Study: Middle Eastern Countries Would Save Money by Ditching Fossil Fuels in Power Mix
Abandoning fossil fuels for electricity generation by 2030 would save money for countries in the Middle East and North Africa (MENA), according to new research into renewable energy in the area.
A feasibility study of 100 percent renewable electricity systems across MENA found that relinquishing fossil fuels in favor of generation based mainly on solar and wind could help cut costs by between 55 percent and 69 percent compared to a business-as-usual scenario. The study, published last month in Energy Strategy Reviews, is believed to be the first to look at how renewable energy generation might meet hourly loads across MENA.
The study looks at several scenarios, including establishing fully renewable electricity grids independently in most MENA countries, or having the whole area interconnected by high voltage DC transmission links.
A third scenario looks at the effect of adding loads from seawater desalination and the industrial gas sector onto a MENA-wide interconnected electricity system.
The researchers estimated the levelized cost of energy (LCOE) arising from fully renewable electricity systems would vary between €40.30 and €52.80 ($43.53 and $57.04) per megawatt-hour, depending on the scenario. The estimated business-as-usual LCOE is €118.60 per megawatt-hour, and that's without including the cost of greenhouse gas emissions.
Unsurprisingly, the most expensive scenario was the one without interconnections between countries. Evening out supply and demand with a MENA-wide transmission network would cut LCOE from €52.80 down to €48.30 ($52.16) per megawatt-hour, the study found.
Importantly, though, the research also showed that coupling the desalination and industrial gas sectors to renewable energy generation could cut LCOE even further, reducing it by 17 percent compared to simply having an interconnected grid.
The integration would be achieved using power-to-gas technology, with 90 percent of electrical energy generation coming from onshore wind and large-scale PV.
“Power-to-gas technology not only functions as a seasonal storage by storing surplus electricity produced mainly from wind power and partially from solar PV but provides also the required gas for the non-energetic industrial gas sector,” said the study.
Middle East solar energy prices continue to fall
The research poses interesting questions for MENA policymakers. While the lowest LCOE can be achieved by interlinking nations and integrating their industrial operations, going down this route could be challenging in practice given the fragile geopolitics of the region.
It would also require by far the highest level of capital investment: almost €1.9 trillion ($2 trillion), compared to €908 billion ($981 billion) for a MENA-wide electrical grid and €962 billion ($1 trillion) for each country to have its own renewable energy supply.
Based on International Monetary Fund data, this investment would equate to 60 percent, 29 percent and 31 percent of total MENA gross domestic product (GDP) in 2019, respectively.
However, said lead author Arman Aghahosseini, of Lappeenranta-Lahti University of Technology in Finland, given an average energy infrastructure lifetime of around 30 years the annual capital expenditure required under any scenario would likely be only 1 percent or 2 percent of GDP.
This “seems to be very well affordable,” said Aghahosseini. “Of course, we agree that tackling the geopolitical issues is not so easy and implementing such a project [with full integration] requires significant cooperation and solidarity between the countries.”
The study’s LCOE figures do not seem far-fetched in view of pricing seen in recent MENA solar auctions.
Four countries in the area were already seeing solar bids of less than $25 per megawatt-hour last year before Dubai attracted a $17-per-megawatt-hour bid for the next phase of its Mohammed bin Rashid Al Maktoum Solar Park.
And in January, Qatar claimed to have gone even lower, without disclosing figures. Despite this, some observers remain cautious about accepting studies that claim to show how regions can achieve full decarbonization of the electricity system.
Noting that many places, including a growing number of U.S. states, now have 100 percent renewable targets for the electricity sector, Menlo Energy Economics president Fereidoon Sioshansi said: “I think you start getting into problems at 50 percent.”
A study last year by Energy and Environmental Economics for Calpine Corporation in the U.S. had shown that balancing variable loads with intermittent renewable energy supplies became prohibitively challenging and expensive at penetrations beyond 85 percent, Sioshansi said.
“Moving towards 100 percent is a good idea, but getting to actual 100 percent doesn’t really make sense,” he said.