Renewable Energy in Morocco and the Middle East

Asad Khaliq
December 6, 2015

Submitted as coursework for PH240, Stanford University, Fall 2015


Fig. 1: The Andasol solar power station, Spain, uses a thermal energy storage system similar to the one in the Ouarzazate Solar Complex in Morocco. (Source: Wikimedia Commons)

The Middle East and North African region (MENA) is home to more than half the world's crude oil and a third of its natural gas. Over the past few decades, it has become globally significant as an energy producer and exporter. The region has simultaneously experienced rapid economic growth, and is poised to continue to account for large percentages of global demand growth for energy. The region's domestic energy policies therefore are very important to the global energy landscape. [1] This paper examines the state of the global energy market, as well as the potential for non-renewable energy exporters in the Middle East to utilize renewable energy - particularly solar power - as a means of supporting and improving energy supply. We will analyze the potential of renewable energy, examine a case study for solar power in Morocco, and look at some of the barriers preventing renewables adoption in MENA, with the hopes of informing dialogue surrounding the requirements for a sustainable and secure energy future.

The Global Energy Landscape and the Importance of MENA Policies

The Middle East is synonymous with the mining and production of oil and energy. The region has long been a power player in world energy production, producing over 30% of global crude oil in 2014 and over 15% of global natural gas. [2] Saudi Arabia, Iraq, Kuwait, the UAE, Qatar, and Iran feature amongst the ten largest producers of crude oil or natural gas. Saudi Arabia alone produces nearly 13% of the world's crude oil. [2]

Meanwhile, the world is using more energy than ever before. The global demand for energy rose from 5000 million tons of oil equivalent (Mtoe) in 1971 to nearly 14,000 Mtoe in 2013. The majority of this energy was provided by Coal, Oil, and Natural Gas - polluting, non-renewable sources of energy production. [2] Much of this demand has come in regions that are poor in oil and natural gas resources - for instance, Asia has accounted for 70% of the growth in global energy consumption in 2000 but does not export significant amounts. Effectively utilizing unevenly distributed natural resources to create and distribute energy is becoming a perennially important challenge. [3]

The demand for energy is also rising in the Middle East. The region saw consumption grow by 56% from 2000 to 2010, four times the global growth rate and nearly double the rate in Asia. [2,4] Saudi Arabia, Egypt, Iran, Kuwait, and Iraq all feature amongst the ten largest users of oil or natural gas for fossil fuel based electricity production. [2] This demand increase is further exacerbated by the fact that most MENA countries subsidize electricity prices, and so price signals do not exist to motivate energy efficient practices amongst consumers. [5]

Demand growth in the Middle East requires particular attention when analyzing global energy dynamics. Greater domestic demand can undermine the export capacity needed to meet growing demand in other regions. In 1973, for instance, the region consumed only 4% of its domestic oil production, but this ratio rose to 24% by 2010. [3] For many MENA countries, the security of energy has not been a major issue. Supplies either came from domestic production (in countries such as Saudi Arabia) or preferential contracts with Arab countries (in the case of importers such as Morocco) which limited risk. However, as global and domestic demand rises, many exporters are needing to sacrifice energy exports in order to keep up with demand at home. The opportunity cost of using scarce fossil fuels to provide cheap, subsidized energy domestically instead of exporting it at a much higher global price is substantial. Saudi investment company JADWA estimated that if all 2.4 million barrels consumed domestically per day in 2010 were instead exported, additional oil revenues of $60 billion would have been generated for the country. [1] Crude oil cost just $3-5 to "lift" in Saudi Arabia in 2012, and the opportunity cost of not selling it at a global price of $125 cost the country dear. [4]

With the region experiencing rapid development and greater global significance, energy demand is expected to continue to grow, and expanding energy production to maintain export capacity while still satisfying domestic demand becomes an issue of utmost importance in ensuring a stable global energy supply.

Going Renewable as an Answer to Rising Global Demand

With the high opportunity cost of using fossil fuel reserves domestically rather than reaping the benefits of exports, it makes sense for countries in the Middle East to look toward renewable energy to help cater to rising domestic demand. There has been some movement to this end. As early as 2011, solar plants cropped up in Jordan and Morocco. Egypt and Tunisia led a push to build wind farms. The Palestinian territories as well as eight Arab nations set renewable energy targets, and some began to draft policy and regulatory frameworks. [1,6] These are summarized in Table 1.

North Africa
Algeria 6% of electricity generation by 2015; 15% by 2020; 40% by 2030, of which 37% is solar (PV and CSP) and 3% is wind.
Libya 3% of electricity generation by 2015; 7% by 2020; 10% by 2025 Morocco: 42% of installed power generation capacity by 2020.
Tunisia 11% of electricity generation by 2016; 25% by 2030; 16% of installed power capacity by 2016; 40% by 2030.
East Mediterranean
Egypt 20% of electricity generation by 2020, of which 12% is wind.
Israel 5% of electricity generation by 2014; 10% by 2020.
Jordan 7% of primary energy by 2015; 10% by 2020.
Lebanon 12% of electrical and thermal energy by 2020.
Palestine 25% of energy from renewables by 2020; 10% (or at least 240 GWh) of electricity generation by 2020.
The Gulf States
Bahrain 5% by 2020
Iraq 2% of electricity generation by 2016.
Kuwait 5% of electricity generation by 2015; 10% by 2020.
Oman 10% of electricity generation by 2020.
Qatar At least 2% of electricity generation from solar energy sources by 2020.
Saudi Arabia 50% of electricity from non-hydrocarbon resources by 2032: 54GW from renewables (of which: 41GW from PV and CSP, 9GW wind, 3GW waste-to-energy, 1GW geothermal), 17.6GW from nuclear
UAE Dubai: 5% of electricity by 2030; Abu Dhabi: 7% of electricity generation capacity by 2020
Yemen 15% of electricity generation by 2025
Table 1: Selected renewable MENA energy targets as of late 2013. [1]

Ambitious renewable energy targets, however, are not sufficient or effective at raising the proportion of renewable energy in a country unless followed by significant policy and strategy changes to support implementation. Despite evenly distributed renewable energy targets in the region, actual investment during the late 2000s came solely from Morocco, Israel, and the UAE; and there was a lack of initiative from key hydrocarbon producers such as Kuwait and Saudi Arabia. The latter in particular has set ambitious targets of generating 50% of energy needs by 2032 from non-hydrocarbon resources, but as of 2014 there was "no dedicated national policy framework and no national energy strategy" and investments into renewable energy by 2012 were barely above $100 million. [1]

A contrast is provided by Morocco, which invested nearly $2 billion into renewable energy in 2012 alone. Soon, it promises to become a "solar superpower" as it pushes forward with projects intended to renewably provide almost half the country's energy within the next five years. [2,7]

Morocco: Leading the way?

Morocco imports 94% of its energy as fossil fuels from abroad, and subsidizes the cost of these imports for domestic use. By 2020, the country intends to generate nearly half of domestic energy demand from wind, hydropower, and solar, with each making up a third of total renewable supply. [2,7] Near the trading city of Ouarzazate, a complex of four linked solar mega-plants is planned to provide nearly 50% of Morocco's electricity from renewable energy by 2020, with the added intent to export extra energy to Europe. The project costs $9bn. [5,7]

The full complex is planned to be the largest concentrated solar power plant in the world. Construction on the project has begun, and the first phase is intended to be completed before the end of 2015. Instead of using traditional photovoltaic panels commonly associated with solar power, the plant uses mirror technology that is more expensive and less common, but can keep producing power even after the sun sets. When the entire complex is finished, it will occupy an area as large as the country's capital city, Rabat; and generate nearly 600MW of electricity - enough to power a million homes. The plant can store energy for up to three hours, and the opening of 2 subsequent plants due in 2017 should mean the complex can store energy for up to eight hours; potentially allowing solar energy to provide 24/7 energy to the country and its surrounding region. [5,7]

The country is "involved in [building] high tension transportation lines" to cover the full south of Morocco as well as Mauritania as a ginger first step in the project, with grander export aims still planned. Exporting solar energy could help economically stabilize the region - talks are ongoing with Tunisia and energy exports across the Mediterranean to Europe are a key goal. To minimize the cost to energy consumers, Morocco's government has provided undisclosed energy subsidies and utilized government guarantees to secure funding from the European Investment Bank and the World Bank. [7]

This sustained push to invest in renewable energy and take advantage of the region's plentiful solar resource may provide a model for other MENA countries to follow.

The future of renewable energy adoption in MENA

If current trends continue, MENA will need more than 120 GW of additional power capacity by 2017. Thus far, despite some announcements to the contrary, renewable energy has received little attention as a viable source for this additional power. However, solar energy provides promising potential. Dramatic cost reductions in solar equipment, a good fit of solar power with demand patterns, and the increased opportunity cost of reliance on fossil fuels mean that solar energy may become increasingly attractive as a policy initiative. [5]

Arguments for the adoption of renewable energy can and have been made on many bases - from climate change mitigation and energy security to economic development. However, the factor most likely to drive rapid market adoption, particularly in MENA, are the economics of renewables versus alternative forms of power generation. Bloomberg's New Energy Finance concluded that solar energy was commercially viable in MENA in 2013 from an economic perspective, particularly when taking into account the stark opportunity cost of using energy that would otherwise be exported. In MENA, and the Gulf in particular, electricity demand is generally greatest in the afternoons - when solar insolation is also generally high. Solar energy could therefore act to reduce peak demand during the summer, subverting the need to increase the amount of fossil fuels used to generate domestic electricity. [1,4,5]

Thus far there has been little investment into solar energy in MENA, despite its abundance. Factors such as entrenched reliance on hydrocarbon fuels, heavily subsidized domestic energy prices, and a lack of policies such as tariffs and quotas to help overcome these barriers, have acted as obstacles. Many oil-producing countries, including Saudi Arabia, have pledged to cut subsidies. However, with the potential for unrest perpetually looming over the region, governments have been very careful with policy changes. Nigeria's attempts in January to raise the price of imported petrol were met with violent protests. Iran (which had a useful scapegoat in the form of outside sanctions) is the only country in the region that has been able to manage a large price increase. These challenges will require a concerted effort over a period of years to overcome. [1,4,5]

However, as recognition builds that solar and renewable energy may be economically viable, deployment is gaining traction. Further changes in regulatory frameworks are necessary to ensure that the region's ambitious renewable energy targets are met. The requirement to juggle growing domestic demand as well as increased export potential may provide the impetus necessary for renewables to make a dent in the domestic energy market. As the global thirst for energy continues to grow, the world will be watching carefully.

© Asad Khaliq. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] L. El-Katiri, "A Roadmap for Renewable Energy in the Middle East and North Africa," Oxford Institute for Energy Studies, January 2014.

[2] "2015 Key World Energy Statistics," International Energy Agency, 2015.

[3] Y. Matsuo, A. Yanagisawa, Y. Yamahista, "A Global Energy Outlook to 2035 with Strategic Considerations for Asia and Middle East Energy Supply and Demand Interdependencies," Energy Strat. Rev. 2, 79 (2013).

[4] "Keeping It to Themselves," The Economist, 31 Mar 12.

[5] S. Griffiths, "Strategic Considerations for Deployment of Solar Photovoltaics in the Middle East and North Africa." Energy Strat. Rev. 2, 125 (2013).

[6] L. Friedman, "Middle East's Push Toward Renewable Energy Spurred by Rising Oil Prices," New York Times, 21 June 2011.

[7] A. Neslen, "Morocco Poised to Become a Solar Superpower with Launch of Desert Mega-Project", The Guardian, 26 Oct 15.