Investors’ Impetus for Renewable Energy
Developers and investors interest in renewable energy from around the globe is set to increase substantially with sweeping economic reforms in today’s evolving energy system.
As the industry is decisively moving away from fossil fuels, the renewable energy is experiencing significant growth worldwide. With governments’ plans to prioritize energy sector investments coupled with the necessity to preserve the environment, renewable is becoming the fastest-growing energy resource today.
Global investment in renewable energy projects has steadily grown from less than $50 billion in 2004 to a record $305 billion in 2015. The potential for investment in these schemes is being welcomed by developers, lenders and contractors alike. Banks keenness to lend for clean energy projects and the easy availability of finance through new capital-market instruments offer some of the most attractive opportunities for investors.
The Middle East region has around $622 billion worth of investments for the planned energy projects for the five-year period ending in 2021, with the power sector accounting for major spending at $207 billion. The region has more than 60GW of planned renewable energy projects in the pipeline.
Scaling up the production of renewable energy in oil-producing GCC countries would reap multiple benefits across the region despite the current market slowdown. As per Irena, renewable energy production targets would cut fuel consumption in power sector by 50% in the UAE, 25% in Saudi Arabia, by 2030. It would also reduce the region’s per capita carbon footprint by 8%.
The regional drive for renewables will have multiple benefits in terms of job creation, GDP growth, development of local industries, and human welfare. The uptake of renewable energy schemes in the GCC has been increased considerably with the private investor involvement in the complete life-cycle of such projects.
Other than big, centralised renewable energy plants, Gulf States are now increasing penetration in the distributed power generation. Dubai is pushing ahead with its ambitious plan to have solar panels on all major rooftops by 2030.
Saudi Arabia has reinvigorated its renewable energy programme and set to deliver 9.5GW by 2023. The first 700MW of solar and wind projects have already been tendered to be developed under the independent power producer (IPP) model.
Saudi Ministry’s initiative to create an export-oriented, fully-integrated local private industry for renewable will be a key shift towards increasing privatization and private investment.
Initiatives such as these are opening up opportunities for investors. A true commitment to cleaner, more efficient renewable energy, which comes with myriad socio-economic benefits, will keep the region ahead in the energy landscape for years to come.