Saudi government’s persistent efforts in renewable energy with the new tariff, as well as the expansion of renewable capacity is expected to lead towards daily oil consumption in 2030 down to 1.5 to 2 million barrels, compared to today’s 11 million, as per a report by Global Ventures named ‘Modern Energy in Africa and Middle East’.
Green Hydrogen in MEA
The report states that in GCC states, RE generation will be paired with growth in green hydrogen production. “GCC states have unique advantages and incentives that will allow them to become leaders in the emerging hydrogen economy. Early and focused investments can create sustainable economic opportunities for the region in a decarbonised world while cementing the GCC’s global role in energy markets,” says the report.
The GCC is allocating significant resources toward new hydrogen economies. Saudi Arabia is currently building the world’s largest green hydrogen plant in the NEOM mega-project and aims to be the world’s largest producer by 2030.
While, the UAE too is gearing up to lead the RE sector in the region. The report says that it has a comprehensive Hydrogen Leadership Roadmap which plans to capture 25% of global low-hydrogen exports by 2030.
However, EV market is going to witness tremendous growth, with the transport sector responsible for over 20% of national greenhouse gas emissions in the UAE and Kingdom of Saudi Arabia,the report says that it is an effective starting point on the journey toward curbing emissions. Both countries have established EV targets. Saudi’s Vision 2030 aims for a full 30% of passenger cars in Riyadh to be electric by 2030. This means around 700,000 EVs on the roads within the next 8 years.
Dubai is targeting that 10% of all vehicles on the roads will be electric or hybrid by 2030. The UAE is classified as an emerging EV market that ranks high in readiness based on macroeconomic factors, competitive landscape, customer readiness, public charging infrastructure and total cost of ownership.
Saudi Arabia is still in the early days of commercial adoption, but due to be catalysed by a drive toward domestic manufacturing. The government’s sovereign wealth fund invested $1 billion in Lucid Motors, in 2018, giving it a majority stake in the business. The California-based company is supporting the Kingdom to establish a local production plant that will manufacture 115,000 vehicles every year.
The regional push to decarbonise, digitise and democratise access to energy provides opportunities to leverage technology in renewable energy, energy storage, energy management systems, carbon offsetting solutions and electric vehicles.
Venture Capital in MEA
Considering above scenario, the report says that Venture Capital in MEA can bridge the funding gap for modern energy startups on their path to partner with established energy players, in a regulated market. Middle East and Africa’s energy sector has seen a significant, year-on-year, increase in venture capital funding, reaping the benefits of the US’ 2005-2011 clean-tech investment bubble, says the report. However, the ‘regional push’ in various areas, as said above, provides various opportunities such as —
In the energy management area, such as data-driven digital grid management solutions that balance and manage the supply and demand of electricity. Further, decarbonisation goals and emission targets of the government will make the data essential in meeting sustainability goals. Start-ups providing data streams in pursuit of efficiency and sustainability gains are exciting opportunities in the short-term landscape of the Gulf’s energy sector.
While in energy storage, a significant opportunity in the GCC, energy storage solutions will be essential part of the region’s transition as renewable energy integration and grid stability become crucial. Start-ups that use storage technology to balance the intermittent nature of renewables, improve grid stability, and manage peak loads could prove key as renewables contribute larger portions to the energy mix. There is also potential in serving off-grid applications and participating in energy markets, providing revenue streams and advancing the clean energy transition in the GCC.
Electric vehicles market provides medium term opportunities with the growth and development of the EV market and it is expected to continue to create opportunities for ancillary solutions supporting the ecosystem. It also includes battery management and analytics, charging infrastructure and networks, vehicle to grid technology, and fleet management.
With the increase in installed solar capacity, software will be necessary to assist in the installation, management and maintenance of these new assets. While in Carbon Capture, Utilisation and Storage (CCUS), the primacy of fossil fuels will drive innovation in CCUS in the next decade as national governments try to offset emissions as an alternative to curbing the use of fossil fuel.
As per the report, carbon offset marketplaces as well as emissions tracking and management solutions will form particularly compelling opportunities in the Gulf’s modern energy future.
Middle East and Africa (MEA) plays a crucial role in the global transition toward affordable, reliable, and clean energy, noted the report.