Gulf states are investing to accelerate renewables deployment, says S&P report
Saudi Arabia and the United Arab Emirates (UAE) have led climate-related efforts in the Gulf Cooperation Council (GCC) region and their governments intend to continue investing in decarbonising the power sector, according to a new report by S&P Global Ratings.
Despite their dependence on the oil and gas industry, the Gulf nations have all announced new targets or renewed their commitment to the Paris Agreement in the past two years, the agency said in its report “Gulf Nations Invest To Accelerate Deployment Of Renewable Energy”.
It said that plans to establish a renewables sector could help the GCC in its efforts to achieve their individual climate goals.
Decarbonising the power sector
“As one of the largest source of emissions, the power sector looms large in most national plans for decarbonisation,” said S&P Global Ratings credit analyst Terry Ellis. “We expect the region to invest significantly in renewables as the decade progresses.”
According to credit analyst Timucin Engin, decarbonising the power sector by making significant investments in renewables “is part of the national objective for achieving net zero targets in both the UAE and Saudi Arabia”.
Analyst Sofia Bensaid also took up the thread: “In our view, solar photovoltaic (PV) power is particularly well-suited to the region, but installed capacity remains low relative to many other regions. We consider solar PV plants to be more predictable and simpler to operate and maintain than other power-generating assets.”
Project finance structures
She went on to add that as the market grows, it’s expected to generate more schemes in the region to be funded using comparable project finance structures.
“The UAE and Saudi Arabia both have established public-private partnership frameworks, making project finance an obvious choice for funding deployment. In our global portfolio of solar PV projects, the key credit factors include the timing of and budget for maintenance, availability, solar irradiance uncertainty, and management of solar panel degradation,” she said.
The report observed that government-related entities have taken the lead on procurement, inviting local and international developers to bid for tenders. Most developers then finance the assets on a nonrecourse basis, which means using substantial commercial bank debt.
“However, the UAE and Saudi Arabia have both established public-private partnership frameworks, making project finance an obvious choice for funding deployment. As energy transition in the region progresses, we expect to see more renewables projects tapping the capital markets for financing, including a growing number of solar PV projects,” the report said.
Including nuclear in the energy mix
The report also applauded the measures taken by countries such as the UAE – which will host the COP28 climate summit later this year – to diversify their energy mix and broaden the horizon for clean energy.
“The UAE's Renewable Energy Strategy 2050 states that decarbonisation of the power sector is a key priority. Organisations like the International Renewable Energy Agency (IRENA) do not include nuclear power in their datasets on renewable energy; the UAE, by contrast, includes nuclear and renewables in its definition of ‘clean energy’. The UAE's goal is to have clean energy provide 30% of its energy mix by 2030, and 50% by 2050,” the report said.
KEEPING THE ENERGY INDUSTRY CONNECTED
Subscribe to our newsletter and get the best of Energy Connects directly to your inbox each week.
By subscribing, you agree to the processing of your personal data by dmg events as described in the Privacy Policy.

Nuclear energy to play a key role in the energy transition
Dec 08, 2023
Renewable energy is accelerating, but not fast enough
Dec 07, 2023
COP28 to drive investment in the energy transition
Dec 06, 2023
Technologies that can be super charged to meet climate goals
Dec 06, 2023
COP28 presents a strong opportunity for Nabors
Dec 05, 2023
Low carbon hydrogen holds the key to achieving net zero
Sep 29, 2023
The trillion-dollar opportunities on the road to net zero
Aug 16, 2023
Unlocking growth opportunities in sustainable finance
Jul 12, 2023
Decoding the trends shaping the future of energy
Jun 14, 2023
Exploring ESG’s critical role in the journey to net zero
May 18, 2023Partner content

IT/OT convergence: balancing agility and reliability

Technologies that can help the oil and gas industry decarbonise

World-class energy management systems can shape a sustainable future

Automation is the key to LNG present and the future scenario for hydrogen
