Market forces and policy

Q3 Within MENA, what is the single most important barrier or challenge to the development of renewable energy?

Instead of looking separately at the drivers of cleantech development and at its barriers or challenges in the MENA Region, industry observers are of the view that these two are interlinked and are part of the overall market forces and policy environment in the region. As cleantech deployment is still in an initial phase, the policies of the governments, their project commitments and subsidies are playing a big role in market development.

Our 2013 cleantech survey ranked the following as the most significant barriers or challenges to the development of cleantech in the region:

Most important barriers or challenges to the development of cleantech — 2013

This year, we have expanded on the above themes and have also made the survey more specific to the three areas within the MENA Region. Across the GCC, the Levant and North Africa, insufficient government policy frameworks and regulations continue to be the largest barrier. This barrier has continued to grow in importance over the past few years.

Price competitiveness remains the second most important barrier in the GCC at 25%, the Levant at 19% and in North Africa at 15%. The sharp decline in cleantech prices over the past few years is not considered significant in the MENA Region as cleantech is still considered to be too costly to deploy. However, there are clear changes in the priority and weightage given to the other barriers to cleantech development.

Poor grid infrastructure is an insignificant barrier in the GCC, while it is the third most important in the Levant and North Africa. Similarly, insufficient private financing and limited financing experience among banks for cleantech projects is the fourth most important barrier in the Levant and North Africa while it is insignificant in the GCC. Lack of financing is considered a key barrier to cleantech development in the Levant.

North Africa also suffers from the lack of local capacity (workforce training, domestic contractors etc.), which was rated at 10% and was much higher than that for the GCC and the Levant.

Most important barriers/challenges to the development of cleantech 2014

Q4 In your opinion, what will be the main drivers of cleantech growth in each geographic Area within MENA?

(Pick the three most important drivers for each area.)

In our 2013 survey, government policy, access to finance and cost of competitive technology collectively represented 85% of the responses as drivers for cleantech growth in the MENA Region. We see key changes from these drivers of development this year. In particular, increasing energy demand due to population growth has moved to second in North Africa and third in the GCC and the Levant from its fourth and below ranking of last year. In addition, North Africa has different priorities and drivers of demand from the GCC and the Levant, which show noteworthy similarities. Government policy remains the top driver across the GCC, the Levant and North Africa.

The second most important driver for the GCC and the Levant is the desire to reduce consumption as well as government subsidies for fossil fuels. This is a change from previous years, when financing and reduced cost of cleantech in the GCC were the second most important drivers. The reason for this change could be that GCC governments would like to increase their revenues from the fuel they use in local consumption and, at the same time, want to meet the cleantech targets defined earlier.

For North Africa, the second most important driver is the increasing energy demand due to population growth. This driver is ranked third in the GCC and the Levant.

Reduced cost of investing in renewable energy is ranked fourth in the GCC and the Levant, while North Africa ranks it third. Water scarcity, though not seen as having a significant impact on the drivers of demand for cleantech, has begun to be mentioned as a driver.

Main drivers of cleantech growth