Middle East Solar Demand Outlook - executive summary

Middle East PV Market Overview
Market Forecast 2013-2017
- Q2, 2013 -
Prepared by ClearSky Advisors Inc.
© ClearSky Advisors Inc. 22-Apr-2013

Table of Contents
About This Report..................................................................................................................................................5
Middle East at a Glance..........................................................................................................................................5
Summary.............................................................................................................................................................. 6
Market Attractiveness........................................................................................................................................... 6
Fundamental Market Drivers ..............................................................................................................................7
Political Market Drivers ......................................................................................................................................7
Market Forecast.................................................................................................................................................... 8
Market Forecast By Region ................................................................................................................................... 9
Forecast Methodology.........................................................................................................................................10
Saudi Arabia......................................................................................................................... 11
At a Glance ..........................................................................................................................................................11
Summary.............................................................................................................................................................11
Market Forecast...................................................................................................................................................12
Market Segmentation..........................................................................................................................................13
Market Attractiveness..........................................................................................................................................14
Solar PV Policy.....................................................................................................................................................14
Competitive Procurement Process.....................................................................................................................14
Electricity Market.................................................................................................................................................16
Supply and Demand.........................................................................................................................................16
Electricity Tariffs ..............................................................................................................................................16
Electricity Production Costs ..............................................................................................................................17
Market Dynamics .............................................................................................................................................17
Solar PV Market...................................................................................................................................................18
Historic Installations.........................................................................................................................................18
Installed Costs..................................................................................................................................................18
Solar Resource .................................................................................................................................................18
Economics of Solar PV......................................................................................................................................19
Key Industry Players.........................................................................................................................................19
Job Creation and Economic Benefits ................................................................................................................... 20
Turkey ................................................................................................................................. 21
At a Glance ..........................................................................................................................................................21
Summary.............................................................................................................................................................21
Market Forecast.................................................................................................................................................. 22
Market Attractiveness......................................................................................................................................... 24
Solar PV Policy.................................................................................................................................................... 24
Licensed Production .........................................................................................................................................24
Unlicensed Production......................................................................................................................................25
Electricity Market................................................................................................................................................ 26
Market Dynamics .............................................................................................................................................27
Solar PV Market.................................................................................................................................................. 28

Installed Costs..................................................................................................................................................28
Modules...........................................................................................................................................................28
Solar Resource .................................................................................................................................................29
Israel ................................................................................................................................... 32
At a Glance ..........................................................................................................................................................32
Summary.............................................................................................................................................................32
Market Forecast...................................................................................................................................................33
Solar PV Policy.....................................................................................................................................................35
Electricity Market Dynamics .............................................................................................................................38
Solar PV Market...................................................................................................................................................38
FiT Program/Government Tenders ....................................................................................................................38
Installed Costs..................................................................................................................................................39
Solar Resource .................................................................................................................................................39
United Arab Emirates............................................................................................................ 41
At a Glance ..........................................................................................................................................................41
Summary.............................................................................................................................................................41
Market Forecast.................................................................................................................................................. 42
Market Attractiveness......................................................................................................................................... 44
Solar PV Policy.................................................................................................................................................... 44
Abu Dhabi........................................................................................................................................................44
Dubai...............................................................................................................................................................46
Benefits of Solar PV..........................................................................................................................................46
Market Dynamics .............................................................................................................................................51
Solar PV Market...................................................................................................................................................52
Installed Costs..................................................................................................................................................52
Solar Resource .................................................................................................................................................53

Jordan ................................................................................................................................. 56
At a Glance ..........................................................................................................................................................56
Summary.............................................................................................................................................................56
Market Forecast...................................................................................................................................................57
Solar PV Policy.....................................................................................................................................................59
Renewable Energy and Energy Efficiency Law (REEEL) ......................................................................................59
Direct Large Scale Proposals.............................................................................................................................59
MEMR Tenders.................................................................................................................................................60
Net Metering....................................................................................................................................................60
Electricity Market................................................................................................................................................ 60
Market Dynamics .............................................................................................................................................62
Grid Infrastructure............................................................................................................................................62
Solar PV Market...................................................................................................................................................63
Installed Costs..................................................................................................................................................63
Equipment Production ......................................................................................................................................63
Solar Resource .................................................................................................................................................63
Other Regions ...................................................................................................................... 65
Iran ......................................................................................................................................................................65
Kuwait .................................................................................................................................................................65
Qatar .................................................................................................................................................................. 66
Bahrain ............................................................................................................................................................... 66
Appendix ............................................................................................................................. 67
Installation Forecasts by Market Segment and Scenario ......................................................................................67
Middle East......................................................................................................................................................67
Saudi Arabia ....................................................................................................................................................68
Turkey ............................................................................................................................................................ 69
Israel ...............................................................................................................................................................70
United Arab Emirates .......................................................................................................................................71
Jordan .............................................................................................................................................................72
Key Solar PV Market Data....................................................................................................................................73

About This Report
This report contains a summary of solar PV market fundamentals as well as an outline of policies, initiatives, and
general market dynamics that have informed a market forecast for the Middle East region through 2017. An initial
analysis was performed on all 16 nations within the Middle East region. Out of these 16 regions, the top 5 market
opportunities of Saudi Arabia, Turkey, United Arab Emirates, Israel, and Jordan have been identified and an in
depth analysis of these opportunities is presented. This document is part of a series of reports that focus on key
emerging PV markets from around the world. Together, these reports provide a comprehensive view of the
opportunities that exist for the solar PV industry within Asia, Africa, Europe, Latin America and the Middle East.
Middle East at a Glance
The Middle East region presents a significant
opportunity for solar PV industry participants
looking for growth opportunities within
emerging markets. The region’s increasing
electricity demand caused by rapidly growing
populations and developing economies has
placed a lot of stress on conventional electricity
supplies. Faced with few other alternatives,
rising oil prices and natural gas supply
disruptions have caused many nations to include
solar PV as part of their long term energy
strategies. As a result, many favourable solar PV
policies and procurement programs have
already been initiated. Furthermore, distributed
solar PV is very close to achieving, or already has
achieved, grid parity within some regions. This is
expected to drive significant distributed PV
market activity and allow some of the economic
and grid stability benefits of this technology to
be realized.
Although the long term prospects for solar PV development are good, the Middle East region does pose significant
risks. Since the markets are considerably under-developed, issues relating to permitting, grid connection, and
project financing are expected to pose significant threats and should be examined carefully. Political instability, as
highlighted by the recent turmoil known as the Arab Spring, is also a significant market risk.

Summary
 Expected installations: It is expected that 11.6 GW of solar PV will be installed in the Middle East region
from 2013-2017.
o 62% of installations will take place in the regions of Turkey and Saudi Arabia.
o The regions of Israel, United Arab Emirates, and Jordan will also see modest market growth.
 Renewable energy targets included as a part of many nations’ long term energy strategies are driving
utility-scale solar PV procurement programs throughout the Middle East region.
 Abundant solar resources, recent decreases in installed costs, and rising unsubsidized electricity tariffs are
driving significant commercial-scale market growth in some regions.
o Regions with highly subsidized electricity rates will have to rely on other incentives to drive
distributed generation market growth; this will limit growth in these regions.
o Higher electricity subsidies provided to residential customers and higher installed costs for
residential systems are limiting growth in the residential market segment.
 Ever increasing electricity demand, abundant solar resources, rising oil prices, natural gas supply
disruptions, decreasing solar PV costs, and rising electricity tariffs are all expected to sustain market
growth in the long term.
 Weak electricity infrastructure, permitting issues, concerns about sovereign bankability, political
instability, and investments in competing technologies such as wind and nuclear, are all expected to
restrain growth in the long term.
Market Attractiveness
ClearSky Advisors’ Middle East PV Market Overview is the aggregation of 9 independent studies of the most
promising solar PV markets within the Middle East region. These regions were selected from the 16 regions that
make up the Middle East based on expectations of solar PV market size. Each of the 9 regions was rated according
to a number of factors deemed to have the largest influence on future solar PV development. Based on these
ratings an Overall PV Market Attractiveness rating was given to each of the regions. These ratings can be seen
below.
Middle East Solar PV Market Attractiveness Matrix
Region
Overall Market
Attractiveness
Cost of
Electricity
Effectiveness
of Solar
Policies
Size of
Electricity
Market
Generation
Capacity
Needed
PV Market
Maturity
Solar Resource
Economic and
Investment
Risk
Saudi Arabia 4.1 4.0 4.5 4.0 4.5 3.5 4.3 3.7
Turkey 3.8 4.0 4.0 4.0 4.0 3.5 3.6 3.1
Israel 3.6 3.5 4.5 1.0 3.5 4.5 4.1 3.7
UAE 3.4 3.0 3.0 2.0 4.0 4.0 4.6 3.9
Jordan 3.2 3.0 4.0 1.0 4.0 3.0 4.1 2.8
Iran 3.1 3.0 3.0 4.0 4.0 2.0 4.3 1.6
Qatar 2.9 2.0 3.0 1.0 4.0 2.0 4.0 3.7
Kuwait 2.9 3.5 2.5 1.0 3.5 3.0 4.1 3.0
Bahrain 2.9 2.5 2.0 1.0 4.0 2.5 4.6 3.8

Middle East Regions That Were Not Rated
Syria
Iraq
Oman
Lebanon
Yemen
Cyprus
Palestine
In general the factors affecting the attractiveness of a solar PV market can be divided into two main categories:
Fundamental Market Drivers and Political Market Drivers. Distinguishing between those markets that are driven
fundamentally and those that are driven politically can be a valuable initial step to gaining a solid understanding of
the various market opportunities and risks present within a given region.
Fundamental Market Drivers
These factors affect the economic returns of installing solar PV in a region, as well as describe the demand that is
present for additional sources of power. High solar resources, expensive electricity production costs and a growing
or developing economy are all considered fundamental market drivers.
Political Market Drivers
Many markets flourish even in the face of limited fundamental market drivers. These markets tend to be driven by
political reasons. Job creation, CO2 reductions and energy security can all drive significant levels of solar PV
adoption. Likewise increases in political uncertainty, like those seen recently during the Arab Spring conflicts, can
often reduce the attractiveness of a given market.
The chart below allows for an easy comparison of different markets and their respective drivers.
Saudi Arabia
TurkeyIsrael
UAE
Jordan
Iran
Qatar
Kuwait
Bahrain
PolicyDrivers
Fundamental Market DriversUnattractive
UnattractiveAttractive
Attractive
Bubbles are sized by total
electricity market size (TWh/year)

Market Forecast
Annual Solar PV Installations in the Middle East (MW)
2013 2014 2015 2016 2017
2013 – 2017
Total
High Case 759 1,744 3,197 4,260 6,718 16,679
Expected Case 530 1,203 2,063 3,108 4,659 11,563
Low Case 317 505 963 2,143 2,814 6,743
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2013 2014 2015 2016 2017
AnnualInstallations(MW)
Middle East Solar PV Market Forecast
Low Case Expected Case High Case
Expected Installations By Market
Segment (2013-2017)
Residential 6%
Commercial 24%
Utility 70%
The majority of PV installations will be
large utility-scale projects driven by
government renewable energy
procurement targets. Highly subsidized
electricity rates for residential customers,
and a lack of distributed solar PV incentive
programs, severely limit growth in the
residential market segment. In many
regions commercial-scale net metered
projects are already economical or are
expected to become economical over the
next 5 years. This will drive significant near
term growth.

Forecast Methodology
Based on the study of market attractiveness the five most promising markets were selected and a 5-year forecast
of solar PV market development was completed for each of these five regions. In addition a preliminary analysis of
likely development in all the other regions was also completed. The formulation of these forecasts followed a
consistent and robust procedure.
The elements that inform each forecast fall into three broad categories.
 Market fundamentals and economic factors
 Renewable energy policy drivers
 Pipelines of announced and planned projects
Market and economic factors influencing PV development include retail electricity prices and electricity demand in
the residential, commercial and industrial sectors, solar insolation and the resulting capacity factors, average PV
installation costs, time of use electricity pricing, and a number of other factors distinct to each region. This data is
collected through primary and secondary sources and used to inform ClearSky Advisors’ propriety Dynamic
Forecasting Tool (DFT) to determine the volume of projects expected to be installed in the absence of additional
policy incentives.
In addition to this fundamental demand, any policies in the region are analyzed to determine the volume of
installations each program will incent. This analysis is based on the detailed nature, budget, and mandated goals
of each policy in addition to the impact of similar programs in similar regions elsewhere in the world.
Finally, the forecast is informed by the pipeline of commercial and utility-scale projects that have been planned or
announced by developers and/or government agencies. Information is gathered from primary and secondary
sources to determine the likelihood that these projects will be completed and the anticipated commercial
operation date for each.
Combining the forecasts together provides a robust, bottom-up analysis for the entire Middle East region.
In addition to the forecasts, detailed information is provided describing the:
 Electricity market structure,
o Electricity supply and demand growth and segmentation,
o Electricity tariffs and costs,
o Market structure and regulation,
 Solar PV market factors,
o Historic installations,
o Installed costs,
o Costs of solar electricity,
 Renewable energy and solar specific policy programs and incentives,
o Current policies and their effectiveness,
o The likely development of future policies, and
o Main policy drivers like job creation, economic development and energy security.

2013 Middle East PV Market Overview
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