Developers are expected to install about 3.5 gigawatts of solar power in the Middle East and North Africa in 2015, up from 149 megawatts that will be installed this year, driven by government support across the region and booming growth in Saudi Arabia and Turkey, according to GTM Research.
Demand for photovoltaic and solar-thermal systems will grow slowly and then skyrocket in 2015 when “the large bulk” of projects from a Saudi program will go into operation, Scott Burger, an analyst with the Boston-based research company, said today in an interview.
Saudi Arabia will account for a third of the region’s demand in 2015 and Turkey about a quarter, according to GTM’s Middle East and North Africa Solar Market Outlook report released yesterday. Solar manufacturers including Suntech Power Holdings Co. (STP:US) and LDK Solar Co. are seeking new markets as sales slowed in Europe and a global glut drove prices down 61 percent in the past two years.
Panel makers are “desperate for demand anywhere they can get it,” said Burger. “When Saudi Arabia says that they’re going to install a lot, they get really excited,” he said.
The country won’t deliver significant solar sales for a few years, he said. “Realistically, we’re not going to see any significant demand until 2015 at the earliest.”
The government has set a goal of having 41 gigawatts of installed solar capacity by 2032, from nothing now. “Saudi Arabia will be the Saudi Arabia of solar energy,” according to the report.
Many governments in the region subsidize fossil fuels. For example, Saudi Arabia provides electricity producers with oil at about $5 a barrel, said Burger. That’s lower than the $93.35 price of crude for February delivery on the New York Mercantile Exchange at 1:48 p.m. today.
Solar can’t compete against such low-cost electricity, so policy is essential in most markets in the region, said Burger It also presents an opportunity. “They want to conserve the oil they burn for electricity” to sell on the international market, Burger said.
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