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November 12, 2024 • 6:00 pm - 8:30 pm est

Financing the Energy Transition 

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Financing the Energy Transition 

Overview

The Gulf Renewable Power Tracker is an interactive and visual database of Gulf state-owned and state-related renewable power investments and developments on a global scale.

This research initiative has three aims in its data visualizations and subsequent analytical output:

  • It tracks the deployment of renewable power projects on a global scale that are led by Gulf state-backed entities.
  • It seeks to analyze the pace and structure of renewable energy development inside of the Gulf states.
  • It brings together consideration the geopolitics of emerging partnerships in investment, manufacturing and technology transfer in renewable energy between the Gulf and China and other partners.

Background

While renewable power projects are growing at a rapid pace inside of the six Gulf Cooperation Council states, there is also a drive to deploy renewable assets outside of the Arabian Peninsula.

The chart above illustrates the substantial increase in renewable energy capacity within the GCC from 2014 to 2023. The region, particularly led by Saudi Arabia and the UAE, has rapidly expanded its solar and wind energy infrastructure, reflecting a broader commitment to reducing reliance on fossil fuels for domestic energy use, and in some ways saving valuable hydrocarbons for export revenue generation. Saudi Arabia, with its Vision 2030 initiative, has been at the forefront of this transformation, investing heavily in solar energy projects and setting ambitious targets for the coming decade. Recent data from the Energy Institute Statistical Review of World Energy 2024 shows that global installed solar and wind capacity reached ~1,420 GW in 2023, growing at annual rate of 19% since 2019. Saudi Arabia’s generation capacity has expanded significantly during this period, growing from 0.1 GW in 2019 to 2.7 GW in 2023, representing a compounded annual growth rate (CAGR) of 121%. The IEA expects countries in the MENA region to add 62GW of renewable energy capacity over the next five years. Although the MENA region is weak compared to other regions on the global scale of renewable energy installed capacity, its speed of project deployment is considerable, especially within the Gulf.

The capacity to develop renewable power projects rests on access to capital, technology and component supply chains, as well as the political initiative to secure off-take agreements with state-owned or controlled utilities across emerging market developing economies. Here the GCC states, and especially state-owned or state-related entities in Saudi Arabia and the United Arab Emirates, are at an advantage.

The Gulf states are not only attracting investment in clean energy but also seek to become development players themselves, using their sovereign funds and state-owned energy firms to invest aggressively in renewable energy and carbon-intense projects in the region and beyond. The funding gap between need and investment in clean energy in the developing world is massive. The Grantham Research Institute on Climate Change 2021 report estimated that around $3 trillion in annual investments will be needed to transition to a low-carbon global economy, three quarters of which must be directed outside of the world’s seven largest developed economies.

Gulf states are positioning themselves to help fill that gap. Gulf states typically invest in high-growth, high-population areas that will likely need more energy from the Gulf in the future—not only oil and gas but also electricity. At a cost of $1.8 billion, Saudi Arabia is now building a high-voltage direct current interconnector that will eventually send 3,000 megawatts of electricity to Egypt. A similar interconnector will begin supplying Iraq with GCC states’ electricity next year. ACWA Power, in which the Saudi Public Investment Fund is a 50 percent stakeholder, is developing solar power plants in Azerbaijan, Ethiopia, Iraq, and Uzbekistan. In 2022, Masdar, an energy company fully owned by the UAE, announced it is spearheading renewable energy projects in Angola, Azerbaijan, Kyrgyzstan, Romania, Tanzania, Uganda, and Angola. The data visualization tool specifically highlights the projects deployed by ACWA Power, a renewable energy company that is partially owned by the Public Investment Fund (the Saudi sovereign wealth fund) and its co-investors from the Silk Road Fund (a Chinese sovereign fund) and projects developed and financed by Masdar, a wholly-owned company of  three UAE government shareholders: Mubadala (an Abu Dhabi sovereign fund), the Abu Dhabi National Oil Company, (ADNOC) and Abu Dhabi National Energy Company (TAQA).

Partnerships in renewable supply chain manufacturing and co-investment also facilitate this expansion into renewable power deployment. The traditional Arab oil giants of the Gulf are also pursuing new shared investments with China in solar manufacturing and power plant development. The Chinese companies TZE, Sungrow, and JinkoSolar, for example, are all expanding export and their manufacturing capacity in the Middle East, most notably in Oman, Saudi Arabia, and the UAE. At home manufacturing capacity allows for the future export of solar panels and components that will supply the projects won by state-owned and related entities like ACWA Power in Saudi Arabia.

The Gulf states and their renewable energy firms and investment vehicles have the capacity and the interest to shape the direction and pace of the energy transition across the wider Middle East and a growing geography of emerging market developing economies, each reliant on investment and financial intervention from the Gulf states, along with more traditional forms of infrastructure investment and aid. Owning, operating and controlling a country’s power production is a mighty—and durable—political tool, as typical power projects are financed for as long as 30 years. Transitioning to renewable energy can lower the price of reliable electricity, allowing people and commerce to thrive as long as investors ensure that the projects they back meet standards of transparency and accountability.

This research initiative has three aims in its data visualizations and subsequent analytical output: First, it tracks the deployment of renewable power projects on a global scale that are led by Gulf state-backed entities; Second, it seeks to analyze the pace and structure of renewable energy development inside of the Gulf states; Third, it brings together consideration the geopolitics of emerging partnerships in investment, manufacturing and technology transfer in renewable energy between the Gulf and China.

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Lead Scholar

  • Karen E. Young

    Senior Research Scholar

Acknowledgements

This project was funded by general research support from the Center on Global Energy Policy. SIPA Graduate Research Assistants were key to its launch, including work by Megren Al Mutairi, Rawan Alfehaid, Alice Baudin. 

Data is from fDi Markets and also compiled by the author from press reports and directly from public company data. To cite the Tracker, Karen E. Young, Center on Global Energy Policy, Columbia University “Gulf Renewable Power Tracker”, access date: https://www.energypolicy.columbia.edu/the-gulf-renewable-projects-tracker/

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