Imtiaz Mahtab, newly appointed CEO of the Middle East Solar Industry Association (MESIA), predicted economic factors will help the solar energy industry in the Middle East grow by 600 percent, but sluggish policy making may hinder that development.
“The solar industry has taken a great leap since last year,” he said. “There is still a lack of stability in policy making. Projects are coming out but there are no concrete decisions.”
According to Mahtab, the industry must grow based on basic economics of supply and demand. As the demand for energy increases, and the supply of oil decreases, the solar energy industry will surge. Though there has been a flux in oil prices over the years, and a drop in 2014 to below $60 per barrel, production will not be able to keep up with the demand.
Prices of solar energy production have been on a steady decline since the launch of Masdar, the first solar project in the Middle East, based in Abu Dhabi. The cost of a utility-scale solar photovoltaic power plant then was about $7 per watt and by 2014 that cost had been reduced to less than $1.50.
There are more than $250 billion in investment opportunities in the Gulf region, but slow commercial procurements from governments could hinder this growth, says Mahtab.
In January of this year Saudi Arabia delayed a $109 billion solar power program for eight years. The project aimed to produce a third of the Kingdom’s electricity from solar panels by 2032. The late King Abdullah’s government had set goals in May 2012, in response to a Chatham House paper that predicted current policies would make Saudi Arabia a net oil importer by 2038. Yet, the country’s ambitions to keep much of the production domestic have delayed the project.
Mahtab raised concerns in financing large scale projects. Banks and financial institutions in the gulf have been wary of investing large sums they know very little about, and have little proven return on investment. As a result, countries like Qatar and Kuwait have been very slow in adopting solar energy policies. However, he remains optimistic that once Saudi Arabia begins to truly develop its industry, the region will see rapid development in solar energy. And he is adamant about his association’s role in the process.
“Saudi is the big giant, it moves slow but if it moves it will move very fast,” he said “MESIA is working with the policy makers to give solar energy more continuity in the region. We (the new board) are all committed. We are here and we are here to support the industry.”