The Middle East, like many other regions, is witnessing an accelerating demand for energy driven by rapidly growing populations, urbanisation and an increase in industrial and construction activity. It has set its sights on a future where renewable and clean energy meets a significant portion of this demand.
Huge investments are being made to diversify the region’s energy sector – investments that could exceed $300 billion by 2050 if utilities meet their ambitious targets. The Middle East’s march towards a cleaner energy mix will be shaped by some very important trends in the years to come.
Countries have set themselves significant future renewable energy targets, with the UAE and Saudi Arabia leading the way. The UAE is aiming for an energy mix that combines renewable, nuclear and clean energy sources by the year 2050 – 44 per cent clean energy, 38 per cent gas, 12 per cent clean coal and six per cent nuclear.
Part of Saudi Arabia’s Vision 2030 is building the $500bn megacity Neom, which aims to be powered by renewable energy. Targets for the project aim to generate 9.5GW of solar and wind energy combined. Other countries, such as Morocco, Yemen, Jordan, Kuwait, Oman, Egypt and Lebanon, have also set themselves ambitious targets to reach by 2030.
Renewables are important in the future of the region, but natural gas will likely account for more than half the Middle East’s energy until at least 2035. This is no bad thing as gas-fired power plants are low on emissions, are highly efficient and can complement the temperamental nature of renewable energy, helping ensure an uninterrupted power supply.
Solar power storage is an example of how this has been a problem in the past. Most solar energy is generated during the day. Given most of our energy consumption occurs at night, natural gas can help balance out this inconsistency, while we wait for energy storage technology to improve.
The natural gas market in the Middle East is growing massively. Low-cost gas reserves are in abundance. There is now also technology to upgrade old gas turbines which are 30 or more years old, improving performance and efficiency.
A ground-breaking advance would be finding new ways to obtain hydrogen for energy production. Hydrogen emits nothing but water vapour, but its extraction has been prohibitively expensive in the past and at the moment, 95 per cent of all hydrogen is produced by getting it from fossil fuels, releasing CO2 into the atmosphere. However, now we can produce it carbon-free via a process you might remember from school, electrolysis.
If we can obtain cheaper hydrogen, which is even cleaner than natural gas, turbines currently used in gas-fired plants can be converted to handle a blend of 30 per cent hydrogen and 70 per cent natural gas. And we are developing the gas turbines of the future to burn 100 per cent hydrogen. This will occur within the next five years.
The UAE government has stated that investment in hydrogen production could reduce costs, making it a viable source of energy. The country is already building the Middle East’s first solar-driven hydrogen electrolysis facility, which will produce carbon-free hydrogen. The Middle East has an advantage in this regard: abundant, low-cost solar power and a geographic location ideal for exporting to European and Asian markets.
As our energy mix diversifies, existing power grids will need to change, becoming more flexible. This will include introducing smart-grids that allow us to have greater control over energy flows, as well as information, so we can better manage complicated processes. Smart grid investments in the Mena region are already projected to reach $17.6bn by 2027. Furthermore, digitalisation of power plants can help prevent shutdowns and more efficiently respond to malfunctions. The future of power generation is firmly with a greater role for digital technologies along with artificial intelligence, which will help maximise the profitability of the sector.
More help from digital technology will help us leverage data to better inform us about how to optimise performance, including by giving us an idea of when we might need to replace equipment, and automating parts of the decision-making process will replace manual operations. All of this serves to reduce the many risks we have to think about in my industry, which can have huge impacts on economies and societies if not thoroughly planned for.
The Middle East is at the heart of this transformation. As the region tries to address the challenges of energy affordability, sustainability, efficiency, security and diversity, new technologies will be crucial moving forward. The Middle East, long known for oil and natural gas wealth, could become equally well known for pioneering clean energy tech.
Khalid Salem is the president of Mitsubishi Power Mena
