Pathways of renewable generation in the MENA region: opportunities for scaling up green finance

Author: Isabella Alloisio & Francesco Pietro Colelli

Solar systems, among other renewable sources, have the highest potential to contribute to the MENA region’s future generation needs. This reflection provides an insight into the most recent cost analysis as well as the different trade-offs available to the region’s economies for scaling up such potential: MENA countries are highly heterogeneous in terms of both energy dependence and carbon intensity of electricity generation. Export-dependent economies need to choose between using cheap fossil fuels for domestic consumption or preserving such resources for export. Oil importers see domestic renewable generation as a way to reduce the pressures on fiscal budgets and to increase their energy security. Expectations of an oil price trend stably around USD 50-60/bbl are fueling the needed fiscal reform momentum throughout the whole region, with important direct impacts on the profitability of renewables. Particular attention will also be given to the development of financial mechanisms that can lower the cost of renewable energy systems, and notably to the role of Gulf Sovereign Wealth Funds potentials for providing suitable long-term and affordable financing.