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A new report by Deloitte highlights the positive effect that recent changes in regional policies towards renewable energy will have on private sector opportunities in the GCC
The Deloitte report indicated that the perception of the region as a net emitter of carbon is gradually changing as the region takes concrete steps to tackle renewable energy and many of the GCC states have embarked on plans to increase the contribution of renewable energy to the region's energy mix.
“In the near term, we expect to see several policy announcements and a push towards green energy production being stimulated at the national and governmental levels,” said Deloitte Middle East managing director for renewable energy Declan Hayes.
The report said, "Saudi Arabia, Kuwait, and Oman have each stated plans to produce at least 10 per cent of their energy from sustainable sources by 2020. Whereas Dubai and Abu Dhabi each set targets of producing 5 per cent and 7 per cent respectively of their energy from solar and renewable sources by 2030."
The report noted that with the additional burst of activity in the renewable energy sector the Middle East could serve as good incentive for large multinational renewable energy companies and component manufacturers alike to consider establishing presence and production centres in the region.
The Deloitte renewable energy report highlighted energy independence as one of the reasons for the shift to renewables but a key factor was the financial incentive to initiate change. It said, "the opportunity costs of burning oil is becoming increasingly difficult to ignore."
The example of Saudi Arabia was used to show the financial benefits of switching to renewable energy, as Saudi Arabia alone is estimated to be diverting 800,000 barrels of its daily oil production to oil burning power plants. According to Deloitte, at current market prices of US$120 per barrel, this amounts to up to $35 billion in lost oil revenue per annum as a result of not selling oil to foreign markets.
The report argued that, "A changing competitive landscape is providing compelling reasons to consider alternative sources of energy. As such, many short term and medium term opportunities will continue to surface and impact the GCC region."