Prospects for the PV market in the Middle East and North Africa: large-scale bidding, thin profit margins

　　In recent years, the solar industry has won some of the largest and lowest-priced contracts in the Middle East and North Africa (MENA) region. However, out of concerns about component prices and availability, what expectations does this industry have for the mid-term development of the solar energy industry in the MENA region?

　　Heymi Bahar, Senior Analyst for Renewable Energy Markets and Policy at the International Energy Agency, said: “There are some markets that have found important growth opportunities in this region and they have already started contracting projects. The United Arab Emirates, Saudi Arabia, and Egypt have a large number of countries. Project, it is expected that there will be additional installed capacity projects in the next few years. In addition, there will be Qatar."

　　In addition to these countries, projects in countries such as Oman, Kuwait and Tunisia continue to grow, and countries such as Pakistan and Iraq are also building the first batch of public utility projects.

　　(Sakaka Solar Project in Saudi Arabia)

　　A: Large-scale bidding projects and low-price bidding

　　The Saudi Arabian Renewable Energy Project Development Office held two initial bids in 2017, one for solar energy and the other for wind energy. A year later, the state-owned developer ACWA Power won the bid for the 300MW Sakaka solar project with a bid price of US$0.0236/kWh, setting a world record at the time.

　　Since then, records have been broken many times. Record-breaking projects include Qatar's first solar tender project, which was priced at only US$0.01747/kWh. The 800MW Al Kharsaah independent power producer photovoltaic project was jointly developed by the French energy giant Total (49%) and the Japanese Marubeni conglomerate Marubeni (51%).

　　B: Aiming at the development of solar energy

　　Israel’s goal is to reach 30% of solar power generation by 2030, while Morocco’s goal for the same year is 52% renewable energy. In August 2021, Oman set a 20% renewable energy power target in 2027 in the national energy target. This indicates that there will be more bidding projects in the next few years.

　　The United Arab Emirates has achieved the highest growth in photovoltaic power generation in this region. Dubai and Abu Dhabi have tendered a large number of solar projects, which means that they will soon be able to achieve their renewable energy targets.

　　In the next few years, solar photovoltaic bidding in this region may continue to be led by large international companies and government-backed organizations. As Jenny Chase, head of solar analysis at BloombergNEF, said, "Product development is not a game for small companies, especially in the tender market."

　　C: The impact of rising costs on MENA is more serious

　　The recent increase in the cost of solar cell modules is one of the main challenges for all related industries. Due to the meager profit after winning the bid, the MENA region may feel the impact of price increases more strongly. Therefore, the construction of the project after the bidding may be delayed.

　　ACWA’s Kom Ombo project in Egypt has been postponed. The Kom Ombo project was postponed for 6 months. Although this may slow down the development of large projects, it is unlikely to prevent their development altogether.

　　Can Baş said: "Our forecasts show that it will take 2-3 years for modules to drop to the level of 2020. As China adds a large amount of production capacity next year, polysilicon prices will tend to normal."

　　D: Mid-term development of solar energy

　　In the medium term, as countries pay more attention to renewable energy, there may be more and more large-scale solar photovoltaic development projects.

　　Can Baş said: "In the next few years, large-scale projects will continue to increase. In many other markets, we have also seen a lot of merger cases. The profit margin of this industry is very low, and it is difficult for small developers to survive."

　　Due to the challenges of module supply, the development of the solar energy industry may be delayed in the next one or two years. Nevertheless, this is only short-term and will not hinder the long-term promotion of solar energy in this region.

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