RENEWABLE ENERGY MARKET ANALYSIS GCC 20192 ACKNOWLEDGEMENTS This report was developed under the guidance of Rabia Ferroukhi IRENA and authored by the Policy Unit IRENA, Laura El-Katiri and Arslan Khalid individual consultants, along with Robin Mills, Maryam Salman and Roa Ibrahim Qamar Energy. This report benefited from the valuable contribution of Verena Ommer, Abdullah Abou Ali, Adrian Whiteman, Javier Esparrago, Samah Elsayed, Dolf Gielen, Michael Taylor, Pablo Ralon, Abdulmalik Oricha Ali, Mohammed Sanusi Nababa, Huiyi Chen, Sandra Lozo, Serkan Ata, Costanza Strinati, Diala Hawila, Emanuele Bianco, Michael Renner and Ahmed Abdel-Latif IRENA; Paul Komor IRENA Consultant; Paddy Padmanathan ACWA Power; Hilal Al Gaithi AER Oman; Tanzeed Alam Earth Matters; Daniel Zywietz Enerwhere; Hussain Junayd Shibli K.A. CARE; Amro Elshurafa KAPSARC; Sgouris Sgouridis Khalifa University; Sa’ad Al Jandal, Ayman Al-Qattan and Osamah Al Sayegh KISR; Kanav Duggal MESIA; Aisha Al Abdooli and Nawal Al Hosany MOCCAE; Khalil Al Zidi PAEW; Raed Bkayrat Sun Energy Advisory; Shashi Prakash Supreme Committee for Delivery and Legacy. DISCLAIMER This publication and the material herein are provided “as is”. All reasonable precautions have been taken by IRENA to verify the reliability of the material in this publication. However, neither IRENA nor any of its officials, agents, data or other third-party content providers provides a warranty of any kind, either expressed or implied, and they accept no responsibility or liability for any consequence of use of the publication or material herein. The ination contained herein does not necessarily represent the views of the Members of IRENA. The mention of specific companies or certain projects or products does not imply that they are endorsed or recommended by IRENA in preference to others of a similar nature that are not mentioned. The designations employed and the presentation of material herein do not imply the expression of any opinion on the part of IRENA concerning the legal status of any region, country, territory, city or area or of its authorities, or concerning the delimitation of frontiers or boundaries. Unless otherwise stated, material in this publication may be freely used, shared, copied, reproduced, printed and/or stored, provided that appropriate acknowledgement is given of IRENA as the source and copyright holder. Material in this publication that is attributed to third parties may be subject to separate terms of use and restrictions, and appropriate permissions from these third parties may need to be secured before any use of such material. This publication should be cited as IRENA 2019, ‘Renewable Energy Market Analysis GCC 2019’. IRENA, Abu Dhabi. ISBN 978-92-9260-096-9 IRENA 2019 ABOUT IRENA The International Renewable Energy Agency IRENA is an intergovernmental organisation that supports countries in their transition to a sustainable energy future and serves as the principal plat for international co-operation, a centre of excellence, and a repository of policy, technology, resource and financial knowledge on renewable energy. IRENA promotes the widespread adoption and sustainable use of all s of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy, in the pursuit of sustainable development, energy access, energy security and low-carbon economic growth and prosperity. www.irena.org A Renewable Energy Roadmap FOREWORD The world of energy is witnessing rapid and far-reaching changes. Cost reductions, innovation and policy frameworks are driving an unprecedented growth of renewable energy across the globe. The imperative to tackle climate change and to advance sustainable development are further strengthening the momentum of this energy transition. As a result, many countries are raising their level of ambition to accelerate renewables deployment. The oil- and gas-exporting countries of the Gulf Cooperation Council GCC are increasingly part of this momentum When the International Renewable Energy Agency IRENA released its 2016 edition of the Renewable Energy Market Analysis for the GCC region, renewables were starting to be developed as a serious value proposition for the region. Two years later, renewables have become a central element of energy planning. Consecutive auction rounds in 2016 and 2017 have pushed down prices for solar photovoltaic and concentrated solar power in GCC countries to world-record lows. This remarkable result showcases the combination of abundant resources and an attractive investment climate. This second edition of IRENA’s regional market analysis analyses the GCC’s rapid progress on renewable energy deployment. It captures market conditions at a time when conversations have moved from “should we have renewables” to “how much can we integrate” and “how do we go further”. The growing adoption of renewables in the region sends a signal to the whole world about the enormous opportunities at hand. Gulf countries are set to capitalise on their promising resources for renewable power generation, along with applications for buildings, transport, direct heat and cooling. Renewable energy targets at the national and sub-national levels are key. By 2030, the region could save 354 million barrels of oil equivalent a 23 reduction, create more than 220 500 jobs, reduce the power sector’s carbon dioxide emissions by 22, and cut water withdrawal in the power sector by 17 based on the renewables targets already in place. The current targets are entirely within reach for the GCC countries. The economic and social rationale for the energy transition in the GCC has never been stronger. By maintaining their leadership in the energy sector and embracing their region’s abundance of renewable energy resources, GCC countries can ensure their own long- term economic and social prosperity. Adnan Z. Amin Director-General IRENA RENEWABLE ENERGY MARKET ANALYSIS THE GCC REGION 345 TABLE OF CONTENTSForeword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Lists of figures, tables and boxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9CUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10BACKGROUND AND ENERGY SECTOR OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . 221.1 Diversification of the GCC economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231.2 Energy resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251.3 Energy supply and consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351.4 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45RENEWABLE ENERGY LANDSCAPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 462.1 Renewable energy targets, status and trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472.2 Renewable energy policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552.3 The institutional landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69RENEWABLE ENERGY INVESTMENT AND COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . 783.1 Renewable energy investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 793.2 Declining costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 843.3 Competitiveness with fossil fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 863.4 Key factors for price reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88RENEWABLE ENERGY BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1004.1 Fuel and emissions savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1034.2 Employment and value creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1054.3 Water savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113RENEWABLE ENERGY AND ENERGY EFFICIENCY . . . . . . . . . . . . . . . . . . . . . . . . . 1165.1 Energy sector status and trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1185.2 Current policy and outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1215.3 Integrating renewable energy through energy efficiency measures . . . . . . . . . . . . . . . . . . . . 1305.4 Barriers, potential measures and long-term outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136THE WAY FORWARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 01 02 03 04 056 RENEWABLE ENERGY MARKET ANALYSIS GCC 2019 LISTS OF FIGURES, TABLES AND BOXES LIST OF FIGURES Figure 1.1 Crude oil reserves by region in 2017 as a share of world total . . . . . . . . . . . . . . . . 25 Figure 1.2 Natural gas reserves by region in 2017 as a share of world total . . . . . . . . . . . . . . . . 26 Figure 1.3 The world’s ten-largest crude oil producers in 2017 . . . . . . . . . . . . . . . . . . . . . 27 Figure 1.4 Crude oil exports by region in 2017 as a share of world total . . . . . . . . . . . . . . . . . . 27 Figure 1.5 The world’s ten largest natural gas producers in 2017 . . . . . . . . . . . . . . . . . . . . . 28 Figure 1.6 Natural gas exports by region in 2017 as a share of world total . . . . . . . . . . . . . . . . 29 Figure 1.7 Natural gas import and export trends for Kuwait, Oman and the UAE, since 2000 . . 30 Figure 1.8 Global horizontal irradiation kWh/m 2 /yr . 31 Figure 1.9 Direct normal irradiation kWh/m 2 /yr . . . . 31 Figure 1.10 Annual average wind speeds . . . . . . . . . . . . 33 Figure 1.11 Suitability analysis results for on-grid solar PV and on-grid wind . . . . . . . . . . . . . . 34 Figure 1.12 Total primary energy supply by fuel in 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Figure 1.13 Installed capacity by country in 2017 . . . . . . 36 Figure 1.14 Electricity generation capacity by fuel source as a percentage of the total in 2016 . . . . . . . 36 Figure 1.15 Population and annualised growth in GDP . . . . . . . . . . . . . . . . . . . . . . . . 38 Figure 1.16 Total final energy consumption by source in the GCC, 1990-2016 . . . . . . . . . . . 39 Figure 1.17 Total final energy consumption by country as a share of the total in 2016 . . . 40 Figure 1.18 Total primary energy use per capita in 2014 kg of oil equivalent per capita . . 40 Figure 1.19 Total final energy consumption by sector as a share of the total in 2016 . . . . . . 41 Figure 1.20 Final energy consumption in the industrial sector as a share of the total in 2016 . . . . . . 42 Figure 1.21 Final energy consumption in the transport sector in the GCC and selected countries in 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Figure 1.22 Electricity end-user profile for a typical building in Abu Dhabi as a share of total electricity consumed in 2010 . . . . . . . . . . . 44 Figure 1.23 Annualised growth in electricity consumption by sector in the GCC and selected countries, 2006-2016 . . . . . . . . . . 45 Figure 2.1 Sustainable energy targets in the GCC . . . . 49 Figure 2.2 Installed renewable energy capacity in GCC as a share of the total, 2017-2018 . 50 Figure 2.3 Growth in renewable energy capacity in the GCC by country, 2014-2018 . . . . . . . 50 Figure 2.4 Renewable power planned additions by technology . . . . . . . . . . . . . . . . . . . . . . . 51 Figure 2.5 Renewable power planned additions by country . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Figure 2.6 Renewable energy projects in the GCC at the end of 2018 . . . . . . . . . . . . . . . . . . . . 54 Figure 2.7 Institutional structure of decision- making in energy and electricity in the United Arab Emirates . . . . . . . . . . . . . . . 70 Figure 2.8 Institutional structure of decision- making in energy and electricity in Saudi Arabia . . . . . . . . . . . . . . . . . . . . . . . . . 73 Figure 3.1 Investments in renewable energy projects in the GCC, 2006-2018 . . . . . . . . . 80 Figure 3.2 The levelised cost of electricity for projects and global weighted average values for CSP, solar PV, onshore and offshore wind, 2010-2022 . . . . 85 Figure 3.3 Price of utility-scale electricity generation technologies in the region US cents/kWh . . . . . . . . . . . . . . . . . . . . . . 87 Figure 3.4 Cost of steam for different generation technologies for enhanced oil recovery . . . . 89 Figure 3.5 Costs and perance indicators in MENA countries for solar PV and CSP technologies, 2013-2014 and 2016-2017 . . . 98 Figure 4.1 Fossil fuel savings by achieving renewable energy targets, by country in 2030 . . . . . . 103 Figure 4.2 Emissions saved by realising renewable energy deployment plans . . . . . . . . . . . . . 104 Figure 4.3 Renewable energy jobs in 2030, by country . . . . . . . . . . . . . . . . . . . . . . . . . 106 Figure 4.4 Renewable energy jobs in 2030, by technology . . . . . . . . . . . . . . . . . . . . . . . 1067 TABLES AND BOXES Figure 4.5 Selected local manufacturers of solar PV components . . . . . . . . . . . . . . . . . 109 Figure 4.6 Reduction in water withdrawal by realising renewable energy deployment plans . . . . . 114 Figure 5.1 Total final energy consumption by sector and country, 2016 . . . . . . . . . . . . . . 118 Figure 5.2 Final energy consumption by source and country, 2016, and compared with the United States and Singapore . . . . . . . . 119 Figure 5.3 Electricity generation per capita MWh/cap/year in the GCC and selected comparat