In a study on the potential for local manufacturing of renewable energy equipment in the Arab region, IRENA has assessed how three pilot Arab countries – Lebanon, Jordan and the UAE – where development of clean energy is currently strong, may host PV, CSP and wind energy industries. In all of them, however, there are currently few chances to see a rising solar and renewable energy manufacturing industry, due to a series of challenges, such as, among others, the lack of a qualified workforce, and favorable regulatory settings.
The Arab region has strong potential for building manufacturing capacities for renewable energy components, according to the report “Evaluating Renewable Energy Manufacturing Potential in the Arab Region: Jordan, Lebanon, United Arab Emirates,” published by the International Renewable Energy Agency (IRENA) and the United Nations Economic and Social Commission of Western Asia (ESCWA), which is based on the analysis of three potential markets with strong renewable energy development: Lebanon, the United Arab Emirates (UAE) and Jordan.
The authors of the report found, however, that wind could be the most suitable technology for the creation of an industry in the region, while the nascent solar PV industry may be put at risk by the presence of international players that undermine the development of this sector to further investment in new facilities and production lines. Furthermore, they believe that technology transfer may be needed, in order to strengthen PV manufacturing capabilities through establishing joint ventures.
Lebanon: a few chances for PV
The smallest of the three countries chosen by IRENA experts, Lebanon has the least chance to host a solid solar panel industry in the near and distant future as, according to IRENA, the country’s current technological environment lacks infrastructure, while its administrative framework lacks qualified workforce and expertise able to keep track of recent developments of the PV technology. Low customs duties and the limited size of the Lebanese solar energy market are also cited as two factors unfavorable to local module production.
A similar assessment has been done for concentrated solar power (CSP) technology, for which the exclusive manufacturing of components would be difficult, the report notes. As for wind power, instead, IRENA analysts believe that the local industry has the capability to manufacture wind towers using local raw materials, while assembling gearboxes from local or imported electronic components. “Nevertheless, regular upgrades would be required in ongoing industrial processes, testing, inspection and continuous research and development,” according to the study. The findings of the study, on the other hand, are so far supported by the fact that no announcement for solar module factories has ever been made to date in Lebanon. “Production costs in Lebanon would not be competitive with the international market due to the need to import raw materials, high energy costs, and high land costs,” the study highlights.
UAE: the best positioned country
The UAE is, among the three pilot countries, in the strongest position. The study stresses that there are currently four operational solar manufacturers in the country: Dubai-based DuSol Industries (50 MW); solar cell maker Microsol International; Almaden (100 MW), which produces ultra-thin, double glass, and frameless PV modules at the Dubai Silicon Oasis Free Zone; and Noor Solar Technologies (NST), which produces both modules and inverters also in Dubai. The country may be particularly suitable for solar glass production, according to the report, as it already possesses a strong glass industry, but also for solar cells and modules. “New lines for solar modules could be manufactured through joint ventures with international companies, leading to an increase in competitiveness and a decrease in system costs,” IRENA experts wrote. According to them, in fact, various inputs offer promising local capacity potential, such as the presence of automated production, as well as that of cable and connection box manufacturers, which may easily adapt their products to PV applications. The main challenges for the UAE solar module industry are also the limited size of the solar energy market and strong international competition, not to mention the technological issue represented by the fact that solar modules produced for Middle Eastern market need to be designed for harsh climate conditions.
Jordan: good fundamentals with limited development
IRENA analysts have stressed how the local manufacturing of renewable energy components in Jordan is supported by domestic content requirements which state that 20% of components should be locally manufactured, a percentage which may even be raised to 35%. Only one manufacturer of PV panels, however, is currently operational in Jordan, Philadelphia Solar, which according to IRENA has a capacity of between 15 MW and 20 MW. Its presence itself, on the other hand, may “motivate other local industries, such as the glass industry, to enter the solar PV market, for example in module assembly”, its experts wrote. Limited know-how on components such as wafers, cells, glass and inverters, as well as limited R&D capabilities represent, together with the limited size of the Jordan solar energy market, the most important challenges for the future of a local panel industry. Joint ventures with international players are also recommended as viable options to set up solar panel manufacturing capacities across the country, a solution that would help the country in increasing competitiveness and decreasing system costs. A strong support may also come from Jordan cable and connection boxes manufacturers, which are well established in the local and export markets.
The authors of the study have identified a few actions that local governments may implement to help the Arab solar and renewable energy manufacturing industry grow. These are, among others, creating more political support in order to enhance the market size, defining a national plan for renewable energy equipment manufacturing, assessing the feasibility of upgrade of existing production lines, and creating links between domestic manufacturers and international big players.
In an interview released to pv magazine in January, the Business Planning and Strategy Manager of Jordan-based consultant, Sina Industrial Projects Co, Ali Suleiman provided an extensive overview on the emerging Middle Eastern PV panel manufacturing industry. In its overview, he stressed the difficulty of existing manufacturers of scaling up capacities and of creating big manufacturers able to compete with Chinese solar giants, while also highlighting the lack of qualified workforce and R&D capabilities as unfavorable factors.
Source PV Magazine