: Kuwait Institute for Scientific Research

KSA: Kingdom of Saudi Arabia

kW: kilowatt

kWh: kilowatt-hour

LNG: Liquefied natural gas

MCDM: Multi-criteria decision making

MEDRC: Middle East Desalination Research Centre

Mtoe: Million ton of oil equivalent

MW: Megawatt

NGO: Non-government organization

NPRP: National Priorities Research Program

NPRP-EP: NPRP-Exceptional Program

NRA: National Regulatory Authority

O&M: Operation and Maintenance

OECD: Organization for Economic Cooperation and

Development

OPEC: Organization of the Petroleum Exporting

Countries

PV: Photovoltaic

QNFSP: Qatar National Food Security Programme

QNRF: Qatar National Research Fund

QNRS: Qatar National Research Strategy

QSTP: Qatar Science and Technology Park

RE: Renewable Energy

RET: Renewable Energy Technology

RE-readiness: Renewable Energy readiness

R&D: Research and Development

SWOT: Strength, Weakness, Opportunity and Threat

SWERA: Solar and Wind Energy Resource Assessment

T&D: Transmission & Distribution

TCF: Trillion Cubic Feet

TWh: Terawatt-hour

UAE: United Arab Emirates

UN-FCCC: United Nations Framework Convention on

Climate Change

GCC Renewable Energy Readiness Report

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Acknowledgements

This report was commissioned and financed by Masdar Institute of Science and Technology and produced in collaboration with the GCC Consortium Partners of the EU-GCC Clean Energy Network. A large share of the research for this report was conducted on a voluntary basis. Authors

Dr. Alam Mondal, Masdar Institute of Science and Technology, UAE

Diala Hawila, Masdar Institute of Science and Technology, UAE

Huden Serenat Khalil, Masdar Institute of Science and Technology, UAE

Dr. Toufic Mezher, Masdar Institute of Science and Technology, UAE

Section Authors

Dr. Rabia Ferroukhi and Arslan Khalid, Knowledge, Policy and Finance Centre, IRENA, UAE

Yousef M. Alyousef, Director, Energy Research Institute, King Abdulaziz City for Science and

Technology, Saudi Arabia

Abdul Sattar Al-Taie, Executive Director, Qatar National Research Fund (QNRF), Qatar

Foundation, Qatar

Lead Country Facilitators and Contributors

Dr. Abdullah Al-Badi, Sultan Qaboos University, Oman

Dr. Ibrahim Abdel Gelil and Maha Abdel Wahab, Arabian Gulf University, Bahrain

Dr. Rabi H. Mohtar and Dr. Mohammed Darwish, Qatar Environment and Energy Research

Institute, Qatar Foundation, Qatar

Dr. Salem F. Alhajraf, Innovative and Renewable Energy, Kuwait Institute of Scientific Research,

Kuwait

Dr. Sulaiman Al Mayman, King Abdulaziz City for Science and Technology, Saudi Arabia

Reviewers

Dr. Scott Kennedy, Masdar Institute of Science and Technology, UAE

Dr. Sgouris Sgouridis, Masdar Institute of Science and Technology, UAE

Abdulla Al Seiari, Masdar Institute of Science and Technology, UAE

Editing

Zarina Khan, Masdar Institute of Science and Technology, UAE


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1 Introduction

1.1 Motivation

Energy is a vital input for socio-economic development. Worldwide, the present trends of energy supply

and demand are not sustainable due to the expected gap between supply and demand in the future.

The fossil fuel reserves are limited and use of these fuels has a negative impact on the environment.

Holding energy at a secure level and global climate change at a safe level requires policies to be

connected to sustainable development strategies.

One may ask, however, why Gulf Cooperation Council (GCC) countries, endowed with substantial

reserves in oil and gas, should invest in alternative energy. There is a perceived opportunity cost of

diverting resources away from the oil and gas sector, which has high a return on investment. However,

this perception is relatively short-sighted and ignores both the near-term opportunities of economic

growth in the renewables sector as well as the long-term threats of falling behind in a transforming

energy economy.

On a purely economic basis, the GCC’s investment in the development of Renewable Energy

Technologies (RETs) provides an opportunity for a number of key benefits. First, facilitating the

diversification of the energy supply mix away from a reliance on petroleum and natural gas would

increase long-term energy security by exploiting a renewable, as opposed to finite, energy resource.

Second, reducing the domestic consumption of fossil fuels would increase oil and gas export revenue

potential and help prevent a near-term transition to the status of an energy importer for some countries

(e.g., the KSA, UAE), given current projections of rapidly increasing domestic energy demand. Third,

support for this sector would create opportunities for capital investment. Finally, the resulting economic

development can potentially create high value jobs within the region that can support the establishment

of the full renewable energy value-chain, including R&D, manufacturing, and local and international

deployment.

These benefits can only be realized through supportive policies that address the existing barriers

preventing growth in this sector. By tackling these challenges, the integration of RETs in the power

sector would not only support the sustainable development of the GCC region, but would also

contribute towards the region’s global responsibility for environmental protection.

Climate change and energy security1 [1, 2] are also important issues on the global arena which are

rapidly becoming equally important issues for the GCC. The region’s current energy situation shows a

trend of rapid energy demand growth. From 1997 to 2006, the primary energy consumption in the GCC

increased by almost 60% [3] at a rate of about 6.6% per year. Forecasts suggest that energy demand will

increase at an annual growth rate of 9.5% by 2020 [4].

1 Energy security refers to a consistent availability of sufficient supplies of primary energy. It involves the provision

of sufficient and reliable energy supplies to satisfy demand at all times and at affordable prices, while also avoiding environmental impacts [1, 2].


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Rapid development in the region has also resulted in a rise of CO₂ emissions of 33% to 35% between

2007 and 2008 [3]. Currently the CO₂ emissions per capita, per gross domestic product (GDP) and energy

intensities in the GCC countries are higher than the average of EU-25 and the average of the

Organization for Economic Co-operation and Development (OECD) countries [5]. Although the GCC

region represents 0.6% of the global population, it is responsible for 2.4% of the total greenhouse gas

(GHG) emissions produced globally [6].

With recent climate change modeling studies showing that the Arab region could face an increase in

surface temperature between 2 to 5.5°C by the end of the 21st century [7], all GCC countries have

responded by ratifying the Kyoto Protocol of the United Nations Framework Convention on Climate

Change (UNFCCC). In 2005, Kuwait, Oman, Qatar, the Kingdom of Saudi Arabia (KSA), and the United

Arab Emirates (UAE) all ratified the Kyoto Protocol. Bahrain was the last of the GCC countries to join the

Annex 1 party in 2006 [8].

Even with clear incentives to adopt RETs and a good potential resource base, the region’s transition

from conventional fossil dependence to widespread utilization of renewables is not an easy one.

Throughout the GCC region, domestic economies continue to enjoy significant subsidies on fossil fuels,

albeit while bearing the external costs associated with their use. Subsidies create a higher economic

barrier for adopting any alternatives, which is exacerbated by the high investment cost of RETs.

Given these barriers to RET development, GCC countries are required to provide both economic and

political interventions to support RETs. These interventions include legislation, incentives to investment,

generation targets, guidelines for energy conservation and strategies to stimulate the energy industry

[9, 10].

Assessment of renewable energy readiness (RE-readiness) is a useful approach for developing countries,

including the GCC, to find the gaps hindering deployment of RETs and to identify a country’s strengths

and weaknesses in regards to RET development. It is defined by the International Renewable Energy

Agency (IRENA) as an assessment of the key conditions for RET development and deployment in a

country, and the actions necessary to further improve these conditions of the conditions necessary for

the installation and ongoing operation of renewable energy facilities in a country [11].

1.1 Renewable Energy Readiness

IRENA defines readiness as “when actors are able to deploy renewables where they are the best option,

accounting for all economic, social and environmental criteria.” It conducts its assessments by looking at

“the current state of national readiness, across the project lifecycle, from national energy strategy and

policy, to building, operation and maintenance (O&M), with capacity-building cutting across all these

items” [11].

On a national level, RE-readiness is an indication of the country’s realization of the need for renewable

energy and its ability to introduce and support renewable energy projects. In this report, RE-readiness is

defined as the level of development of a county’s infrastructure, institutions and human capital factors

that influence the attractiveness of investing in renewable energy projects and play a role in enhancing


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the reliability of RETs to ensure their sustainable deployment. This report presents a RE-readiness

framework that can create a benchmark for comparison among different countries and to assess future

progress.

1.2 Aim of this Report

Prepared in partnership with GCC Consortium on Clean Energy through the European Union (EU) GCC

Clean Energy Network, this report aims to develop and disseminate an assessment framework to

evaluate GCC countries’ (RE-readiness) for deployment of (RETs).

A framework is adopted in which we apply a consistent methodology across all the GCC countries to

assess the current state of infrastructure, institutions and human capital to adopt and deploy RETs.

The framework is followed by an assessment of how conditions might be improved. The assessment will

enable countries to identify existing gaps and increase diffusion of RETs across a range of renewable

energy sources (solar and wind) resulting in improved energy security and reduced CO2 emissions.

1.3 Objectives

Through this study we hope to achieve the following objectives:

1) Foster understanding and development of RETs in GCC countries.

2) Provide a wider introduction to energy and environmental issues.

3) Develop a generic framework to assess RE-readiness of GCC countries as a case study.

4) Calculate the RE-readiness score for GCC countries and discuss the associated weaknesses and

strengths.

5) Identify priority areas for research and development related to renewable energy deployment.

Towards achieving these objectives, the report essentially serves as a benchmark to assess each

country’s RE- readiness, identifying gaps and providing recommendations to overcome the main barriers

to integrate renewable energy projects for power generation. It is useful for a first level benchmarking

of a country’s relative position against regional or global averages. However, one must recognize that

such an assessment reflects a best estimate, given currently available data, of an inherently dynamic

situation. As both the availability of data and the weight of the impact of factors behind the readiness

calculation are modified over time, the absolute scores will change and the rankings will be affected.

To meet the above mentioned objectives, this report is divided into the following sections:

Introduction: the motivation behind the study, definition of RE-readiness, aims and objectives of

this report.

Energy Demand and the Deployment of Renewables: section discusses the global and GCC

energy context, focusing on RET development, drivers and barriers to RETs. The potential of RE

jobs in the GCC as a major benefit of RET deployment in the region is also explored.

Energy Demand and Renewable Energy Development Initiatives in the GCC Countries: section

discusses the energy demand, consumption and the status of RET development initiatives in

each GCC country.


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Methodology: Framework to Assess RE-Readiness Factors

Analysis of RE-Readiness Factors: section discusses the factors’ and sub-factors’ scores of

infrastructure, institutions and human capital pillars.

Summary of Findings: section provides RE-readiness index and overall noticeable gaps for

development of RETs. This section also includes country-wide gaps, SWOT analysis and priority

research areas to deployment of RETs in the GCC countries.

Conclusions

2 Energy Demand and the Deployment of Renewables

This section provides an update of the current and future global energy scene: demand and supply,

diminishing fossil fuel reserves and the consequence of increasing global CO2 emissions. Within the

same context, the GCC energy scenario is discussed.

The second part of this section gives an overview of the benefits of RETs to meet growing energy

demand, growth status, drivers and barriers to deployment and deployment trends.

Lastly, the potential for renewable energy jobs in the GCC as a major benefit of RET deployment in the

region is explored.

2.1 Growing Energy Demand

The global primary energy demand in 1980 was 7,228 million ton of oil equivalent (Mtoe), the total

installed capacity of power generation was 1,945 gigawatt (GW). By 2008, global primary energy

demand had increased by 70% at 12,271 Mtoe with installed capacity increasing to 4,719 GW, of which

almost 70% was from fossil fuels [12].

In 2011, although the world primary energy consumption grew by 2.5%, roughly in line with the 10-year

average, consumption in OECD countries fell by 0.8%, the third decline in the past four years driven by

the global financial crisis. However, non-OECD consumption continued to grow by 5.3%, in line with the

10-year average. Global consumption growth decelerated in 2011 for all fuels, as did total energy

consumption for all regions [13]. This sudden shift in paradigms in recent year shows how energy plays a

vital role in the functioning of the world economy.

With improving global economic prospects, it is expected that over the next two decades, projected

electricity demand alone will require the installation of the same power generation capacity that was

installed over the entire 20th century [14].

Key factors driving this increase in energy demand can be summarized as follows:

Industrialization: particularly in emerging markets.

Increasing wealth: among rapidly developing countries, where often less efficient end-use

equipment are used.

Globalization: increasing transportation to further destinations with greater speed.


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Energy Security: while energy demand is typically driven by short-term considerations (e.g., GDP

growth, transport needs), long-term concerns over energy security worldwide are leading to

premiums being paid for energy assets.

2.1.1 Global Energy Mix

Conventional fossil fuels that provide energy in affordable, concentrated ready to use forms remain the

principal sources of energy worldwide. Currently, the global energy supply share of fossil fuels is about

80%. While only 20% of the worldwide total final energy demand is supplied by nuclear and renewable

energy sources [15].

Increasing global energy demand, most of which is being met by fossil fuels is causing an increase in CO₂

emissions. In 2012, a total of 35.6 billion tons of CO₂ emissions were generated worldwide, 2.6% more

than the previous year, mostly as a result of increased fossil fuel combustion. The emissions thus exceed

1990 levels (base year for the Kyoto Protocol) by almost 60% [16]. The IEA suggests that around 84% of

total CO₂ emissions are energy related [17] with 41% of emissions coming from fossil fuel-based power

generation alone [18].

A global decline in conventional coal, oil and natural gas reserves has been observed over recent

decades as these conventional fuels are not being newly formed at any significant rate, and thus their

reserves are ultimately finite. Unconventional fossil fuels, such as tar sands and shale oil and gas, have

recently seen a rapid rise in terms of their projected supply. While these unconventional sources will

likely have a major role to play in the global energy supply, they remain subject to the same drawbacks

as conventional sources: uneven distribution, finite resources, environmental impacts including GHG

emissions and other hazards.

2.1.2 Future Energy Supply

If the current rate of energy consumption is continued then conventional coal, oil and natural gas

reserves may last for 118, 46 and 58.6 years respectively [19]. On the other hand, unconventional

resources will likely last much longer [20].

The World Energy Outlook Factsheet on the evolution of global energy markets by 2035 suggests that

though renewables grow rapidly, fossil fuels remain the principal sources of energy worldwide. Demand

for oil, gas and coal grows in absolute terms through 2035, but their combined share of the global

energy mix falls from 81% to 75% during that period. The unlocking of unconventional resources

portends a very prominent future for natural gas, which nearly overtakes coal in the primary energy

supply mix by 2035 [21].

Nuclear power, in light of additional policy changes in several countries prompted by the accident at

Fukushima Daiichi has seen a downward revision from previous projections leading many to wait for a

new generation of proven nuclear reactors to minimize risks. Projections for 2035 suggest that nuclear

power will maintain a 12% share of electricity generation [21].


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Renewable energy deployment is driven by government incentives, falling costs, rising fossil fuel prices

and, in some cases, carbon pricing: their share of electricity generation grows from 20% in 2010 to 31%

by 2035 [21].

2.1.3 The GCC Energy Scenario

The GCC region accounts for about 45% of the world’s proven oil reserves and 25% of the world’s oil

exports. It possesses around 18% of the proven global natural gas reserves [22]. Driven by strong

economic growth, rapid industrialization and infrastructure development and investment in the energy

sector, this region’s energy consumption has increased at a tremendous rate. In 2005, total energy

consumption was 275 Mtoe which increased to 389 Mtoe in 2011 at an average growth rate of about

6.85% per year [23].

Electricity consumption in the GCC countries has also increased at a fast rate: 12.4% from 2005 to 2009

(3.15% per year). The rate is much higher than the world average of 2.2% for the same period [4].

Average per capita electricity consumption in the GCC region was 10,976 kilowatt-hour (kWh) in 2009,

which was 3.9 times more than the world average of 2,806 kWh in 2009 [24].

In 2006, the total electricity production in the GCC was about 324 TWh, which increased to 391 TWh in

2009 [24]. On this basis, it is estimated that the production growth is about 6.9% per year. Energy

demand is expected to continue increasing in line with growing industrialization in this rapidly

developing region. The present generation capacity in the GCC countries is about 80 GW [25].

Considering current trends, the region must increase its electricity capacity by an additional 60 GW to

meet the demand by 2020. Some macroeconomic, energy and environmental indicators for the GCC

countries are presented in Table 1.

Table 1: Key indicators of the GCC countries and world average (2009-10) [24]

Key indicators Bahrain Kuwait Oman Qatar KSA UAE GCC World

GDP growth (%) 4.5 3.41 4 16.6 4.6 1.43 5.7 2.71

GDP per capita (Current USD) 18,184 62,664 20,790 72,398 16,423 39,624 38,347 9,157

Electricity production (TWh) 12.05 53.21 17.82 24.78 217 90.5 415.3 20,078

Electricity consumption per capita (kWh)

9,214 17,609 5,724 14,420 7,427 11,463 10,976 2,806

Energy use per capita (kWh) 93,936 132,263 64,426 172,967 683,00 99,620 105,246 20,764

Electricity production from gas (% total)

100 28.82 82 100 44.8 98.2 75.63 21.4

Electricity production from oil (% total)

0 71.17 18 0 55.2 1.8 24.36 4.8

Electricity production from renewable (% total excluding hydro)

0 0 0 0 0 0 0 3

Access to electricity (% population)

99.4 100 98 98.7 99 100 99.18 74

CO2 emission (metric ton per capita)

21.36 30.11 17.34 49 16.56 24.98 26.55 4.76

CO2 emission from electricity

and water (% total)

54.21 68.19 56.7 52 51.4 50.8 55.55 47.5


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CO2 intensity2 (kg per kg oil

equivalent) 2.43 2.75 2.78 2.97 2.81 2.65 2.73 2.53

In the context of such significant need for new capacity, the GCC region has a unique opportunity to

channel future investment into the deployment of renewable energy technologies (RETs), thus

enhancing future energy security and reducing GHG emissions. The integration of RETs in the power

sector through nationwide energy planning would enhance not only the sustainable development of the

GCC region, but would also integrate the GCC’s efforts into the broader global effort to address the

challenges of climate change.

2.2 Deployment of Renewable Energy Technologies

Renewable energy plays an important role in the process of integrating the environment into energy

policies through its potential to contribute to the objectives of sustainability. Renewable energy-based

power generation generally emits no GHG’s during operation, with the notable exception of biomass-

based power plants, which are neutral over their complete life-cycle in terms of GHG emissions.

Renewable energy resources can contribute significantly to the security and diversity of a nation’s

energy supply mix by providing a secure, indigenous source of energy that is available in a variety of

forms [26].

Renewable energy benefits have created a strong motivation for pursuing RETs in both developed and

developing countries. During the global financial crises in 2009, renewable energy continued to grow to

supply 16.7% of global final energy consumption in 2010 [27]. Of this total, modern renewable energy

accounted for an estimated 8.2%, a share that has increased in recent years, while the share from

traditional biomass has declined slightly to an estimated 8.5% [28]. Global investments in RE continued

to surge, from USD 39.5 billion in 2004 to USD 244 billion in 2012 (UNEP, FSFM and BNEF, 2013).

Globally, electricity generation from renewable energy resources has been growing rapidly. During 2011,

renewables accounted for almost half of the estimated 208 gigawatts (GW) of electric capacity added in

the power sector globally. Wind and solar photovoltaics (PV) accounted for almost 40% and 30% of new

renewable capacity, respectively, followed by hydropower (nearly 25%). By the end of 2011, total

renewable power capacity worldwide exceeded 1,360 GW, up 8% over 2010; renewables comprised

more than 25% of total global power-generating capacity (estimated at 5,360 GW in 2011) and supplied

an estimated 20.3% of global electricity. Non-hydropower renewables exceeded 390 GW, a 24% capacity

increase over 2010 [28].

Solar PV grew the fastest of all renewable technologies during the period from end-2006 through 2011,

with operating capacity increasing by an average of 58% annually, followed by concentrating solar

thermal power (CSP), which increased almost 37% annually over this period from a small base, and wind

power (26%) [28]. Compared to the global 1.4% annual growth of conventional energy, worldwide

installed capacities of solar PV and wind power grew at 30% per year [29-31]. This has led to a significant

2 CO2 intensity refers to CO2 emissions per kg of oil equivalent of final energy use.


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reduction in the investment cost of solar PV and wind power generation. Figure 1 shows the growth of

renewable energy capacity from 2006 to 2011.

During 2011, China added 90 GW of electric capacity (70 GW of which was non-hydro) ending the year

with an estimated 282 GW, more renewable power capacity than any other nation. The top seven

countries for non-hydro renewable electric capacity—China, the United States, Germany, Spain, Italy,

India, and Japan—accounted for about 70% of total capacity worldwide. The ranking was quite different

on a per capita basis, with Germany in the lead followed by Spain, Italy, the United States, Japan, China,

and India [28].

Figure 1: Average annual growth of renewable energy capacity, 2006-2011, adopted from [28]

2.2.1 Drivers and Barriers to the Deployment of RETs

National governments tend to increase the deployment of RETs for the following three interlinked

reasons [2]:

1) To improve energy security.

2) To encourage economic development with innovation and high-tech manufacturing.

3) To protect the climate and the wider environment from the impacts of fossil fuel use.

Despite the exhibited performance of RETs worldwide and their significant environmental benefits, it

has not been possible to tap their full potential. This is due to the various barriers, relating to

infrastructure, market conditions, human capital both institutional and regulatory [9, 32-36], which all

impede the diffusion and continued growth of RETs.

Renewable energy must compete with financial and regulatory systems that have evolved to promote

the development and use of fossil fuels, and often discriminate against the use of RETs. Furthermore,

0% 10% 20% 30% 40% 50% 60% 70% 80%

Solar PV

Concentrated Solar Power (CSP)

Wind power

Solar thermal

Ethanol production

Biodiesal production

Hydropower

Geothermal power

% Growth Rate

End 2006 to 2011 2011 only


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the one major barrier to RETs is their relative cost. Costs are closely tied to the development of markets

and technical progress.

The cost of solar PV has been falling consistently over the last three decades, exhibiting a learning curve

with a cost reduction rate of 19.3% [37] for every doubling of solar PV capacity. This is partly driven by

the increase in the efficiency of solar PV and improvements in market conditions favorable to RETs.

Availability, affordability (price volatility and price uncertainty) and sustainability of energy supply are

interlinked aspects of an overall energy system that can significantly influence deployment.

Global new investment in renewables rose 17% to a record USD 257 billion in 2011. This was more than

six times the figure for 2004 and almost twice the total investment in 2007, the last year before the

acute phase of the recent global financial crisis. This increase took place at a time when the cost of

renewable power equipment was falling rapidly and when there was uncertainty over economic growth

and policy priorities in developed countries [28].

2.3 Potential Renewable Energy Jobs in the GCC Countries3

Investment in the development of RETs in GCC countries provides an opportunity for a number of key

benefits, one of which is the potential for job creation across the full renewable energy value-chain,

including R&D, manufacturing, installation, operation and maintenance and decommissioning. Several

studies indicate that there is considerable potential for gross job creation in renewable energy and that

the number of jobs generated per dollar of investment or per unit of capacity is generally higher in

renewable energy than in fossil fuel generation. While the extent of employment effects may be

debated, most studies suggest that renewable energy deployment may also be associated with net job

creation, although the magnitude will vary by country and by sector. Similarly, the number of jobs

created in the GCC countries will depend on a range of factors, including the success of deployment,

existing industry, labor skill and availability, training and education policy, as well as the multiplier

effects of deployment on the rest of the economy.

Unemployment is a challenge in the GCC region and could potentially threaten the high standards of

living. In particular, high population growth rates, unattractive private sector opportunities and the

relative lack of required skills among the local graduates have resulted in a significant employment

problem for GCC youth4. As such, policy makers have been considering different ways to generate jobs,

as well as shift part of the workforce away from government jobs into fast-growing new industries

outside of hydrocarbons, including the renewable energy sector.

Indeed, national renewable energy targets indicate that most countries in the GCC are planning to add

significant renewable energy based capacity in the next couple of decades. Given that all countries have

ample solar resources available throughout the year, the main focus of investment is expected to be

solar energy (PV in particular). This is also reflected in the existing and planned projects in the GCC.

3 This section is contributed by Rabia Ferroukhi and Arslan Khalid, Knowledge, Policy and Finance Centre, IRENA.

4 Unemployment rates are significantly higher in the 19-25 age groups: 30% in Saudi Arabia, 24% in the UAE, 28%

in Bahrain, 23% in Oman, and 12% in Kuwait; as opposed to the overall unemployment rates of 10.5% in Saudi Arabia, 14% in the UAE, 8% in Bahrain and Oman and 6% in Kuwait.


16

Encouragingly, studies also indicate that when comparing between renewable technologies with

different capacity factors (employment per unit of energy), PV technologies account for the highest

number of job-years per GWh over the lifetime of a facility [38].

Realization of the announced renewable energy targets in the GCC region can potentially lead to

significant job creation along the value chain in the GCC countries, which can be estimated more

precisely using different available methodologies. Based on a simple employment factors methodology,

preliminary analysis shows that the renewable energy capacity in GCC can reach 20 GW by 2020 and 60

GW by 20305 [39], generating 0.6 and 1.8 million (gross) jobs by 2020 and 2030, respectively. More than

90% of these jobs will be generated in the solar energy sector, where the dominant share of jobs

created is generally concentrated in the manufacturing and construction6 stages of the supply chain

(discussed in Section 5.1.4.4). It must be noted that the share of local jobs will eventually depend on the

degree of localization (domestic vs. foreign) of some of the key stages of the supply chain (in particular,

manufacturing). Therefore, fostering the domestic growth of these stages should be essential in the list

of priorities of GCC governments.

In order to create a market for renewable energy and facilitate the development of the local renewable

energy supply chain, regulations and policies will play a very import role. A stable, thriving and

predictable renewable energy demand is an essential factor for attracting sizeable private investment in

a local renewable energy supply chain. Therefore, deployment policies that create a significant local

renewable energy demand (public or private), are very important in generating renewable energy

related jobs. In addition, capacity building activities that develop the necessary skills and understanding

among the stakeholders7, coupled with conducive labor policies, can facilitate the shift of labor resource

towards renewable energy.

Several studies suggest that demand for PV or wind power can lead to significant job creation through

installation and maintenance activities given that appropriate capacity building initiatives are applied.

However, in order to create jobs throughout the renewable energy supply chain, GCC countries can

adopt various industrial policies that encourage the development of the domestic industry from the

demand and the supply side.

On the demand side, incentives such as local content requirement can be a key tool to establish

manufacturing facilities by generating the demand for local equipment and services. On the supply side,

governments can support the establishment of manufacturing facilities by providing guarantees and low

cost financing; promoting research and development; arranging transfer of technology; training human

capital; and if possible, providing additional demand by facilitating export of the domestic equipment

and capabilities [40]. Finally, government can further promote the establishment of the renewable

5 It is assumed that the share of the RE technologies are the following: 60% PV, 30% CSP, 5% wind and 5% waste to

energy. 6 In general this applies to fossil fuel-based technologies, feedstock production and distribution of biofuels account

for the largest share of jobs. 7 Training and skill development program for stakeholders including workers, investors, financers and politicians.


17

energy supply chain through direct public investment in flagship projects and/or public private

partnerships.

Of particular relevance in the enabling policies that would ensure job creation from renewable energy

deployment are renewable energy education and training. Strong skills development initiatives need to

be undertaken to build a critical mass of technical skills to ensure the sustainability and long-term

success of renewable energy industries.

To achieve deployment targets and maximize job benefits, it will be necessary to facilitate increased

renewable energy education and training. It is, therefore, advisable to conduct skills mapping exercises

to identify existing skill and knowledge-related gaps in the GCC region. This should then be used to

develop appropriate training and education policies and to make sure that vocational training and

curricula are in line with industry needs.

In the development of policies to support job creation in renewable energy, the following aspects should

also be considered: the state of existing skills should be accounted for when formulating deployment

and industrial policies; services should be provided to help match jobs and workers; and job creation

should be focused in areas/demographic groups with low employment. The efforts mentioned above

will be especially needed given that the GCC relies heavily on skilled labor from overseas, without always

ensuring that skills are transferred to local people [40].

Significant efforts are already being undertaken to increase renewable energy education. The flagship

research institutes of the Masdar Institute of Science and Technology and the King Abdullah University

of Science and Technology (KAUST), for example, have become state-of-the art higher education

facilities that provide both local and foreign students with the necessary training needed to carry

forward the dream of a renewable energy future in the GCC. Among several other educational and

research initiatives in Qatar, Qatar University, along with implementing renewable energy related

teaching, has established a teaching laboratory in collaboration with the German Heliocentric Energy

Solutions company to provide practical knowledge in the fields of solar and wind energy generation

systems and storage. The Qatar Environment and Energy Research Institute (QEERI) is conducting

research on various energy and environmental issues with special focus on solar energy. The Kuwait

Institute for Scientific Research (KISR) is financing research projects on solar energy systems and their

technical feasibility in the country, in which more than 70 researchers, engineers and technicians are

trained and involved. Dhofar University in Oman has launched projects integrating renewable

technologies into academic programs and into students’ course curricula, thus providing graduates with

knowledge in renewable energy systems and design aspects of related projects.

Clearly there is significant potential for job creation along the value chain in the GCC to meet announced

renewable energy targets. However, as explained above, sustainable job creation in the GCC will require

going beyond a deployment policy to also introduce the appropriate labor, education/training, and

industrial policies required to create the overall enabling environment. Assuming there are net

employment benefits from deploying renewables, the jobs created will be most cost-efficient when

support policies are holistic, stable, consistent, and long-term.

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=4&cad=rja&sqi=2&ved=0CEMQFjAD&url=http%3A%2F%2Fwww.kisr.edu.kw%2F&ei=hsgQUabsFsfryAGS9YHQBA&usg=AFQjCNGrLtOYcY7RcZn1Iz2nAXAr6XeNXA&sig2=IjU6tO7hF8qUigcRVVC9Mg&bvm=bv.41867550,d.aWM

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=4&cad=rja&sqi=2&ved=0CEMQFjAD&url=http%3A%2F%2Fwww.kisr.edu.kw%2F&ei=hsgQUabsFsfryAGS9YHQBA&usg=AFQjCNGrLtOYcY7RcZn1Iz2nAXAr6XeNXA&sig2=IjU6tO7hF8qUigcRVVC9Mg&bvm=bv.41867550,d.aWM


18

3 Energy Demand and Renewable Energy Development Initiatives in the GCC

Countries

This section discusses the energy demand, consumption and the status of RET development initiatives in

each GCC country.

3.1 Bahrain

Population and economic growth have led to a very high estimated annual energy growth rate of 10% in

Bahrain. In 2008, the total installed power generation capacity was 2,780 megawatts (MW) [25]. It is

expected that a total capacity of 6,500 MW will be required by 2030 to meet the projected demand [41].

With an installed capacity that is not always able to meet current demand, causing occasional power

outages, this small nation will need to double its natural gas supply in less than a decade to meet the

growing demand [4] or diversify its energy supply through careful consideration of alternative energy

sources.

3.1.1 RET Development Initiatives

Bahrain installed three wind turbines at its world trade center that meet 13% of the building’s energy

demand. The country has a pilot solar energy street lighting project that was implemented by the

Electricity and Water Authority (EWA).

Initiatives by the Bahrain Government to evaluate the renewable resources include the assignment of

Petro-solar an American company to assess the potential of solar energy. In July 2011, Bahrain signed a

contract with Fichtner Consulting Engineers of Germany to prepare a detailed techno-commercial

feasibility study for solar and wind energy resources [42]. The EWA of Bahrain also conducted an

assessment of solar and wind energy resources. The authority observed the possibility of using these

resources for production of electricity and desalinated water.

The following are the planned and conducted renewable energy projects in Bahrain:

1) Bahrain Petroleum Company’s (BAPCO) first zero emissions house built with a hybrid energy

system with total capacity of 7 kW (hybrid: solar, wind and fuel cell). BAPCO had formed an

administration team consisting members from universities and energy utilities, responsible for

the oversight and promotion of RET projects in Bahrain.

2) In 2009, a 5 MW capacity solar and wind project was announced to be installed. Bidding for the

project is being organized by the EWA.

3.2 Kingdom of Saudi Arabia

The KSA’s rapid economic growth is closely linked to its per capita energy consumption which has

increased by more than 30% since 2010 [43]. This significant increase in internal energy consumption

has caused a gradual decrease in oil exports. In 2008, oil met 60% of total energy consumption (about

800 million barrels of oil equivalent). Current trends show that energy consumption in the KSA is

expected to double in 2030, which will inevitably lead to diminished oil exports [43].


19

KSA’s power generation capacity grew 11.8% reaching 51.2 GW by 2009. Population growth and

economic expansion, are projected to increase demand for electricity capacity to 77.4 GW by 2020 [44].


The KSA made the first step in the region in the 1970’s by founding the King Abdulaziz City for Science

and Technology (KACST) and funding R&D projects including renewable energy. Despite having the

largest oil reserves in the world, the Kingdom is focusing heavily on solar energy projects, with an early

emphasis on water heating and electrification in off-grid remote areas.

In 2009, the KAUST was founded to turn the country into a key energy research hub and to develop

renewable and sustainable technologies through cooperation with global scientific bodies. However, the

renewable energy sector is still somewhat immature in the KSA. No comprehensive technical or techno-

economic feasibility studies based on local conditions have been performed yet.

In May 2010, the governor of the Saudi Electricity and Cogeneration Authority announced a framework

that set out the conditions of government funding and incentives for the development of the renewable

energy sector. A feed-in tariff based is expected but has not yet been implemented.

In April 2010, the King Abdullah City for Atomic and Renewable Energy (KA-CARE) was founded by a

Royal order with a mandate to contribute towards sustainable development through implemention of

nuclear power plants and renewable energy projects to diversify energy supply and minimize CO2

emissions. It aims to exploit the country’s abundant natural resources to reach a sustainable energy

supply mix. Its intention is to strengthen Saudi Arabia's ability to meet future international oil demand

for the development of technology and human capacity. These require the establishment of an

important new economic sector focused on alternative energy.

In April 2011, the KSA announced that it would invest USD 100 billion in renewable and nuclear energy

to reduce its dependence on crude oil and to achieve 7-10% electricity generation from RETs by 2020

[44].

3.2.2 Initiatives for Reducing Supply Side Energy Consumption8

The KSA has taken the following initiatives to reduce energy consumption on the supply side [43]: 1)

modernization of existing power plants, 2) minimum efficiency standard for new power plants, 3)

minimum overall efficiency standard for co-generation desalination plants, and 4) implementation of a

renewable energy program to displace fossil fuels.

3.2.3 Renewable Energy Program to Displace Fossil Fuels

Analysis of solar resource assessment studies show that there is a great potential for solar energy in the

KSA. A solar photovoltaic area of 22–40 km2 in Saudi Arabia can produce as much electricity as a 1,000

MW oil-fired power station [43]. Studies suggest that if subsidy on oil is removed, at current oil prices

(assuming USD 80/barrel), electricity from PV in Saudi Arabia can be more competitive than electricity

from oil-fired power generation. An estimate done by this section contributor shows that in order to

8 This section is contributed by Yousef M. Alyousef, Director, Energy Research Institute, King Abdulaziz City for

Science and Technology, Riyadh, Saudi Arabia.


20

stimulate PV in the country, an incentive equivalent to approximately USD 0.17 /kWh needs to be

introduced.

Our review of renewable energy options for the KSA also advocates a great potential for solar thermal

applications. Concentrated solar power (CSP) electricity generating systems can achieve conversion

efficiencies of 18-30%. Solar absorption cooling, where thermal energy from the sun is used for re-

generation in absorption chillers, is another possible application.

Despite its great potential, the wide scale deployment of solar energy in the KSA faces several barriers.

These include lack of incentives, high costs (considering current subsidies on oil), the need for more

public knowledge and professional training. It is assessed that 5 GW of solar PV installation has the

potential to save about 55 TWh per year in the KSA, leading to savings of about 2.8% compared to the

base case.

3.3 Kuwait

Kuwait is the fifth largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC).

Oil and natural gas are the main available primary energy resources in the country. Energy consumption

is increasing at a rate of 8% annually [45].

In 1958, the first power plant was installed with a capacity of 15 MW; the total installed capacity grew to

11.6 GW by 2008. It is expected that by 2020 a total capacity of 23 GW would be needed to meet the

projected demand of electricity [44].


The country is richly endowed with solar energy. Kuwait has set an ambitious renewable energy

production target, which aims to generate 10% of its electricity from sustainable sources by 2020 [46].

Another initiative was the establishment of the renewable energy program by the Kuwait Institute for

Scientific Research (KISR). The KISR undertakes studies on feasibility of deploying renewable energy in

Kuwait. It focuses on regulations and policies that government needs to set up to promote renewable

energy development. As part of renewable energy resources assessment efforts, a study by the Japan

External Trade Organization was commissioned by the Ministry of Economy, Trade and Industry of

Kuwait in 2008. The study assessed technical, economical and operational aspects of combined cycle

power generating system using solar thermal energy.

Several pilot projects in wind, solar PV and solar thermal technologies have been completed by the KISR.

Some of these projects are: solar heating and cooking with different thermal storage configurations,

solar cooking project with 172 solar collectors covering a total area of 300 m2, thermal and electricity

application projects including Kuwait English School (Salwa) with daily electricity load of 80 kWh, 630 PV

modules and 110 batteries with electricity production capacity of 24.2 kW, KISR’s solar house with 76 PV

modules, 48 batteries and electricity production capacity of 2.6 kW, solar power plant at Sulaibia

complex with 56 power production of 125 kW. In addition, the following renewable energy projects

have been announced [4]:


21

1) A joint project of 15 MW wind power has been proposed by KISR and Germany to install in

Kuwait. Another project of 5-10 MW solar power is to be installed.

2) The country is also working with a Japanese company in order to assess economic feasibility of

solar power plants in Kuwait.

3.4 Oman

Expansions of industrial and population growth have put a strain on Oman’s power sector infrastructure.

In 2010, total peak electricity demand in Oman was 3,856 MW, a 46.4% increase since 2005 [44]. The

peak demand is expected to grow at an annual rate of 8% and is projected to reach about 6,600 MW by

2018 [47].


The Authority for Electricity Regulation (AER) of Oman has outlined a roadmap for the Development of

Renewable Energy Projects. The AER published a report called “Study on renewable energy resources,

Oman” in 2008. The study recommends several pilot projects of RETs [48]: 1) 10 kW off-grid solar

PV/diesel hybrid system; 2) 20 kW grid-connected solar PV system; and 3) 10 MW grid connected wind

power farm. The criteria for selection of the recommended pilot projects types include:

1) Demand for these types of projects is expected in the near future.

2) The projects are expected to be economically viable in the future.

3) The projects shall contribute to the awareness of renewable energy.

4) The projects are based on well proven and reliable technology.

However, as of yet none of the recommended projects have been confirmed. Oman has recently floated

a tender for a concentrated solar power plant between 50 MW and 200 MW capacity. Special attention

has been given to look for a suitable policy framework and develop institutions to promote renewable

energy investments under clean development mechanism (CDM).

3.5 Qatar

Qatar’s economic growth is estimated to increase by 10% annually over the next 5 years, and to

continue growing at a slightly lower rate of 7% in subsequent years [49]. The economic growth is driven

by rising energy prices and higher exports of liquefied natural gas (LNG). Almost one third of the Middle-

East’s total conventional gas reserves are in Qatar, which also has a world share of about 12% [50].

Revenues generated from tapping this resource are used to develop the country's infrastructure,

education and health facilities as well as modern hydrocarbon operations.

In the year 2000, the country’s peak electricity demand was only 1,800 MW, this figure reached 8,000

MW by the year 2011. Electricity demand growth in recent years has been about 5.1% [4]. By 2030,

Qatar’s electricity generation is projected to continue growing at an annual rate of 2.9%. The country’s

primary energy demand is projected to grow at a moderate rate of 5.2% annually.


The government of Qatar is committed to diversifying its economy and to reducing its dependency on

fossil fuels. Qatar hosted the 18th United Nations Framework Convention on Climate Change (UNFCCC)


22

Conference of Parties (COP18) in Doha from November 26 to December 7, 2012. The COP18 marks the

beginning of negotiations for a global agreement. With the international spotlight shifting to the region,

COP18 provided an unprecedented opportunity for the GCC countries to contribute their ambition and

combined experience to the world’s most complex intergovernmental efforts. The conference was

especially important given the inseparability of the global climate and energy challenges. As the first

Gulf country to host the talks, Qatar presented an opportunity to overcome differences between energy

exporters and importers and drive forward practical, mutually beneficial solutions.

Qatar announced to host a carbon neutral Football World Cup in 2022. Although, the country has no

renewable energy goals or policy mechanisms yet [36], Qatar proposed the newly built stadiums for the

event be solar powered and suggested that solar power will be connected to each of the stadiums’

electrical systems and national grid.

The Qatar National Food Security Programme (QNFSP) recently launched a solar resource assessment

project. The project is to be conducted by the German Aerospace Centre (DLR) to identify the country’s

most favorable areas for solar energy projects. Additionally, the following are the planned renewable

energy development projects in Qatar [4]:

1) On January 7, 2010, the country announced plans to invest about USD 1 billion in solar power

projects, and to install at least 100 MW of solar power in the next five years.

2) Over USD 500 million will be invested by Qatar Foundation to establish a polycrystalline silicon

plant. The Qatar Science and Technology Park will develop a new plant at Ras Laffan Industrial

City that will be one of the first operational polycrystalline silicon plants in the GCC region.

3) Chevron will test solar panels and energy-efficient lighting in Qatar.

4) The Center for Sustainable Energy Efficiency is expected to open soon. The center aims to

identify solar power, solar air-conditioning and low-energy lighting technologies for Qatar.

In 2012, Qatar published Qatar’s National Research Strategy (QNRS) and a strategic plan for

implementation. The strategy reflects input from Qatar’s researchers, leadership and other

stakeholders. The strategy addressed some important pillars for R&D such as enterprise, energy and

environment, computer science and information technology, health and social sciences. Energy and

environment pillar goals and objectives identified there-in are as follows:

1) Sustain economic prosperity through oil and gas diversification.

2) Achieve sustainable development through economic diversification, including solar energy and

alternative fuels.

3) Energy efficiency for improvement of energy use.

4) Protecting Qatar’s natural environment.

5) Environmental sustainability.

6) Addressing global climate change.

7) Cross-cutting basic research and applications.


23

3.5.2 National Research Funding Mechanisms9

Qatar launched the Qatar National Research Fund (QNRF) to support its strategic development plans.

QNRF funds a broad range of subjects that align with the themes and objectives listed in QNRS

(discussed in the previous section) via two flagship programs namely; National Priorities Research

Program (NPRP) and NPRP-Exceptional Program (NPRP-EP).

The NPRP grant offers competitive funding with a maximum budget per proposal of USD 350,000 per

year for up to three years (total USD 1.05 million). Lead Principal investigators (PI) from outside of Qatar

may identify a co-lead PIs inside Qatar with whom they can submit joint project proposals.

The NPRP-EP, grants only proposals that carry exceptional scientific merit, with a total budget of up to

USD 5 million for projects with a duration of up to five years.

3.6 United Arab Emirates

Although, the UAE has an abundance of natural resources, possessing 9.3% of the world’s proven oil

reserves and 4.1% of the world’s proven gas reserves [51], the relatively high energy demand and

current constraints on exploiting domestic gas reserves has led the country to become a net importer of

natural gas since 2007 [44].

Power generation in the UAE is almost entirely dependent on fossil fuels, with natural gas accounting for

98% of the total installed capacity in 2009 [24]. With the cost of natural gas heavily subsidized to

produce electricity for the utilities [9], low energy costs and high economic and population growth rates

have driven the country’s energy consumption to rise tremendously in the past decades [52]. The annual

electricity demand growth in recent years has been about 9% [53, 54].


Despite the UAE’s natural gas and oil reserves, the country has made significant commitments to

alternative energy development. The UAE is among the first major oil-producing countries to ratify the

Kyoto Protocol of the UNFCCC in 2005 with other GCC countries excluding Bahrain which ratified in

2006.

The Emirate of Abu Dhabi has established one of the world’s most comprehensive clean energy

initiatives through the Masdar Initiative. It has set target of 7% of electricity generating capacity from

renewable energy by 2020. The Abu Dhabi Climate Change Policy Plan proposes that Abu Dhabi will

generate electricity by 10% from renewable energy by 2030 [51]. IRENA’s headquarter were established

in Abu Dhabi after the emirate won the bid to host the international body. Abu Dhabi also hosts the

World Future Energy Summit every year. The Summit brings together some of the world's most

influential stakeholders across the renewable energy sector and encourages the development of RE

related human capital for the region. This initiative showcases Abu Dhabi’s commitments to the

deployment of renewable energy.

9 This section is contributed by Abdul Sattar Al-Taie, Executive Director, Qatar National Research Fund (QNRF),

Qatar Foundation, Qatar


24

Dubai has set a target of 5% renewable energy generating capacity by 2030 (1000 MW). Both emirate

level governments are creating policies and incentive frameworks to deliver their targets.

The UAE Solar Atlas has been commissioned to provide valuable technical data for setting up solar

energy projects in the country. The UAE Solar Atlas is the outcome of the agreement signed between

Masdar Institute and IRENA. The agreement announced at the World Future Energy Summit 2012 in Abu

Dhabi also covers exchange of information; joint implementation of project activities, analyses and

research studies; as well as defining technical compatibility and methodological harmonization and data

transparency protocols for solar and wind data.

Existing RET projects in the UAE include a 10 MW PV plant in Masdar City, Abu Dhabi and the recent

Shams 1 project, a 100 MW CSP plant in the western region of Abu Dhabi. Other planned RET projects in

the country include:

100 MW PV plant

28.8 MW wind plant

100 MW waste-to-energy plant

The Dubai Supreme Council of Energy launched the Emirates Energy Award in 2012-13. It is an

international prize that will be awarded every two years to encourage rational use of energy and energy

resources. The award aims to reward best practices and leading initiatives in pursuit of alternative

energy, energy efficiency, sustainability and environmental protection.

Another notable effort on part of the UAE, is the annual Zayed Future Energy Prize to honor

outstanding, innovative achievements and governance or leadership in the global search for a

sustainable energy future.

4 Methodology: Framework to Assess Renewable Energy Readiness

The RE-readiness assessment framework has been developed by identifying the dominant barriers and

supporting mechanisms for the deployment of RETs and then proposing ways to quantify and rate those

factors. The framework defines the factors along the pillars of infrastructure, institutions, and human

capital. Each factor is assigned a weight and a score between 1 and 7, with 1 being the lowest and 7 the

highest score.

The scoring criteria for some factors and sub-factors can be initially assessed from a qualitative range of

“poor” to “very good” and then translated into a score from 1 for “poor” to 4 for “very good”. These are

then normalized into a score between 1 and 7. The scores are: 1 (poor), 2 (fair), 3 (good) and 4 (very

good), corresponding to 1, 2.33, 4.66 and 7, respectively. For other factors and sub-factors that are

related to quantitative data, this study applied different quantitative techniques to get an RE-readiness

score from 1 to 7. These techniques or assessment methods are explained in the following sections of

analysis of renewable energy readiness factors.


25

The factors and sub-factors data relating to the deployment of RETs was provided by the team members

of this report from their respective GCC countries. A questionnaire (given in appendix 1) was supplied to

the report team members to collect data related to the deployment of RETs. After gathering all

quantitative and qualitative data, this study applied different scoring techniques to obtain an RE-

readiness score for each factor and sub-factor.

This scale range is adopted to align with the scale of the Global Competitiveness Report (GCR)

developed by the World Economic Forum [55]. Table 2 provides an example of global competitiveness

scores for some factors of the GCC countries. The GCR measures countries’ competitiveness levels by

assessing their competitiveness factors and giving them a score between 1 and 7. Some of the factors of

the GCR, such as countries’ overall infrastructure, institutions, financial market development,

macroeconomic environment, higher education and training, were taken directly from the report, as

these factors are also relevant to the countries’ level of readiness to adopt renewable energy projects.

Other factors and sub-factors, such as access to renewable energy finance, power off-take

attractiveness, renewable generation target and current installed capacity, are taken from the Ernst &

Young (E&Y) renewable energy country attractiveness indices report [56]. However, this study applies its

own technique to finding the selected factors and sub-factor scores as discussed, based on the GCC

countries’ available data. The E&Y report provides long-term indices that are forward looking and take a

long-term view. The report is published quarterly and provides scores out of 100 for national renewable

energy markets and infrastructures and their suitability for RETs. Some additional factors and sub-

factors are also incorporated that are related to the development of RETs in this framework (Table 3).

Table 2: Global competitiveness scores* of the GCC countries [55, 57]

Global Competitiveness Index (GCI)-pillars

Bahrain Kuwait Oman Qatar KSA UAE

GCI 2011-2012 4.5 4.6 4.6 5.2 5.2 4.9 Basic requirements 5.4 5.2 5.6 5.8 5.7 5.8 Institution 5.3 4.4 5.3 5.4 5.5 5.2 Infrastructure 5.1 4.4 5.2 5.2 5.3 6.0 Macroeconomic environment 5.1 6.6 6.5 6.4 6.1 6.1 Higher education and training 5.0 3.8 4.2 4.6 4.8 4.8 Goods market efficiency 5.2 4.3 4.8 5 5.2 5.2 Financial market development 5.1 4.2 4.7 5 5.1 4.6 Technology readiness 4.5 3.7 4.1 4.7 4.3 4.9 Innovation 3.2 3.0 3.4 4.7 4.2 4.0 * The score is out of 7. The higher the score, better the competitiveness of the country.

To determine the weights of different sub-factors that make up a given factor, or the factors that make

up a given pillar, the commonly utilized equal weights method [58] was applied, which weighs all

variables within one category equally. A list of the pillars, factors and sub-factors and related weights

are given in Table 3.

After determining weights, a multi-criteria decision making (MCDM) technique was applied to calculate

the final RE-readiness index for each country. The MCDM technique provides solutions to problems


26

involving multiple conflicting objectives [59]. The MCDM is a general class of operations research models

that deals with problems involving a number of decision criteria. In this report, the weighted sum

method is applied [58] to obtain a final RE-readiness index.

This study combines the various methodologies to determine a final RE-readiness index (Figure 2). This

study also applies a SWOT analysis to find the strengths, opportunities, weaknesses and threats for the

diffusion of RETs in the GCC countries. Finally it recommends some priority areas for research and

development in this region towards sustainable development for the longer term.

Table 3: RE-readiness framework factors and respective weight

Pillars, Factors and sub-factors Weight (within immediate parent category)

Pillar 1: Infrastructure 33.34%

1.1 Natural resources 20% 1.1.1 Conventional resources 50% 1.1.2 Renewable energy potential 50% 1.2 Country overall infrastructure 20% 1.3 Existing grid capacity 20% 1.4 Market infrastructure 20% 1.4.1 Goods market efficiency 20% 1.4.2 Market deregulation/power sector reform 20% 1.4.3 Current installed capacity of RETs 20% 1.4.4 RE supply chain and operation & maintenance facilities 20% 1.4.5 Power off-take attractiveness 20% 1.5 Electricity access rate and projected demand 20% 1.5.1 Projected electricity demand growth 50% 1.5.2 Electrification rate 50% Pillar 2: Institutions 33.33%

2.1 Public and private institutions related on renewable energy 25% 2.2 Key policies 25% 2.2.1 Identified targets and policy mechanisms 34% 2.2.2 Institutional/electricity market regulatory framework 33% 2.2.3 Climate or CO2 emission reduction policy 33% 2.3 Access to renewable energy finance 25% 2.3.1 Financial market development 50% 2.3.2 Investment in renewable energy 50% 2.4 Macroeconomic environment 25% Pillar 3: Human capital 33.33%

3.1 Technical and commercial skills 34% 3.1.1 Higher education and training 25% 3.1.2 Capacity building 25% 3.1.3 Availability of renewable energy scientists and engineers 25% 3.1.4 Labor market efficiency 25% 3.2 Technology adoption and diffusion 33% 3.2.1 Technological adaption readiness 50% 3.2.2 Innovation and research & development 50% 3.3 Awareness among consumers, investors and decision makers 33% 3.3.1 Resource availability awareness 50% 3.3.2 Consumer and social awareness 50%


27

Figure 2: Overall methodology for this study

Supplied data by this report team members and literature

review on RETs development in the GCC countries

●●●●●●●●●●●●●●●●

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●●●●●●●●●●●●●

●●●●●●●●●●●●●●●

●●●

●●●

●

●●●

●●● ●●●

●●●

Pillars

Infrastructure Institutions Human Capital

Identify

factors &

sub-factors

Identify

factors &

sub-factors

Identify

factors &

sub-factors

Input

representative

Data gathering

& scaling

between 1 & 7

Data gathering

& scaling

between 1 & 7

Data gathering

& scaling

between 1 & 7

Output

representative

Weighting

factors

Weighting

factors

Weighting

factors

Equal Weights

Method

X 33.3% X 33.3% X 33.3%

Total RE-readiness index for a country: Out of 7

Multiply by the

pillar weights

Weighted Sum

Method

Identify strengths, gaps and priority

research areas in the GCC countries

for sustainable development

SWOT analysis


28

5 Analysis of RE-Readiness Factors

This section outlines RE-readiness factor assessment data for each of the GCC countries and the given

scores based on the methodology discussed. The factors are separated according to the three pillars of

infrastructure, institutions and human capital.

5.1 Infrastructure

In general, infrastructure refers to a country’s physical capability to deploy RETs. It is assessed by

availability of natural resources (conventional fossil-fuels and renewable energy) as well as grid capacity

to transmit and distribute additional power/electricity generated from renewable energy sources to

consumers. Furthermore, other factors of infrastructure related to the development of RETs are

considered such as: market infrastructure (goods market, power sector reform, RETs development, and

power off-take attractiveness), electricity access rate and projected electricity demand.

5.1.1 Natural Resources

5.1.1.1 Conventional Resources

An assessment of the availability of conventional fossil fuels, as it relates to RE-readiness, is evaluated

according to proven reserves of oil and gas in GCC countries. These conventional resources are scored

based on the rankings provided by the World Factbook 2011 [60] for oil and gas reserves of each

country. Therefore, RE-readiness score of this sub-factor is high if the proven reserves are relatively low

for a given country. It presumes that less proven reserves encourages investment in RETs in order to

diversify the supply mix of energy. Moreover, these individual scores for oil and gas are averaged to

determine an overall score for this sub-factor.

For example, the Gulf countries have substantial conventional resources: KSA has the world’s largest oil

reserves of 259.9 billion barrels, Kuwait has 101.5 billion barrels, the UAE has 97.8, and Qatar 25.4

billion barrels. In regards to proven natural gas reserves, Qatar ranks 3rd in the world with 899 trillion

cubic feet (TCF), KSA ranks 5th with 263 TCF, UAE ranks 7th with 210 TCF, and Kuwait has 63 TCF [60]. The

following table (Table 4) illustrates the given scores for each country based on its reserved rank.

Table 4: The GCC countries energy reserve ranks and RE-readiness scores

Proven Oil and Gas Reserves

Rank 1-16 16-32 32-48 48-64 64-80 80-96 Rank >96

Allocated score 1 2 3 4 5 6 7

Country Oil rank Score Gas rank Score Average score

Bahrain 66 5 55 4 4.5

KSA 1 1 4 1 1

Kuwait 6 1 20 2 1.5

Oman 23 2 26 2 2

Qatar 12 1 3 1 1

UAE 7 1 7 1 1


29

5.1.1.2 Renewable Energy Potential

Assessment of potential RE resources is necessary to deploy RETs in a nation. It includes solar radiation,

wind speed, and available lands for solar PV, CSP and wind farms used for

power generation. A higher resource value leads to a higher RE-readiness score. Other RE sources, such

as biomass and hydro, are not incorporated into the study due to their limited potential in the GCC

countries. The following analysis of solar and wind potentials clarifies these sub-factors.

5.1.1.2.1 Solar

GCC countries receive substantial solar radiation, with KSA having the highest resource potential. Table

5 shows solar potentials of each GCC country. On average, the global solar radiation for solar PV is close

to 2,083 kWh/m2/year and the direct solar radiation for CSP is about 2,208 kWh/m2/year in the region.

Our study considers the technical potential of solar energy (kWh/m2) to calculate readiness related to

solar potential. The impact of dust, humidity and high summer temperatures can decrease efficiency of

solar power, but this factor is not taken in account for the purpose of this study.

5.1.1.2.2 Wind

The Gulf region has moderate wind energy potential. Its countries have an average wind speed of about

6 m/s with a wind potential that varies substantially among them. The recorded full load hours per year,

which denotes the number of hours a wind turbine that is designed for the local wind speeds would

operate at full capacity, are relatively less comparing to other countries (Table 5). The cost per unit

generation increases if full load hours of wind power decrease. KSA has recorded full load hours of 1,789

per year, which is the highest within the GCC countries where as UAE has the least full load hours per

year at 1176. It is assumed that a country’s average wind speed will impact its RE-readiness score, as

higher speed is more attractive for wind power development.

Table 5: Solar and wind potential in the GCC countries [4, 61, 62]

Country PV Global solar

radiation kWh/m

2/year

CSP Direct normal solar radiation (kWh/m

2/year)

Solar energy

(kWh/m2)/

Score

Wind speed (m/s)

Hours of full load per year

Score

Bahrain 2160 2050 5.1 5 – 6 1,360 5.5

Kuwait 1900 2100 5.9 5 - 5.5 1,605 5.2

Oman 2050 2200 5.4 4 -6 1,463 5

Qatar 2140 2200 5.2 5 -7 1,421 6

KSA 2130 2500 5.6 2.5-4.5 1,789 3.5

UAE 2120 2200 5.4 3.5-4.5 1,176 4

Average 2083 2208

Generally, the GCC countries have substantial solar and reasonable wind resources. Qatar, Kuwait,

Bahrain and Oman receive RE-readiness scores of 5.6, 5.5, 5.3 and 5.2, respectively, because of their

Inass

Highlight

Inass

Highlight


30

substantial solar and wind resources. UAE and KSA follow with a score of 4.7 and 4.55, respectively and

their lower scores are due to their lack of wind resources.

5.1.2 Overall Country Infrastructure

Overall infrastructure includes transport (roads, airports, and sea-ports), information and

communication technologies, and import-export facilities of a country, revealing its capacity to

implement large-scale projects. Infrastructure influences projects that depend highly on logistical

supports. For example, a modern infrastructure makes transportation of equipment for the installation

of renewable energy projects easier and more efficient. Therefore, a well-developed transport network

is a prerequisite to deploying large amounts of renewalbe energy capacity.

The GCR ”Global Competitiveness Report” gives scores for countries’ overall infrastructure on a scale

from 1 to 7 [55]. The GCC countries enjoy a well-developed modern infrastructure. In Qatar, for

example, winning the bid to host the 2022 World Cup has provided further impetus for rapid

infrastructure development. UAE has a modern infrastructure that ranks 8th in the world with a score of

6 [55]. Qatar and the KSA scores are 5.2 and 5.3, respectively. The scores for Oman, Bahrain and Kuwait

are 5.2, 5.1 and 4.4, respectively.

5.1.3 Existing Grid Capacity

A modern and advanced grid is required to transmit electricity generated from RETs. The ability to

efficiently balance supply and demand is also necessary, as RET-generated electricity varies based on

resource availability. Realizing the urgent need to meet the growing electricity demand, the GCC

countries have jointly embarked on a project to develop their grid systems and establish an

interconnection. Over 1 billion US Dollars has been allocated for the GCC grid interconnection project.

The electricity grids of Bahrain, Kuwait, KSA and Qatar were connected for the first time to form the

North Grid (Phase 1) in 2009 and the connection between UAE and Oman to form South Grid (Phase 2)

was completed in 2011. This power grid project in the GCC region started in 2005 to establish an

integrated electricity network in the Middle East. The network is expected to transmit an additional 100

GW to meet the next 10 years’ electricity demand.

Generated power from RETs can be transmitted through the same grid. Alternatively, RET-generated

power can be set up and transferred across the region to load centers [63]. This interconnection

provides an alternative source of reserve and support during emergencies. The GCC countries’ existing

grid capacity is well suited to handle additional energy generation through RETs. The allocated score is 7

for each country on existing grid capacity related to RE-readiness.

5.1.4 Market Infrastructure

Even though renewable energy technologies are still developing, they are gaining maturity similar to

conventional technologies used for power generation. New technology always demands a suitable

market infrastructure for its sustainable development. However, market infrastructure sub-factors

which influence deployment of RETs in a country are:


31

1) Goods market efficiency10;

2) Market deregulation/power sector reform;

3) Current installed capacity of RETs;

4) Supply chain and O&M facilities;

5) Power off-take attractiveness.

5.1.4.1 Goods Market Efficiency

Efficient goods markets refers to a broad set of factors that affect the overall efficiency of markets in a

particular country. Limited barriers to entry, low transaction costs, and clear and transparent tax

structures are examples of conditions that will encourage competitive behavior of firms and lead to a

more efficient market.

Independent power producers need efficient goods markets to be able to enter the power sector,

particularly with a new technology that may be competing with conventional power sources. The goods

market efficiency score is given by the GCR. The KSA, Bahrain and the UAE ranked 4th, 6th, and 10th,

respectively in the world in goods market efficiecy in 2010. The UAE, Bahrain and the KSA receive scores

of 5.2 each for their goods market efficiency while Qatar, Oman, and Kuwait are scored at 5, 4.8 and

4.3, respectively.

5.1.4.2 Market Deregulation/Power Sector Reform

Market deregulation and power sector reform refer to a process by which government ownership and

involvement in the operation of the power sector is reduced and competitive entrants are encouraged.

Encouraging this substantial change in the sector requires strong policies and regulations to ensure

efficient operation and eliminate monopolistic behavior of private firms, as well as the availability of

private investment to guarantee sufficient capacity and reliability of service. Power sector reform can

also include [64]:

1) Introducing competition in the market to guarantee higher quality of service and lower tariffs;

2) Adjusting tariffs by removing subsidies and ensuring cost reflective pricing;

3) Minimizing the government’s regulatory role by changing the regulatory mandate from a

government entity (e.g., Ministry of Energy) to an independent regulatory authority;

4) Amending electricity acts to establish a sound legal basis for power sector reforms.

Additional factors that are used to assess the level of reform include macroeconomic indicators such as

power sector investment constraints, government fiscal constraints, options to raise capital,

international investment, multilateral structural commitment lending policies, and national economic

reform [64].

The GCC countries’ power sector reforms show that most of the electricity generation takes place

through partial public ownership with T&D typically having full public ownership. The limited extent of

10 “Countries with efficient goods markets are well positioned to produce the right mix of products and services

given their particular supply-and-demand conditions” (GCR, 2012).


32

private competition for power generation reduces the RE-readiness. Aggresseive government

involvement in terms of policy and financial supports to further reform the power sector and limit

government involvement is also lacking. All of the GCC countries receive a fair score of 2.33 for market

deregulation.

5.1.4.3 Installed RET Capacity

The current installed capacity of RETs gives an indication of attractiveness for RET investment. High

capacity installation of RETs demonstrates that the country has an established infrastructure and supply

chain facilities. These facilities accelerate the growth of additional capacity and increase the

attractiveness of new investment, which in return leads to a higher RE-readiness score.

UAE leads the GCC region in existing RET installation capacity. A solar PV plant of 10 MW has been

installed at Masdar City, Abu Dhabi as well as four other small-scale solar PV projects [71]:

1) 1 MW rooftop installation on the Masdar Institute.

2) 291 kW PV array at the Yas Marina circuit.

3) 204 kW PV parking shade at Masdar City.

4) 200 kW mounted on the Presidential Sea Palace rooftop.

In addition, a 100 MW CSP plant called Shams 1 in Abu Dhabi’s western region has been launched

recently in 2013. There are future plans to build 1,500 MW of renewable energy projects in Abu Dhabi

by 2020 [9, 34] which will include a 100 MW PV plant, named Nour 1, to be installed in Al Ain and the

developing of a wind farm of 30 MW and a solar PV array at Sir Bani Yas Island by Masdar Power.

Moreover, in January 2012, Dubai announced a renewable energy target of 1% of installed capacity by

2020 and 5% by 2030. It has launched the Mohammed bin Rashid al-Maktoum Solar Park, with a total

capacity of 1GW by 2030 [65].

KSA has a total of 723 kW solar PV systems installed so far [4]. In addition, KSA inaugurated its first 500

kW (expandable to 6-8 MW) solar power plant at Farasan Island in 2011. The country also announched

plans to install 5 GW solar power generation capacity by 2020 [44]. The KSA is also preparing to install a

total capacity of 41 GW in the next 20 years which would be divided into 25 GW from CSP and 16 GW

come from solar PV. Additionally, the country is planning to install 9 GW from wind power in the next 20

years.

Kuwait and Bahrain have installed solar power capacity of 151 kW and 7 kW, respectively, and there are

no RE-based power plants in Qatar or Oman so far. Nevertheless, Qatar is planning to install at least 100

MW from solar power in the next five years. Also, Oman has confirmed a shortlist of six renewable

energy pilot projects to be installed. Four of these projects are solar and two are wind projects:

1) 100 kW solar PB project in Hiji.

2) 292 kW solar project in Al Mazyonah.

3) 1,500 kW solar project, location not yet confirmed.

4) 28 kW solar project in Al Mathfa including battery storage.

5) 500 Kw wind project in Masirah Island.


33

6) 4,200 kW wind project in Saih Al Khairat, Wilyiat of Thumrait.

In addition, a large scale solar project of 200 MW is also expected to become available in 2014.

As discussed previously, RE-readiness gets a higher score when the current installed capacity of RETs in a

country is high and the growth trend of installation capacity is increasing. Qualitative assessment for

current installed capacity can be done using an indicator from a range of poor to very good. This study

considered the following for the scores:

If there is no current installed capacity then the country’s score is 1.

If less than 1 MW installed capacity then the score is 2.33.

If more than 1 MW but less than 1 GW is installed then the score is 4.66.

If more than 1 GW capacity is installed the score is 7 out of 7.

Considering the present installation capacity of RE-based generation of the GCC countries, the UAE and

KSA receive a higher RE-readiness score of 4.66 (good) each because of their current installed capacity.

Qatar and Oman get 1 each and Kuwait and Bahrain get a fair score of 2.33 each due to their limited

current installed capacity of RETs.

5.1.4.4 RE Supply Chain and O&M Facilities

This study assesses the extent to which a domestic supply chain exists and its adequacy in terms of

supporting the construction, operation and maintenance of RET power facilities. A well-developed local

supply chain could minimize logistical issues, increase availability of product inputs for an RET project,

and significantly reduce construction, operation and maintenance costs. Additionally, having locally

available O&M facilities ensures a higher reliability of energy supply. These factors, in turn, boosts

customer confidence and the attractiveness of a technology and increases investors’ interest. Other

elements such as quality control, adequate standards, and a skilled workforce help to improve a

product’s reliability and increase its market size.

An example of the workforce requirements for the case of the PV industry is illustrated in Figure 3.

Engineers and technicians form the backbone of the upstream stages (processing and manufacturing) of

this supply chain. They are responsible for producing solar grade ingots and wafers from raw

semiconductor material and also for the production/assembly of the PV panels and other system

components. Project development requires diverse skills of system designers, solar resource analysts

(meteorology), business managers and financial analysts, among others, while the installation sub-stage

creates jobs for construction workers and technicians. Technical staff is again needed over the project

lifetime for operation and maintenance. Finally, construction workers and materials recycling related

personal are required at the decommissioning stage.


34

Figure 3: Direct jobs across the PV value chain (Adapted from [40])

Supply chain and O&M indicators as they relate to RE-readiness are assessed based on the level of

development of existing renewable energy projects in the GCC countries. Qualitatively, the level is

considered across a range from “poor” (if there are few or no projects and no experience importing

equipment and O&M expertise from abroad or securing project finance) to “very good” (when a

developed RET supply chain exists, with O&M facilities and quality standards being implemented).

The GCC region has been a point of interest for many national and international companies to invest in

renewable energy that would enhance supply chain specifically in solar and wind projects. The GCC

countries’ energy market has started to grow recently. Some private companies have been supporting

the establishment of a supply chain for energy system with special focus on RETs.

For instance, Qatar has signed an agreement to build a poly-silicon factory at the Ras Laffan Industrial

City, which is expected to produce 3,600 tons per year of high-purity poly-silicon. Also, the MBM

Holdings has announced its plan to build a solar grade poly-silicon plant in Dubai with a capacity of 2,500

tons per year. The project is sponsored by MBM Holdings and jointly developed with ERC Pvt Ltd

Singapore [66]. The KSA has also taken similar initiatives for the development of RET supply chain. The

country has announced the establishment of a world-class poly-silicon factory in Al Jubail Industrial at a

cost of 1 billion US Dollars, which will have a capacity of up to 7,500 tons per year. Another facility will

produce 10,000 tons per year of poly-silicon in Yanbu Industrial City and will create about 1,000 new

jobs. Some multi-national companies specializing in RETs have entered the Gulf region recently [36].

Scores for GCC countries considering this sub-factor are as follow: KSA, Qatar and the UAE receive a

score of 4.66 (good) equally on supply chain and O&M facilities while Bahrain, Oman and Kuwait get a

fair score of 2.33 each.

5.1.4.5 Power Off-Take Attractiveness

Subsidized energy prices hinder the deployment of RETs. The fossil fuel subsidy in Kuwait was the

highest at 2,800 US Dollars per capita in 2010 [67]. The UAE and Qatar spent close to 2,500 US Dollars

Processing

Engineers

Technicians

Manufacturing

Engineers

Technicians

Project Development

and Installation

System designers

Business managers

Finance analysts

Resource analysts

Operation and Maintenance

Technicians

Maintenance staff

Decomissioning

Construction workers

Material recyclers


35

per capita in 2010. Subsidy and lack of inclusion of external costs of fossil fuels impede investment in

RETs.

The level of attractiveness of renewable energy would ideally be assessed based on the difference

between the per unit electricity generation cost from fossil fuels and renewable energy. To ascertain the

RET attractiveness, the costs of conventional fossil fuels based power generation must be assessed

including these fuels’ subsidies and the external costs associated with their use. If the cost difference is

large then conventional primary fuels will be favored, whereas RET deployment will appear more

attractive for electricity generation in the opposite situation. Another way to measure RET

attractiveness is to look at the electricity tariffs. Higher electricity tariffs make RET development more

attractive.

RE-readiness is high where renewable energy generation costs are competitive with conventional

energy-based generation. This study assumes that higher electricity tariffs in a country lead to a more

favorable environment for deployment of RETs, while the lowest tariffs create the least favorable

environment. This study categorizes electricity tariffs according to seven levels, starting from the lowest

tariff with the lowest score (Table 6). A recent estimate places the cost of electricity for solar PV (ground

mounted) between USD 0.11/kWh and USD 0.49/kWh and for a roof-top system the cost ranges

between USD 0.14/kWh and USD 0.69/kWh [68]. An electricity tariff that is more than USD 0.14/kWh

will receive the highest score of RE-readiness. For example, the highest electricity tariff is paid by the

residential consumers in Denmark, of about USD 0.37/kWh [69] while Abu Dhabi has the lowest which is

about USD 0.013/kWh for citizen consumers.

Table 6: Scoring criteria for attractiveness of RETs

Electricity tariff (USD/ kWh)

0.013- 0.0334

0.0334- 0.0533

0.0533- 0.0731

0.0731-0.0930

0.0930-0.1128

0.1128-0.138

>0.138-

Score 1 2 3 4 5 6 7

According to the household electricity tariffs of the GCC countries [3] and the scoring methodology

proposed, the scores of RE-readiness for the GCC countries are presented in Table 7. The flat electricity

tariff is less in Qatar, Kuwait and Bahrain based on an average residential consumer’s tariff. The average

electricity tariff, including citizens and foreign residents, in Abu Dhabi and Dubai is relatively high and

receives a RE-readiness score of 3.

Table 7: Competitive advantages of RETs and RE-readiness scores

Country Generation cost (USD/kWh)

Consumer cost (USD/kWh)

Type Score

Bahrain 0.0397 0.008-0.04 Slab rate 1

KSA 0.099 0.013-0.06 Slab rate 2

Kuwait 0.131 0.006-0.04 Slab rate 1

Oman 0.0649 0.0415 Flat 2

Qatar 0.0384 0.0164 Flat 1

UAE 0.0595 0.028 Flat national 3

0.082 Flat non-national


36

Figure 4 summarizes the RE-readiness scores for the market infrastructure sub-factors across all

countries. One can see that due to cheap and subsidized energy prices, the power off-take

attractiveness is consistently low. Also, most of the countries have no significant current installation

capacity of RETs. Even though the region has relatively high goods market efficiency, the other sub-

factors reduce the overall market infrastructure RE-readiness score.

Figure 4: Market infrastructure’s sub-factors readiness score

5.1.5 Electricity Access Rate and Projected Demand

The final infrastructure factor is electricity access, which indicates the electrification rate of a country,

and projected demand. A high electrification rate denotes a strong network that will be more capable of

integrating RETs that are geographically distributed. A high projected demand indicates the need for

future capacity, which can motivate investment in RE projects. The electricity demand growth and

electrification rate as well as the quality of electricity supply for the GCC countries are explained in the

below sections.

5.1.5.1 Projected Electricity Demand Growth

To score the projected electricity demand growth, a linearly spaced range was established from 1

(where the expected demand growth is between 0% and 1.5%) to a score of 7 (where demand growth is

more than 9%). The demand growths are supplied from the report team members through specific

questionnaire (see Appendix).

0,00

1,00

2,00

3,00

4,00

5,00

6,00

Bahrain KSA Kuwait Oman Qatar UAE

RE-

read

ine

ss s

core

Goods market efficiency

Market deregulation/powersector reform

Supply chain and O&Mfacilities

Current installed capacity ofRETs

Power off-takeattractiveness


37

The expected electricity demand growth of the GCC countries and their scores are given in Table 8. The

KSA receives a score of 4. Bahrain, Kuwait and Qatar receive a score of 5 individually. Oman and the UAE

receive a score of 6 each.

Table 8: Expected electricity demand growth and scores of RE-readiness

Expected demand growth 4.5-6%

Expected demand growth 6-7.5%

Expected demand growth 7.5-9%

Expected demand growth > 9%

Score

Score 4 5 6 7

Bahrain X 5

KSA X 4

Kuwait X 5

Oman X 6

Qatar X 5

UAE X 6

5.1.5.2 Electrification Rate

GCC countries have electrification rates that are among the highest in the world (Kuwait and the UAE

100%, the KSA 99%, Bahrain 99.4%, Qatar 98.7%, and Oman 98%). The Gulf region enjoys a high

reliability (limited load shedding/blackouts) of electricity supply. The only exception is during summer

peak load days, when some shortages are experienced.

Kuwait and the UAE have 100% electrification rates and best quality of electricity supply (with only very

rare blackouts/load shedding). Thus they receive a score of 7 on electrification rate and quality of

supply. KSA and Bahrain receive a score of 6.5 each, and then Qatar and Oman receive a score of 6

equally, due to existence of some blackouts or load shedding.

Finally, the overall RE-readiness based on infrastructure is summarized in Figure 5. It shows the

strengths and weaknesses of some issues for the development of RETs in the region. It also points out

that market infrastructure and available fossil-fuels reserves are limiting factors regarding RE-readiness

of infrastructure in all GCC countries.


38

Figure 5: RE-readiness for pillar 1: Infrastructure

5.2 Institutions

Institutional readiness gives an overview of factors such as the existing institutional framework, key

long-term policies, access to renewable energy finance and microeconomic environment of RET

deployment. These factors are very significant to establish effective and reliable energy policy for

sustainable energy development in any country. They also show the fitness of institutions to implement

targeted renewable energy projects and their sustainable development.

5.2.1 Public and Private Institutions Supporting RE

The quality of Institutions has a strong bearing on the development of renewable energy projects. Legal

and administrative frameworks that govern public and private sectors represent the overall institutional

environment. Moreover, institutions influence strategy development as well as policy and investment

decisions. The GCC countries have healthy public and private institutions in general according to the GCR

(2012). KSA ranks 12th in the world on general institutions and achieves a score of 5.5. Qatar ranks 14th

on institutional competitiveness and gets a score of 5.4, followed by Oman and Bahrain at 16th and 17th,

respectively, with a score of 5.3 equally. UAE ranks 22nd and receives a score of 5.2 whereas Kuwait’s

institutional competitiveness level is less, with a rank of 47 and gets a score of 4.4.

5.2.2 Key Policies

Government policies are the backbone of the development of RETs in a country. Energy policies and

energy-related utilities’ regulatory frameworks are the drivers for sustainable implementation of

renewable energy projects. Relevant policies in this context could include targeted renewable energy

production to improve energy security and/or CO2 emissions reduction targets to mitigate climate

change.


0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

RE

-rea

din

ess

sco

re

Natural resources

Overall infrastructure

Existing grid capacity

Market infrastructure

Electricity access rate andprojected demand


39

5.2.2.1 Identified Targets and Policy Mechanisms

Reliable and effective renewable energy policies are essential to attract investors. It is important to have

a realistic target based on long-term planning to integrate large-scale renewable energy projects into

the power sector. Large RET projects provide economies of scale and favorable planning environments,

which facilitate project development financing [56]. The absence of long-term planning based on

techno-economic feasibility results in a lack of policy clarity and consistency over the long-term,

hampering investment and development of renewable energy projects [70].

Each country has its own unique energy resources, national economic development and demand

patterns, and energy security and climate concerns. Given these unique variables, suitable policies for

each country will be unique. The possible long-term policies for the deployment of RETs must be

evaluated in terms of their cost of implementation, while also considering evolving factors such as

technology learning effects, and resource availability. The challenge is in finding a suitable path where

energy security, environmental constraints and economic development are taken into consideration.

Cost-benefit analysis of policies can be assessed through various energy-economy modeling techniques.

Some approaches can also suggest optimal capacity expansion plans, while considering the factors

mentioned above. Such approaches have been commonly applied by national and international agencies

such as the International Energy Agency (IEA), International Atomic Energy Agency (IAEA) and others.

The IEA presents a series of renewable energy plans for Denmark, Sweden, France, USA, Germany, and

Japan in [71].

National energy-economy modeling has remained relatively limited in the GCC countries. There are a

few studies on RETs made for UAE and KSA [51, 52, 72-75]. Furthermore, Kuwait had developed its

reference energy system to integrate RETs using MARKAL model and now converted to the TIMES model

to optimize energy use in the long-term [76, 77].

RETs development targets should ideally be based on techno-economic modeling of renewable energy

potential for a given country. These targets provide guidance to investors and entrepreneurs in order to

develop their future strategy and business plans to invest in RETs development.

To ascertain the RE-readiness score of this sub-factor for each GCC country, our study disaggregated this

sub-factor into two components: renewable energy production targets and policy mechanisms.

Renewable energy production targets are scored by assessing the targets using the SMART approach – a

target must be specific, measurable, achievable, reasonable, and time-bound. Policy mechanisms are

further broken down into regulations, fiscal incentives, and finance (including finance for R&D). The

policy mechanisms are identified by the Renewable Energy Policy Network for 21st Century (REN21) [78].

A summary of the scoring rubric for this factor is shown in Table 9. Examples of policy initiatives

currently established in the GCC countries are explained below.

In Bahrain, the Ministry of Electricity and Water has recognized the need to promote sustainable energy

sources. However, Bahrain has set no targets yet for renewable energy-based electricity generation.

Only some fragmented activities exist to demonstrate renewable energy projects in the country.


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The KACST published a strategy report on “Strategic priorities for energy technology program” focusing

on Saudi Arabia’s energy research and innovation plans [79]. The KA-CARE has drafted a strategy that

includes new regulations and financial incentives for private investors to develop renewable energy

projects in the KSA. The strategy will be announced shortly after approval from the Saudi Cabinet. The

KSA has a target to generate 7-10% of total electricity from renewable energy by 2020 [44], including

other sources such as nuclear. The target is specific and time bound as well as it is reasonable and

achievable.

Kuwait has set most ambitious targets to generate 10% of its electricity from sustainable sources by

2020 [46]. Specialists are skeptical of its ability to meet its targets because Kuwait has no policy

mechanism or financial incentive to encourage renewable energy projects.

Oman has announced its target to develop the solar industry. A large scale solar power plant with a

capacity of 200 MW is expected to become available in 2014. The country has no specific target or policy

mechanism for development of renewable energy projects.

Qatar has introduced project-specific targets for its plan to host a major sustainable sporting event in

2022. Qatar proposed the newly built stadiums for the World Cup 2022 to be solar powered. It also

suggested that solar power plants will be connected to the stadiums and to the national grid. Qatar set a

target of 6% electricity from renewable energy by 2020. The target is specific and time bound. The

country has no policy and financial incentive mechanisms for renewable energy development yet. The

Qatar Foundation is supporting R&D in renewable energy projects through funding.

UAE has set a target to reach 7% of total capacity through renewable energy installations for Abu Dhabi

by 2020 [6]. Dubai's target of 5% renewable energy generation capacity by 2030 is to be achieved

primarily through the development of solar plants and clean coal power plants. Official policies are being

drafted for this sector, but are not yet finalized.

In reference to the scoring methodology explained above, Table 9 shows the targets and RE-readiness

scores relating to policy mechanisms for the GCC countries.

Table 9: The GCC countries RETs deployment targets and policy mechanism scores

Renewable Energy Generation Target Policy Mechanism Score

Specific Measurable Achievable Reasonable Time bound

Regulations Fiscal Incentives

Finance &R&D

Score 0.7 0.7 0.7 0.7 0.7 1.16 1.16 1.16 7

Bahrain 0 0 0 0 0 0.3 0 0.3 0.6

KSA 0.7 0.35 0.35 0.35 0.7 0.58 0.58 0.58 4.19

Kuwait 0.7 0 0 0 0.7 0 0 0 1.4

Oman 0.35 0 0 0 0.35 0 0 0 0.7

Qatar 0.7 0.17 0.17 0.17 0.7 0 0 0.58 2.49

UAE 0.7 0.35 0.35 0.35 0.7 0.3 0 0.3 3.05

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5.2.2.2 Institutional/Electricity Market Regulatory Framework

Institutional regulatory challenges are diverse in terms of their impact on energy production. Some of

these challenges affect the energy industry in general and some affect renewable energy projects

specifically. Regulators need to create an environment that avoids or minimizes investors risk in RET

projects. The most common institutional regulatory challenges are [70]:

1) The absence of long-term planning;

2) A large number of overlapping relevant authorities;

3) Lack of coordination between relevant authorities;

4) Complex permitting procedures;

5) Lack of stakeholder involvement in decision-making.

Frequent changes in regulations pose uncertainty and reduce the attractiveness of renewable energy

investments. A study was conducted in 2006 to identify how a country’s regulatory framework affects

investments in the e-communication sector [80]. It discusses factors that contribute to more regulatory

certainty. These factors involve clear legislation, timely implementation of legislation, comprehensive

guidance on the interpretation of legislative requirements, harmonization between stakeholders, clear

communication from the relevant National Regulatory Authority (NRA), and adequate appeals processes

and adequate NRA enforcement powers. These identified factors are used to determine RE-readiness

score of the regulatory framework for renewable energy deployment in the GCC countries.

Most of the GCC countries lack a specific regulatory authority that is specifically responsible for RET

projects. The existence of such an authority could streamline the permitting and approval process,

ensure standardization of projects and promote competitiveness in the sector; thereby ensuring a

higher project quality and increased administrative efficiency.

The KSA has assigned KA-CARE to co-coordinate national and international energy policy. KA-CARE is

responsible for working on the development of sustainable energy in the KSA. In contrast, Bahrain has

not assigned a separate regulator yet.

The Sustainable Environmental Management Program in Kuwait was started in 2003 to establish an

environmental database. The program also includes a focus on building awareness of sustainable energy

sources and their usage. So far, there is no dedicated law on sustainable energy use or uptake in Kuwait.

Oman has carried out a study to evaluate CDM projects that are suitable for the country. The authority

has also invited the Rural Areas Electricity Company to identify possible locations for pilot distributed

projects on solar and wind power.

Qatar has no dedicated legal or regulatory framework for the deployment of clean energy projects yet.

UAE launched the Masdar Initiative in 2006 to advance the development, commercialization and

deployment of RETs. The coordination between Masdar and the regulatory authority in UAE is relatively

advanced comparing to the rest of GCC countries, with an established feed-in-tariffs for the Shams 1 CSP

plant.


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According to the country-specific surveys, KSA and UAE have better legislation and harmonization

between stakeholders as well as an adequate regulatory enforcement for RET deployment. These

advantages are reflected in their scores as shown in the next table. The scores are given based on seven

sub-factors that contribute more regulatory assurance and each sub-factor receives 1 point out of total

7 points (Table 10).

Table 10: The GCC countries regulatory framework scores

Country Bahrain KSA Kuwait Oman Qatar UAE

Clear legislation 0.25 1 0.25 0.5 0.5 1 Timely implementation of legislation 0.25 0.25 0.25 0.25 0.25 0.25 Harmonization between stakeholders and good coordination

0.25 1 0.25 0.5 0.25 1

Transparency and clear communication from NRA

0.25 0.5 0.25 0.5 0.25 0.5

Comprehensive guidance of legislative requirements

0.25 0.5 0.25 0.25 0.25 0.5

Adequate NRA enforcement 0.25 1 0.25 0.25 0.5 1 Clear and consistent permitting procedures and fair competition as well as adequate appeals processes

0.25 0.5 0.25 0 0.25 0.5

Score 1.75 4.75 1.75 2.25 2.25 4.75

5.2.2.3 Climate / CO2 Emissions Reduction Policy

A policy for climate protection and energy security should incorporate efforts to diversify the energy

mix, including the use of low carbon supply options. Climate change mitigation policies that target

renewable energy supply options or demand-side efficiency have associated co-benefits of less primary

energy use as well as diversification of supply [81, 82]. All the GCC countries have ratified the Kyoto

Protocol and are committed to sustainable development. The Kyoto Protocol was successfully extended

for 2nd commitment periods of 8 years (2012 to 2020) in COP18 meeting in Doha, Qatar. Any party in

Annex I may continue to participate in CDM projects activities.

The existence of reduction targets for CO2 emissions would promote the development of RETs. Our

study gives the top score of 7 for countries with a target of 30% CO2 emissions reduction by 2020,

whereas the lowest score of 1 is given if there is no target to reduce CO2 emissions.

The Dubai Supreme Council of Energy and Dubai Carbon Center for Excellence are developing a strategy

to cut CO2 emissions. The strategy sets its effort to cut Dubai’s CO2 emissions by 1.5 million tons per year

[83]. Therefore, UAE receives a score of 2.33 and the remaining GCC countries are scored at 1 for no

emission reduction targets.

5.2.3 Renewable Energy Finance

The availability of project finance for RETs is an important factor for project development. This study

looks at financial market development in general and investment in renewable energy projects


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specifically. Scores for “financial market development” and “investment in renewable energy” are

averaged to get readiness score of “renewable energy finance”.

5.2.3.1 Financial Market Development

One of the most pressing barriers to deployment of RETs is finance. It is essential to evaluate the

financial market of a country to determine its capability to invest in renewable energy projects. General

financial market development indicates efficiency of the market in terms of availability and affordability

of financial services. It also assesses financing possibility through equity market, access to loans, capital

availability and restriction on capital flows.

The GCC countries have relatively well developed financial markets. Bahrain and Qatar receive a score of

5.3 each in financial market development. Kuwait gets a lower score of 4.3. Scores for different sub-

factors of financial market and world rankings are presented in Table 11.

Table 11: World ranking and financial market development scores [55]

Country Availability of finance (score) [Rank]

Affordability (score) [Rank]

Local equity market (score) [Rank]

Access to loans (score) [Rank]

Venture capital (score) [Rank]

Soundness of Banks (score) [Rank]

Average score

Bahrain 6.1 [11] 5.8 [7] 4.6 [18] 5.0 [2] 4.2 [8] 6.1 [18] 5.3 KSA 5.5 [30] 5.4 [17] 5.1 [5] 4.6 [5] 4.2 [7] 6.0 [20] 5.1 Kuwait 4.9 4.6 3.9 3.5 3.4 5.4 4.3 Oman 4.8 4.9 4.5 4.0 [13] 3.9 [16] 6.0 4.7 Qatar 5.6 5.6 [8] 5.1 [6] 5.3 [1] 5.4 [1] 5.0 5.3 UAE 5.5 [31] 5.1 [24] 4.2 [35] 4.3 [10] 4.0 [13] 5.5 4.8

5.2.3.2 Investment in RETs

The level of investment in renewable energy shows a country’s interest in deployment of RETs. Higher

investment in this sector indicates that a country is substantially ready for RET development. For

example, Germany invested 1.5% of its GDP in 2010 in clean technologies and energy efficiency to

reduce the impact of climate change [84]. Worldwide, total investment in renewable energy reached to

257 billion US Dollars in 2011, up from 211 billion US Dollars in 2010 [27, 85]. This investment increased

in both developed and developing countries; 168 billion US Dollars and 89 billion US Dollars,

respectively. China increased its investment to 51 billion US Dollars in 2011. India displayed the fastest

expansion rate for investment in renewable energy projects in 2011 with a 62% increase to 12 billion US

Dollars [85].

The Gulf region investments in RETs are increasing compared to a very low level in 2010. The UAE

invested about 837 million US Dollars in 2011 [85]. Qatar has invested 500 million US Dollars in a poly-

silicon facility that is expected to start in 2012 [27]. The KSA invested more than 200 million US Dollars in

research and developed of RETs. Additionally, Oman, Bahrain and Kuwait plan to invest 21 million US

Dollars, 133 million US Dollars and 600 million US Dollars, respectively, in future renewable energy

projects [86]. Huge investments in RETs and non-fossil energy sources are planned by Qatar, UAE, and


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KSA. Qatar plans to invest 1 billion US Dollars in RETs, UAE plans 20 billion US Dollars on 4 nuclear

reactors and solar projects, and the KSA plans to invest 100 billion US Dollars on 16 nuclear reactors and

solar [86] plants.

Table 12 below provides insight into how RE readiness scores for this sub factor are evaluated:

Table 12: RE Readiness Scores for Investment in RE Development

Investment in RE Development (USD) RE Readiness Score

50 billion 7

1 – 50 billion 4.66

200 million – 1 billion 2.33

No investment 1

Considering the present investment level, the UAE, KSA and Qatar receive a RE-readiness score of 2.33

each on investment in renewable energy. The remaining countries score a 1.

5.2.4 Macroeconomic Environment

In addition to the financial markets of a country, the stability of its macroeconomic environment is vital

for RET development. For the readiness assessment, the macroeconomic environment indicates the

ability of the government and private sector to support and invest in the development of renewable

energy projects. High interest and inflation rates, for example, will discourage investment. The scores for

the macroeconomic environment factor are given by the GCR.

The GCC countries have a very strong macroeconomic environment. A number of factors such as the

government budget, gross national savings, inflation, interest rates, government debt, and credit rating

are considered to determine RE-readiness scores for the macroeconomic environment factor. The GCC

countries’ macroeconomic data, world ranking (2011-2012) and RE-readiness scores are presented in

Table 13. Kuwait receives the highest score of 6.6 followed by Oman at 6.5 on macroeconomic

environment.

Table 13: Macroeconomic indicators, world ranks and competitiveness scores [55]

Country Budget balance (% GDP) [Rank]

National savings (% GDP) [Rank]

Inflation (%) [Rank]

Interest rate (%) [Rank]

Debt (% of GDP [Rank]

Credit rating (1-100) [Rank]

Overall score

Bahrain -7.8 34.4 2 [1] 6.0 32 68.1 [40] 5.1 KSA 7.7 [8] 35.2 [14] 5.4 6.0 10.8 [10] 75 [32] 6.1 Kuwait 17.5 [2] 40.4 [9] 4.1 [75] 0.5 [2] 10.5 [9] 76.2 [29] 6.6 Oman 75 [9] 41.4 [8] 3.3 3.5 5.9 [4] 71.8 6.5 Qatar 11.4 [4] 49.4 -2.4 [102] 4.4 17.8 79 6.4 UAE 3.3 [12] 26.4 0.9 [1] 3.0 21.0 75.3 6.1

Figure 6 represents the RE-readiness scores for the factors of pillar 2 along with the sub-factors that

comprise the key policies factor. The lines in figure 6 indicate RE-readiness scores for sub-factors of key

policies. The dots in this figure present overall factor scores of institutions. The figure shows that there

are insufficient policies for the development of RETs for power generation in the GCC countries. There is


45

also a lack of targeted energy production from renewable energy policy and climate policy in most of the

GCC countries.

Figure 6: RE-readiness for the Institutions pillar (dots present factors scores and lines indicate the scores for the sub-factors of the Key Policies factor).

5.3 Human Capital

Human capital is a critical driver for sustainable development of RETs over the short and long term

period. Human capital in the context of RE-readiness indicates supply of human resources with the

ability to develop, manage and maintain renewable energy projects in a given country. It measures the

ability to select and sustainably operate the most appropriate technology. Factors such as technical and

commercial skills, technology adoption and diffusion, and consumer awareness of renewable energy,

are required for the development of human capital for RETs deployment.

5.3.1 Technical and Commercial Skills

There are a number of sub-factors that must be considered to determine the overall RE-readiness score

of technical and commercial skills factor. These include higher education and training, capacity building,

availability of renewable energy scientists and engineers, and labor market efficiency.

5.3.1.1 Higher Education and Training

Higher education and training programs give an indication of the technical capacity to plan, develop,

operate and maintain infrastructure projects in a country. The score is calculated based on the number

of schools for secondary and tertiary levels and enrollment rates. It is also assessed based on the quality

of education including math and science, management studies and internet access in schools.

Additionally, higher education and training programs provide a general understanding of technical skills

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1,00

2,00

3,00

4,00

5,00

6,00

7,00


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Public and private institutions

Key policies

Identified targets and policymechanisms

Institutional/electricitymarket regulatory framework

Climate or CO2 emissionreduction policy

Access to renewable energyfinance

Macroeconomic environment


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to install and run new technologies. The scores for higher education and training are given by the GCR.

Bahrain leads with a score of 5, followed by the KSA and UAE with 4.8 each on higher education and

training. Qatar, Oman and Kuwait are scored at 4.6, 4.2 and 3.8, respectively.

5.3.1.2 Capacity Building

For the energy sector, capacity building can be conducted and measured at four levels, including overall

energy sector, organization, personnel and individual or community. Capacity building comprises a

series of activities that lead to an improvement in skill and performance for personnel, an organization,

or a community.

The capacity building indicator for renewable energy can be measured by the number of non-

governmental organizations (NGOs) and public and international organizations that are working on

renewable energy. Additionally, the number of associations, professional networks, annual

conferences/workshops on renewable energy and energy policy in a country indicate the level of

capacity building on RETs. This factor is assessed qualitatively based on survey data into a range of

“poor” to “high” capacity building and then translated into RE-readiness scores between 1 and 7.

The EU and the GCC partner countries established the EU-GCC Clean Energy Network in 2009. This

network brings together the relevant EU and GCC stakeholders from public and private sectors to

expand cooperation on clean energy. This network acts as a facilitator and identifies projects in fields of

common interest, specifically in renewable energies for their development.

The European Commission is assisting in the establishment of a large-scale platform for R&D

cooperation with the GCC to provide opportunities for stakeholders from both the EU and the partner

countries. It aims to identify initiatives and projects to increase utilization of renewable energy

resources in the GCC region. The establishment of IRENA’s headquarters in the UAE also plays an

important role in enhancing capacity building in the GCC region.

A list of organizations that are working in energy and sustainable energy in the GCC countries are given

in Table 14, along with their activities. Some related issues on renewable energy development in this

region have explained in Section 2.5. The GCC countries earn equally a score of 2.33 on capacity building

due to their limited present activities.

Table 14: List of organizations and their R&D facilities in the GCC countries on renewable and sustainable energy

Country R&D Facilities

Bahrain University of Bahrain conducting studies on solar and wind energy sources.

Bahrain Petroleum Company launched R&D policy in the field of solar energy.

The Electricity and Water Authority trying to install RETs.

The BAPCO formed a team consisting members from universities and energy utilizes. This team is responsible to follow up the renewable energy projects and promotion of RETs. BAPCO also established a renewable energy education park.

National Gas and Oil Company planning to install 20 MW grid-connected solar PV.


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Kuwait The Kuwait Institute for Scientific Research (KISR) supervises research on solar energy systems. The KISR works for long-term energy planning, applying MARKAL/TIMES model. Analysis has been conducted to evaluate the financial feasibility of photovoltaic technology. Studies have been carried out to assess potential of grid-connected photovoltaic systems. The KISR research areas are: innovative and renewable energy resources, energy efficiency and implementation, and energy planning and policy measures.

The Public Authority for Applied Education and Training, the Kuwait Foundation for the Advancement of Sciences, the Kuwait Society of Engineers and Kuwait University promote research on alternative energy resources and their use, projects and events.

Oman The Middle East Desalination Research Centre (MEDRC) and the Sultan Qabous University conduct active research on renewable energy.

The MEDRC and Caledonian College of Engineering worked on the application of solar energy in reverse osmosis water desalination.

The Renewable & Sustainable Energies Research Group was established in 2003.

The Ministry of Environment and Climate Affairs, the Authority for Electricity Regulation and the Public Authority for Water and Electricity are working on renewable energy resources feasibility and also conducting events and seminars.

Qatar The Qatar National Research Fund, a member of the Qatar Foundation, provides funds for research on variety of subjects including renewable energy.

The Qatar Science and Technology Park (QSTP) is working on clean energy. QSTP is closely working with Qatar Solar Technologies, a joint venture with SolarWorld AG, one of the largest solar companies.

Chevron is working with local organizations in Qatar to identify and deploy sustainable energy technologies.

The Center for Sustainable Energy efficiency is expected to open to identify solar power technologies that are best suitable for Qatar.

KSA The Energy Research Institute in King Abdulaziz City for Science and Technology conducted two major international joint programs that have assisted in establishment of a series of research activities and pilot projects in Saudi Arabia.

Solar Energy Research American Saudi directed towards demonstration projects such as solar electricity generation and decentralized usage, water desalination and cooling systems.

The second major research program by ERI-KACST is Hydrogen from Solar Energy (HYSOLAR) concentrated on solar based production of hydrogen.

King Faisal University, King Abdul Aziz University, King Fahd University of Petroleum and Minerals (KFUPM), and King Saud University have joined the KACST research program to establish solar cooling labs.

The Center for Engineering Research at KFUPM conducts research to investigate the potential of utilizing hybrid energy conversion systems.

Solar and Photovoltaic Engineering Research Center at KAUST provide a foundation for RET research and development.

A Sustainable Energy Technologies program has been established at King Saud University.

The Center for Clean water and Clean Energy at MIT and KFUPM has been established for research and educational partnership.


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UAE Masdar Institute of Science and Technology has been established as a post-graduate university focused on science and engineering of advanced renewable energy, environmental technologies and sustainability.

Many UAE universities are conducting research on RETs, environmental sustainability assessments in UAE buildings and utilization of solar–hydrogen energy. They also organize seminars, workshop on renewable energy. Masdar hosts the World Future Energy Summit in every year.

5.3.1.3 Availability of Renewable Energy Experts

The availability of renewable energy experts can be indicated by the number of specialized institutions

or consultancy firms in a country that provide advisory services. It indicates the number of specialized

companies that are capable of installing RETs including their operation and maintenance services. To

find the availability of renewable energy experts, the number of undergraduate and graduate study

programs dedicated to renewable energy also provide an indication. This factor is assessed qualitatively

by a range from “poor” to “very good” and then translated into scores.

The Gulf region has been able to establish several institutions that offer education and research facilities

in renewable energy (Table 14). In general, a depth of technical skills personnel and experts in

renewable energy are lacking in the GCC countries except for KSA and UAE. Commercial skills and

information on RETs are lacking in all the GCC countries [36]. UAE and KSA receive a score of 4.66 each

and the rest of the GCC countries score 2.33 each on availability of renewable energy expert readiness.

5.3.1.4 Labor Market Efficiency

The labor market is vital to assess ability to retain labor forces in a country. The labor market efficiency

indicator measures the efficacy of the labor market. It gives an idea of the country’s efficient use of

talent, in terms of pay and productivity, reliance on professional management, brain drain and female

participation in the labor force. Otherwise, even in the presence of clean energy education institutions,

graduates are unlikely to choose to stay and work in a country.

The GCC countries are mainly characterized by a small population relative to their resources and thus

there is considerable reliance on foreign labor. The countries have had to offer high remuneration

packages to attract expatriates with necessary experience. The scores for labor market efficiency are

given by the GCR: the better the labor market efficiency of a country the higher its score for readiness.

Bahrain ranks 19th, Qatar 22nd and the UAE 28th in the world in labor market efficiency and receive scores

of 4.9, 4.9 and 4.8, respectively. The KSA and Oman get score of 4.6 each and Kuwait receives the lowest

score of 4.4.

5.3.2 Adoption and Diffusion of New Technologies

5.3.2.1 Technological Adoption Readiness

This factor includes technological readiness and innovation, representing both shorter- and longer-term

drivers for competitiveness of technology development. Technological readiness measures agility of a

country to adopt existing and new technologies. It also measures the capacity to influence daily

activities and processes for increased efficiency and competitiveness. The indication of RETs adoption


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can be measured by looking at some factors such as the existing available technologies and their

adoption, foreign and domestic investments, and technology transfer facilities. The scores for

technological readiness of all countries are given by the GCR. UAE scores the highest at 4.9, followed by

Qatar with 4.7. Bahrain receives a score of 4.5, the KSA is scored t 4.3, Oman is scored at 4.1 and finally

Kuwait has the lowest score of 3.7.

5.3.2.2 Innovation and R&D

Establishment of a strong R&D sector for knowledge economy aids the GCC countries to fulfill

sustainable development goals. R&D institutions lead technological development and also meet the

critical need for training and capacity building for the workforce. The R&D indicator of a country can be

found from its expenditure of GDP for R&D purposes. The percentage of GDP expenditure on R&D in the

GCC countries is very low compared to the world average. Kuwait spent about 0.1% and the KSA spent

about 0.08% of their GDP for R&D in 2009 when the world average spent was about 2.1% [24].

The innovation and R&D indicator is determined by quality of scientific research institutions, investment

in R&D, university-industry collaboration in R&D, and availability of scientists and engineers. There is no

specific indicator related to RET innovation. The countries that are highly innovative are those, which

move towards the most appropriate innovations and technologies for their development. These

countries will also likely include RET development as a priority.

The number of energy utilities and scientific research institutes related to energy in the GCC countries is

given in Table 14 to provide a general overview of R&D in renewable energy. The GCC region relies

heavily on importing its knowledge through people, technologies and services in an effort to accelerate

development with little or no focus on R&D. There is no published number of researchers found in the

GCC countries. RE-readiness scores of innovation are taken from the GCR. Qatar scores the highest in

innovation with a score of 4.7 followed by the KSA with 4.2. The UAE gets a score of 4 and Oman

receives a score of 3.4. Bahrain gets a poor score in innovation at 3.2 and the poorest score is received

by Kuwait, with a score of 3.

5.3.3 Consumers, Investors and Decision Makers Awareness

5.3.3.1 Awareness of Renewable Energy Resource Availability

Detailed and reliable renewable energy resources assessment is an asset for energy planners and

investors. The assessed resources’ potential allows investors to evaluate the possible return on their

investment and determine the viability of a particular project. High quality assessment of renewable

energy resources allows national and regional level energy agencies to establish long-term energy

policies for sustainable development.

The resource awareness factor is assessed qualitatively by a range from “poor” (if there are no resource

assessment efforts) to “very good” (if all potential resources have been assessed and the results of the

studies have been made available to the public). Finally, qualitative levels are translated into scales from

1 to 7. RE-readiness scores are allocated considering four stages of awareness:

1) No resource assessment efforts;

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2) Few assessment projects have been planned but no studies conducted;

3) Potential resources have been investigated;

4) Assessment for all resources have been conducted and made available to the public.

The scores are 1, 2.33, 4.66 and 7, respectively.

Several initiatives have been carried out to assess renewable energy resources potential in the GCC

countries. A committee led by the Bahrain Electricity and Water Authority conducted an assessment of

solar and wind energy and looked at the possibility of using these resources for the production of

electricity and desalinated water in the early 1990s.

In Kuwait, a study was commissioned by the Ministry of Economy, Trade and Industry in 2008 with the

aid of the Japan External Trade Organization to assess the technical, economical and operational aspects

of combined cycle power generating system using solar thermal energy.

In Oman, meteorological data collected by Directorate General of Civil Aviation and Meteorology is now

available in order to assist RETs development. The Oman Authority for Electricity Regulation has done a

complete study on “Renewable Energy Resources, Oman” in 2008. The Oman Public Authority for

Electricity and Water has been conducting a study to assess feasibility of solar energy.

In Qatar, the QNFSP launched a solar resource assessment project to be conducted by the DLR to assess

the country’s most favorable areas for solar energy projects.

In the KSA, between 1993 and 2000, the KACST and the National Renewable Energy Laboratory, USA

conducted a joint project to upgrade the solar resource assessment capability of the country. The KACST

is collecting wind speed and direction data at 20, 30, and 40 meters above ground level and also

conducting solar resource assessment using 12 solar radiation monitoring stations to monitor total

horizontal, direct normal and diffuse radiation. The Energy Research Institute of KACST has made

progress in the use of solar energy with several experimental applications of solar technologies through

actual field studies at remote areas [44].

A preliminary assessment of solar and wind energy resources was conducted between 2007 and 2008

within United Nations Environment Programme’s (UNEP) Solar and Wind Energy Resource Assessment

(SWERA) in the UAE. The assessment was sponsored by Masdar as part of the Masdar Initiative and the

findings of the assessment are to be made available on the SWERA website when completed.

More recently, the UAE Research Centre for Renewable Energy Mapping and Assessment has been

mandated to develop the UAE solar and wind energy resource maps, in addition to developing regional

knowledge and leadership in renewable energy assessment and mapping for the Arabian Peninsula and

countries with similar climate, mainly in Africa.

All countries in the GCC are engaged in renewable energy resources assessment for RET development to

differing degrees. The KSA and UAE are ahead compared to the other GCC countries. The KSA and UAE

receive scores of 4.66 while the rest of the GCC countries score 2.33.

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5.3.3.2 Consumer and Social Awareness

Consumer and social awareness are usually the result of capacity building efforts on renewable energy

resources and technologies. NGOs, professional associations, and related public organizations may

organize exhibitions, seminars, events, and awareness campaigns in the media to raise consumer

awareness. This factor is usually measured through surveys. The results are generally presented in

published reports, such as “The GCC in 2020: Resources for the future” [23]. The factor is assessed

qualitatively from a range of “poor” to “very good” consumer and social awareness and finally

translated into the scales from 1 to 7. Many initiatives have been taken to spread awareness in the GCC

states. Social awareness concerning the requirement of clean energy development has been assessed

with a good score of 4.66 for the KSA and UAE. Bahrain, Kuwait Oman and Qatar receive a fair score of

2.33 on consumer and social awareness.

Figure 7 presents the RE-readiness scores for the human capital pillar. Bahrain, Kuwait and Qatar show

that they are not ready for the development of RETs due to their lack of capacity building and

awareness. Bahrain, Kuwait and Oman are also lacking on innovation and R&D. The lines of the Figure 7

show the main factors for readiness and the dots represent the parent categories sub-factors scores.

Figure 7: RE-readiness for the Human Capital pillar (lines indicate factors and dots show sub-factors)

6 Summary of Findings

This section summarizes the RE-readiness of the GCC countries to adopt renewable energy projects

based on the following pillars: infrastructure, institutions and human capital. After obtaining all

quantitative values for factors and sub-factors, these were weighted using the method discussed in

Section 4.

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Technical and commercialskills

Higher education andtraining

Capacity building

Availability of renewableenergy experts

Labor market efficiency

Technology adoption anddiffusion

Technological adaptionreadiness

Innovation and R&D

Awareness (resource,social, consumer)


52

Table 15 summarizes the surveyed and assessed RE-readiness scores for the all GCC countries. With a

score of 4.75 out of 7 the UAE receives the highest RE-readiness index. The KSA follows closely with a

score of 4.60. The RE-readiness index shows that compared to the other GCC countries, the UAE and KSA

are more ready to integrate RETs for power generation (Table 15). Kuwait receives the lowest RE-

readiness index of 3.8 due to lack of market infrastructure, awareness and key policies for development

of RETs.

Table 15: The GCC countries RE-readiness scores and overall index


53

Factors and index along the pillars

Weight (within

immediate parent

category)

Weight

(100%)Score Index Score Index Score Index Score Index Score Index Score Index

Infrastructure 33.34%

Natural resources 20% 4.90 2.78 3.50 3.60 3.30 2.85

Renewable energy potential 50% 3.33% 5.30 0.18 4.55 0.15 5.50 0.18 5.20 0.17 5.60 0.19 4.70 0.16

Conventional resources 50% 3.33% 4.50 0.15 1.00 0.03 1.50 0.05 2.00 0.07 1.00 0.03 1.00 0.03

Country overall infrastructure 20% 5.10 5.30 4.40 5.20 5.20 6.00

Country overall infrastructure 100% 6.67% 5.10 0.34 5.30 0.35 4.40 0.29 5.20 0.35 5.20 0.35 6.00 0.40

Existing grid capacity 20% 7.00 7.00 7.00 7.00 7.00 7.00

Existing grid capacity 100% 6.67% 7.00 0.47 7.00 0.47 7.00 0.47 7.00 0.47 7.00 0.47 7.00 0.47

Market infrastructure 20% 2.64 3.77 2.46 2.49 2.80 3.97

Goods market efficiency 20% 1.33% 5.20 0.07 5.20 0.07 4.30 0.06 4.80 0.06 5.00 0.07 5.20 0.07

Market deregulation/power sector reform 20% 1.33% 2.33 0.03 2.33 0.03 2.33 0.03 2.33 0.03 2.33 0.03 2.33 0.03

RE supply chain and O&M facilities 20% 1.33% 2.33 0.03 4.66 0.06 2.33 0.03 2.33 0.03 4.66 0.06 4.66 0.06

Current installed capacity of RETs 20% 1.33% 2.33 0.03 4.66 0.06 2.33 0.03 1.00 0.01 1.00 0.01 4.66 0.06

Power off-take attractiveness 20% 1.33% 1.00 0.01 2.00 0.03 1.00 0.01 2.00 0.03 1.00 0.01 3.00 0.04

Electricity access rate and projected

demand20% 5.75 5.25 6.00 6.00 5.50 6.50

Expected energy demand growth 50% 3.33% 5.00 0.17 4.00 0.13 5.00 0.17 6.00 0.20 5.00 0.17 6.00 0.20

Electrification rate 50% 3.33% 6.50 0.22 6.50 0.22 7.00 0.23 6.00 0.20 6.00 0.20 7.00 0.23

Institution 33.33%

General institutions 25% 5.30 5.50 4.40 5.30 5.40 5.20

Public and private institutions 100% 8.33% 5.30 0.44 5.50 0.46 4.40 0.37 5.30 0.44 5.40 0.45 5.20 0.43

Key policies 25% 1.12 3.31 1.38 1.32 1.91 3.38

Identified targets and policy mechanisms 33.3% 2.78% 0.60 0.02 4.19 0.12 1.40 0.04 0.70 0.02 2.49 0.07 3.05 0.08

Institutional framework 33.3% 2.78% 1.75 0.05 4.75 0.13 1.75 0.05 2.25 0.06 2.25 0.06 4.75 0.13

Climate/CO2 emission reduction policy 33.3% 2.78% 1.00 0.03 1.00 0.03 1.00 0.03 1.00 0.03 1.00 0.03 2.33 0.06

Access to renewable energy finance 25% 3.15 3.72 2.65 2.85 3.82 3.57

Financial market development 50% 4.17% 5.30 0.22 5.10 0.21 4.30 0.18 4.70 0.20 5.30 0.22 4.80 0.20

Investment in renewable energy 50% 4.17% 1.00 0.04 2.33 0.10 1.00 0.04 1.00 0.04 2.33 0.10 2.33 0.10

Macroeconomic environment 25% 5.10 6.10 6.60 6.50 6.40 6.10

Macroeconomic environment 100% 8.33% 5.10 0.42 6.10 0.51 6.60 0.55 6.50 0.54 6.40 0.53 6.10 0.51

Human capital 33.33%

Technical and commercial skills 33.3% 3.64 4.10 3.22 3.37 3.54 4.15

Higher education and training 25% 2.78% 5.00 0.14 4.80 0.13 3.80 0.11 4.20 0.12 4.60 0.13 4.80 0.13

Capacity building 25% 2.78% 2.33 0.06 2.33 0.06 2.33 0.06 2.33 0.06 2.33 0.06 2.33 0.06

Availability of RE experts 25% 2.78% 2.33 0.06 4.66 0.13 2.33 0.06 2.33 0.06 2.33 0.06 4.66 0.13

Labor market efficiency 25% 2.78% 4.90 0.14 4.60 0.13 4.40 0.12 4.60 0.13 4.90 0.14 4.80 0.13

Technology adoption and diffusion 33.3% 3.85 4.25 3.35 3.75 4.70 4.45

Technological adaption readiness 50% 5.55% 4.50 0.25 4.30 0.24 3.70 0.21 4.10 0.23 4.70 0.26 4.90 0.27

Innovation and R&D 50% 5.55% 3.20 0.18 4.20 0.23 3.00 0.17 3.40 0.19 4.70 0.26 4.00 0.22

Awareness 33.3% 2.33 4.66 2.33 2.33 2.33 4.66

Resources availability 50% 5.55% 2.33 0.13 4.66 0.26 2.33 0.13 2.33 0.13 2.33 0.13 4.66 0.26

Consumer and social acceptance 50% 5.55% 2.33 0.13 4.66 0.26 2.33 0.13 2.33 0.13 2.33 0.13 4.66 0.26

RE-readiness index 100% 4.00 4.60 3.80 4.00 4.22 4.75

UAEBahrain KSA Kuwait Oman Qatar

Inass

Highlight

Inass

Highlight


54

Figure 8 demonstrates the RE-readiness assessment index of the GCC countries and shows a quick

comparison to benchmark the initiatives taken in each country. Figure 9 presents the renewable energy

attractiveness index based on different pillars related to the development of RETs. The figure shows that

human capital readiness is comparatively low, institutional readiness scores in the middle, while existing

infrastructure is relatively strong.

Figure 8: The GCC countries RE-readiness index

Figure 9: The GCC countries’ attractiveness index on renewable energy development pillars

Figure 10 presents the gaps and strengths for the GCC countries for the development of RETs. Overall

the most noticeable gaps identified are as follows (Figure 10):

1,00 2,00 3,00 4,00 5,00

Kuwait

Bahrain

Oman

Qatar

KSA

UAE

RE-readiness index

0,00

1,00

2,00

3,00

4,00

5,00

6,00


RE

-ea

din

ess

sco

re

Pillar 1: Infrastructure Pillar 2: Institutions Pillar 3: Human capital


55

1. Key policies (lack of regulatory authorities and energy & climate policies);

2. Power off-take attractiveness due to subsidized electricity tariffs and energy prices;

3. A weak supply chain due to low level of current installed capacity of RETs;

4. Limited awareness of renewable energy resource potential, economic and environmental

benefits, and technology learning cost reduction effects;

5. Investment in renewable energy projects is comparatively less;

6. Large fossil fuel reserves reduce the urgency of energy diversification and promotion of

renewable energy;

7. Limited organizations for development of human capacity and experts in renewable energy.

The GCC countries are well positioned to invest in RETs considering their macroeconomic environment,

institutional facilities, grid system and natural resource potential. All of the GCC countries have energy

prices that show highly subsidized final energy use. Although the region is heavily endowed with

renewable energy resources, RETs cannot compete with the existing fossil fuel-based electricity

generation. In general, the GCC countries have sound public and private institutions. However, the

countries lack energy and climate policies that are required to accelerate the deployment of RETs for

sustainable development.

Figure 10: The GCC countries’ gaps and strengths on renewable energy development (KEY: HC: Human capital, Inst.: Institutions and Infra.: Infrastructure)

6.1 Identified Gaps in GCC Countries

The presented framework identifies the gaps for the development of RETs for each of the GCC countries.

Figures 12-17 show the most noticeable gaps for the deployment of RETs in the GCC countries. This

study categorized gaps for the deployment of RETs where a score of RE-readiness was less than 4 for

each factor/sub-factor. A score above 4 indicates relative strength in the readiness to deploy RETs for

power generation.


56

The main gaps are market infrastructure, targets and policy mechanisms, climate policy, access to

renewable energy finance and institutional framework. Capacity building, lack of current RETs installed

capacity, awareness, supply chain and O&M are also common for almost all the GCC countries. The GCC

region lacks available experts (scientists and engineers) and an innovation and R&D environment to

support the diffusion of new technologies. Abundance and affordability of fossil fuels as well as

subsidized electricity tariffs are all prominent barriers. Subsidies act as a major disadvantage to the

investment of renewable energy projects for power generation.

Figure 11 shows identified RET development gaps for Bahrain. Bahrain lacks key policies, awareness of

renewable energy resource potential and their benefits. It is also low on current RET installed capacity

under market infrastructure, and access to renewable energy finance. Subsidized electricity tariffs,

innovation and capacity building gaps are also evidenced. Similar gaps exist in Kuwait and Oman; these

can be seen in Figure 13 and Figure 14, respectively.

In Qatar, RETs are less attractive due to subsidized electricity tariffs and heavy reliance on fossil fuels,

which can be seen in Figure 15. More efforts should be made to promote climate and long-term energy

policies in an effort to accelerate deployment of RETs in Qatar. Awareness, capacity building and

institutional framework are expected to improve due to Qatar’s hosting of a carbon neutral world cup in

2022.

The KSA and UAE are in a better position due to their many initiatives to invest in clean technologies and

targeted policies for accelerating deployment of RETs. Many stakeholders are involved in the

development of renewable energy projects in these two countries.

Many of the gaps that are identified in the UAE are being addressed by the UAE government. The

government realizes the need for diversification of its energy supply and optimal use of finite fossil fuels,

reviewing tariffs and minimizing subsidies. Lack of innovation and R&D, capacity building and long-term

energy and climate policies are being addressed by the Abu Dhabi government, which has set a target of

transforming into a knowledge-based economy by 2030. Moreover, the establishment of Masdar City

has created a hub for renewable energy business and is developing a comprehensive supply chain for

accelerating deployment of RETs.

Inass

Highlight


57

0 1 2 3 4

Key policies

Awareness


Access to renewable energy finance

Technical and commercial skills

Technology adoption and diffusion

Figure 11: RET deployment gaps in Bahrain

Bahrain

0 1 2 3 4

Natural resources

Key policies



Figure 12: RET deployment gaps in the KSA

KSA

0 1 2 3 4

Key policies

Awareness





Natural resources

Figure 13: RET deployment gaps in Kuwait

Kuwait


58

6.2 SWOT Analysis

In the following section, the findings on RE-readiness are summarized using a SWOT (strengths,

weaknesses, opportunities and threats) analysis. The SWOT analysis was developed by the business

community to facilitate strategic planning [87]. The analysis is intended to maximize strengths and

0 1 2 3 4

Key policies

Awareness




Natural resources


Figure 14: RET deployment gaps in Oman

Oman

0 1 2 3 4

Key policies

Awareness


Natural resources



Figure 15: RET deployment gaps in Qatar

Qatar

0 1 2 3 4

Natural resources

Key policies



Figure 16: RET deployment gaps in UAE

UAE


59

opportunities, minimize external threats, and transform weaknesses into strengths. It is designed to be

used in the preliminary stages of decision-making and as a precursor to strategic management planning.

The analysis results are presented in Table 16.

Table 16: The SWOT analysis for optimal deployment of renewables in GCC countries

Strengths

Healthy macroeconomic environment

Developed general financial market

Well-developed general infrastructure

High projected electricity demand growth

Substantial grid capacity

High general technological readiness

Weaknesses

Lack of energy policy and mechanisms

Lack of climate policy

Lack of investment in renewable energy

Large fossil-fuel reserves

Subsidized electricity tariffs

Lack of RET supply chain

Lack of technical and commercial skills in renewable energy

Opportunities

Substantial renewable energy resources

Recent initiatives to raise awareness on RET

Diversification of energy supply

CO2 emissions reduction towards global responsibility

Threats

Subsidized energy prices

Lack of awareness of technology learning effects

Lack of awareness of RETs benefits and co-benefits

6.3 Priority Research Areas

Research and development is a pre-requisite for deployment of RETs and a sustainable energy

transition. Both technological and non-technological R&D on RETs are essential. Technological R&D that

is most required for the region should focus on the unique climactic challenges associated with RET

deployment, such as the effects of high temperatures, limited water supply, and dust and humidity on

RET operation.

For non-technological R&D, a major effort should be undertaken to advance the state of long term

techno-economic modeling to assess the feasibility of sustainable energy systems in the region. Many of

the main threats to RE-readiness, such as subsidized energy prices, lack of awareness of technology

learning effects and RET benefits and co-benefits can be addressed through rigorous energy-economy-

environment modeling. At the same time, research on external costs associated with the use of fossil

fuels for all conventional conversion technologies should be intensified. Strategies to internalize these

costs should be developed and analyzed. Research into these areas in the GCC countries are lacking,

which poses a significant barrier even though the region exhibits many important strengths and

opportunities.

Based on the identified gaps in GCC countries, this study recommends the following for accelerating the

deployment of RETs:

1. Develop strategic plans to meet sustainable development goals for each of the GCC countries

and the region.


60

2. Create collaboration among the GCC energy research institutions and universities as well as

international partners.

3. Undertake feasibility analysis of long term energy and climate policy (targeted renewable energy

production and CO2 emissions reduction) and establish feasible national policies for sustainable

energy development.

4. Undertake analysis of energy subsidies and incorporate external costs of fossil based power

generation technologies.

5. Include technology learning effects of innovated clean conversion technologies in long term

planning.

6. Undertake research on life cycle cost of RETs incorporating their co-benefits.

7. Undertake research on methods of financing for evolution of RETs.

8. Establish an organization to implement, support and monitor RET projects.

9. Use international instruments such as CDM to promote RET development.

10. Improve capacity-building and awareness.

11. Undertake best practice analysis on renewable energy projects and its application to develop

human capital.

12. Develop awareness of RET benefits, energy security and global contribution on climate change

issues.

7 Conclusions

The GCC countries have embarked on a major economic diversification program during recent years,

including many programs to diversify sources of energy supply. These countries are endowed with huge

amounts of fossil fuels and abundant renewable energy resources, especially solar and, to a lesser

extent, wind.

The GCC countries are becoming increasingly aware of their depleting oil and natural gas reserves. They

have begun taking steps to explore alternative energy resources for power generation. The region has

undertaken initiatives to launch renewable energy projects to prove their commitment to the UNFCCC

towards sustainable development. Some of the countries, the KSA and UAE in particular, have begun to

invest heavily in renewable energy projects. However, the question remains whether these RET projects

will be followed by a clear policy and legal framework that ensures their sustainable deployment. The

promoted rationale for this undertaking is that by investing in RETs for final energy, the countries will be

able to reduce reliance on their valuable and finite fossil fuel resources for domestic use and increase

their export earnings.

The initiatives taken represent a proactive approach to addressing energy security and environmental

issues at international, regional and national scales. The GCC, however, has yet to come up with a

consistent strategy for the region as well as individual national plans to achieve RET deployment goals.

Most of the countries have not yet officially set their renewable energy development targets and lack

stable policies towards this endeavor. Based on techno-economic feasibility investigations, the countries

could manage to fix their long term strategy and R&D as well as target to produce a certain percentage

of total electricity from solar and wind. RETs would help to increase export earnings while avoiding the


61

external costs of burning these fuels at home. Development of RETs, particularly in R&D, would also help

to create a knowledge-based economy in the GCC countries.

The establishment of IRENA’s headquarters in Abu Dhabi, the Zayed Future Energy Prize, Emirates

Energy Award, hosting of COP18 conference in Doha and many workshops/conferences related to

renewable energy have shed light on the GCCs efforts, further encouraging the deployment of RETs in

the region. Yet, there is still limited awareness among decision-makers about the potential benefits of

clean energy technologies and also inadequate national institutions for R&D of RETs. There has also

been a lack of coordination with national and regional development and lack of stakeholders’

involvement.

The identified RE-readiness gaps need to be minimized to develop a sustainable energy system in this

region. While the region might face certain challenges, such as minimizing energy subsidies and

promoting RET investment, sustained and strong support by the government will help to overcome

these barriers and set the GCC on a path of leadership for the region.


62

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9 Appendix

Questionnaire for the GCC renewable energy readiness assessment report

Based on our presentation and discussion on 28.06.2012 at Masdar Institute, we have prepared the

following questionnaire with short explanations of some factors to support the proposed framework

and to write the GCC renewable energy readiness assessment report:

(Please provide all references in support of your submissions. Respondents may also adopt this

questionnaire in developing report for their respective countries.)

Background

Energy, economy, environment information in general.

Infrastructure

Infrastructure explores each country’s physical capability to install renewable energy technologies in

terms of availability of natural resources, the country’s general infrastructure, and grid capacity to

support additional renewable energy capacity.

Renewable and non-renewable energy potential as well as generation capacity:

1) Which renewable energy resources are available and what are their theoretical or technical

potential (based on wind speed or solar radiation) to generate electricity?

2) What is the total conventional fuel(s) reserve?

3) How does your country rank internationally in terms of proven reserves?

4) What is the fuel cost (per m3 or PJ or barrel) for power generation for each fuel?

5) What is the present generation capacity (MW) by fuels including renewable capacity?

General infrastructure: A country’s general infrastructure affects its ability to implement new

projects, specifically ones that depend on logistical requirements. The Global Competitiveness

Report (http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf) gives quantitative data for

overall infrastructure for each country. Ernst & Young report also gives some indicators of some

factors related to renewable energy (attached).

6) Are there blackouts, load shedding or power shortages?

7) If yes, please provide the frequency and duration.

Market efficiency: In countries where the government has monopoly over power generation,

transmission and distribution, it is an indication of restriction to private sector entry. Control on

transmission and distribution and strict rules and regulations could constraint market forces and

reduce market efficiency.

8) Please complete the following table based on your country’s power sector market regulation:

http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf


69

Sector Public

ownership

Partial public

ownership

Private

monopoly

Private

competition

Don’t know

Generation

Transmission

Distribution

9) What is the cost per unit of electricity generation by fuels?

10) If existent, what is the cost per unit of electricity generation from renewable-based plants?

11) What is the electricity tariff to consumers?

12) Is the tariff subsidized and what are the mechanisms?

13) What is the expected growth rate of electricity demand?

14) What is the percentage of people that have been connected to grid electricity?

Qualitative or quantitative indicators of electricity supply quality can be found in the Global

Competitiveness Report.

Institutions

General institutions indicator gives an indication of how committed the government is to the health

of its institutional framework in terms of efficient or inefficient government. Inefficiency is

determined by wastefulness of government spending, burden of government regulation as well as

transparency of government policy making. These types of factors are most significant in

determining the effectiveness and reliability of energy policy and how fit the public institution is to

implement its set renewable energy targets. Indicator for each country on general institute can be

found in the Global Competitiveness Report.

15) Regulatory framework: The most frequent regulatory challenges are a) the absence of long-term

planning; b) a large number of relevant authorities; c) lack of coordination between relevant

authorities; d) complex permitting procedures and legal appeal process; and e) lack of

stakeholder involvement in decision-making. Which of the above challenges exist in your

country?

A study11 was conducted in 2006 to identify how a country’s regulatory framework effects

investments in the e-communication sector. The main factors identified are: a) clear legislation;

b) timely implementation of legislation; c) comprehensive guidance on the interpretation of

legislative requirements; d) harmonization between stakeholders; e) clear communication from

national regulatory authorities (NRA); and f) adequate appeal processes and NRA enforcement

powers. Which of the above factors exist in your country for regulatory framework?

16) Please provide a list of energy related institutions and provide their activities.

11

Assessment of the regulatory framework for electronic communications – growth and investment in the EU e-

communications sector was conducted in 2006 by London economics in association with Price waterhouse Coopers


70

17) What are the federal or local level renewable energy policies?

18) What are the mechanisms to support renewable energy deployment?

19) Do you have any climate policy to minimize CO2 emissions?

20) Are there any renewable energy deployment or capacity generation targets?

21) Are the targets specific and time bound?

22) Are the targets achievable and reasonable?

23) Are there fiscal incentives to install renewable based power plants?

24) Please provide some detailed information on existing renewable energy projects.

25) Is there public funding to support research and development (R&D) in energy-related subjects?

26) Financial market development: To overcome one of the most pressing barriers to diffusion of

renewable energy technologies, it is important to assess the well-being of the financial market

that determines investor’s capability to invest renewable energy projects. This factor looks at

the efficiency of the financial market in term of availability and affordability of financial services,

possibility of financing through equity market, ease of access to loans, capital availability and

restriction on capital flows. Please rank from “poor” to “very good” your country’s financial

market development for deployment of renewable energy technologies. Also provide

explanations in support of your ranking.

27) Macroeconomic environment: In addition to a country’s financial market, the stability of its

macroeconomic environment is vital to determine the ability to invest in energy sector for

sustainable development. The government’s capability to invest in the energy sector weakens

when it has to make high-interest payments on its past debts. Also, developers do not operate

efficiently when inflation rates are high, and investors are not encouraged when cost of capital

is elevated. This factor is determined by the government’s budget balance and debt, the

national savings rate, inflation, interest rate, and country credit rating. So, the macroeconomic

environment signals government ability to support for renewable energy deployment and the

private sector’s ability to invest in new projects. Please provide explanations on how you rank

your country’s overall macroeconomic environment. Give a range from “poor” to “very good”

regarding the macroeconomic environment for the deployment of renewable energy

technologies of your country.

28) Are there any existing reports or models focusing on long-term energy planning based on

techno-economic analysis?

Human capital

The human capacity measures a country’s ability to select and sustainably operate the most

appropriate technology, as well as managing and maintaining projects of a country. Please discuss

the status/perspective of the following factors related to human capacity for the deployment of

renewable energy technologies:

29) Higher education and training: This is an indicator of how much a country can provide the

necessary technical human capacity in terms of skilled and trained personnel in order to plan,


71

develop, operate and maintain general projects. Please discuss the human capacity level on

renewable energy based on the following headings:

Engineers

Technicians

Project developers

Researchers

Consultants

others

30) Labor market efficiency: It is vital to assess the country’s ability to retain experts. The labor

market efficiency indicator measures the efficacy of the labor market, and gives an idea of the

country’s efficient use of experts, in terms of pay and productivity, reliance on professional

management, brain drain and female participation in the labor force. Otherwise, even in the

presence of renewable energy education programs, graduates would not choose to stay and

work in the country. Please provide explanations on how you judge the overall labor market

efficiency of your country. Both qualitative and quantitative assessments are expected.

31) Are there any institutes in your country responsible for long-term energy planning, applying

models for sustainable development?

32) Technology adaption and diffusion: It is important to assess how well a country succeeds in

keeping up with the new technologies when we want to study the chances of renewable energy

technologies adoption. This is measured by its people’s ability to adapt to technological changes,

the level of innovation and R&D. Please discuss renewable energy technologies adoption

readiness and how you rate your country in adopting renewable energy technologies. Give a

range from “poor” to “very good”.

33) Innovation and R&D: Aside from technological readiness, this factor measures the country’s

capacity for innovation, quality of scientific institutions, company spending on R&D, government

procurement of advanced technology products, and availability of scientists, utility patents.

Please discuss innovation and R&D programs. The indicator of this factor can be found in Global

Competitiveness Report.

34) Resource availability awareness: Please provide some details on resource availability awareness

in your country. Give a range from “no resource assessment efforts” to “conducted assessment

on all renewable resources and made data available to the public”.

35) Please discuss consumer and social awareness of renewable energy in your country. Give a

range from “no consumer and social awareness” to “very good consumer and social awareness”.

Thank you

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