(MENAFN- Khaleej Times) UAE sees new projects across coal, nuclear and solar, funded by both local and Asian investors Mergers and acquisitions in the renewables sector picked up in 2016 across the Middle East and Africa after a long period of slow activity, with greenfield activities continuing to dominate power and utility transactions in the region, attracting $8.7 billion (Dh31.95 billion) of investment last year, according to a report.
The EY report "Power transactions and trends: 2016 review and 2017 outlook" said the UAE also saw new projects across coal, nuclear and solar, funded by both local and Asian investors, to support its raised renewable energy target from 24 per cent to 26 per cent to help fight climate change. Separately, Dubai launched a $27 billion green fund to support global sustainability projects.
Additionally, in the UAE, a consortium of lenders including Islamic Development Bank, Natixis, National Bank of Abu Dhabi and First Gulf Bank invested $924 to build the 800ME Mohammed bin Rashid Al Maktoum Solar PV Phase III.
"The Dewa's achievement towards the end of 2016 in reaching financial close on the clean coal Hassyan IPP and Mohammed bin Rashid Al Maktoum Solar PV Phase III shows the pace and scale by which successful projects are coming to market in the region," said David Lloyd, Middle East power and utilities transactions leader at EY. "The focus in 2017 will be very much on the Saudi renewable energy programme, now that this has been launched by the Ministry of Energy, Industry and Mineral Resources, and on potential investment opportunities from Saudi Electricity Company's unbundling into four generation companies."
Middle East energy reforms
Governments in the Middle East are committed to energy reforms and have implemented energy-reducing tactics, such as in Oman, where subsidiaries were removed and cost-reflective tariffs were introduced for customers using more than 150MWh of electricity per annum. Also planning to increase electricity and water tariffs is Kuwait, which will target consumers of large quantities.
Saudi Arabia plans to cut electricity and water subsidies by $53 billion and by 2020, and have further plans to unbundle the state-controlled Saudi Electricity Company to eventual privatisation. Moreover, a tender in 2018 for 300MW will boost solar capacity in the kingdom, followed by other tenders for 900MW in 2019 and 750MW in 2020.
Egypt, one of the top 40 most attractive destinations for renewable energy, is planning to build solar plants with capacity for an estimated 250 MW. In December, Jordan, another top 40 destination, announced its third renewable energy tender for 200MW and 100MW wind energy capacity.
Governments are also showing a growing interest in digital and smart technologies. In November, the Bahrain Electricity and Water Authority agreed to partner with Siemens to modernise its grid infrastructure. The Qatar General Electricity and Water Corporation is partnering with Belgian consultancy Elia Grid to develop smart grid expertise.
"We see a clear intent to move on an accelerated basis to greater private sector participation throughout the power and utility value chain," Lloyd added.
This will create opportunities for both local and international investors, whether in corporate or project finance form. Our current belief is that the nearer term opportunities lie at the production end of the value chain, in both power and water, although we do see potential opportunities in the medium term in transmission, distribution and even retail," concluded Lloyd.
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