The coronavirus (COVID-19) outbreak slowed down the implementation of renewable energy projects in 2020 in the region, the Middle East Solar Industry Association (MESIA) said in its latest annual outlook report.
Solar Outlook Report 2021 highlighted budgetary difficulties and revised spending and investment, reduced government services and travel difficulties as contributing factors for the slowdown of tender evaluations, finalisation of processes for ongoing tenders and launching of new projects.
The report noted that with weaker external demand and tighter financial conditions, availability and cost of project finance may become less favourable.
“Moreover, some countries in the region are faced with delicate choices between reining in social support programs, reconsidering investment priorities in new projects or increasing their budgetary deficit. This situation has led, at least for the moment, to some cancellations or postponements of projects.”
Logistical issues, supply of equipment and materials, new constraints of customs clearances, difficulties in access to sites and availability of workforce slowed down the construction and maintenance of renewable power plants, at least in the first phase of the pandemic, the report said, citing feedback of MESIA members.
It said short term measures including temporary reductions in electricity tariffs in Egypt and the UAE and limits imposed on solar wheeling in Jordan adversely impacted ongoing and planned new projects.
However, with most governments in the region committed to clean energy goals, long term prospects for solar remain high, according to the report. The LCOE [levelised cost of energy] of utility-scale solar and wind plants have remained lower than thermal power plants despite the decline in fossil fuel prices.
Solar prices have continued to decline globally with the 2-gigawatt Al Dhafra solar project in Abu Dhabi hitting a world record low price with $0.0135 per kWh, the report said. A members’ survey of MESIA found that solar prices are expected to fall by least 5-10 percent by 2022 thanks to technological advancements in modules.
“They [technological advancements] will induce better performance and lower costs with higher yield and lower degradation. Installation will also become less costly as structural enhancements combined with smaller amounts of module instalments, as nominal capacity increases, will eventually decrease construction time and improve BOS [Balance of System] costs,” the report said.
(Writing by Syed Amen Kader; Editing by Anoop Menon)