Solar energy is slowly becoming a more considerable option with the costs of equipment being in decline. This raises the question how the cost of solar energy compares to the use of oil or gas. Currently, some regional countries have to bear the expense of importing oil, the shortages of gas supply and the competition with European buyers. Solar power can reduce the need for high imports of oil and fill the gaps in the supply of natural gas. The high solar irradiance levels in the Arab world are enough to meet the highest demand peaks, and any mismatch in supply and demand can simply be solved through energy storage (Mills 7). This is especially important for countries such as Jordan, Morocco and Lebanon, where the costs of importing fuel are very high (in Lebanon, around 95% of electricity was produced with oil products by 2009 alone). Apart from the rising costs of fuel, the environmental hazards resulting from their emissions have also become too significant to ignore.

Though the regional industry is still in its initial stages, with only a small number of projects actually in operation, it is expected to show substantial growth in the coming years. Currently, most solar mirrors are provided through importation since the low supply of the region is not enough for local production. The size of this market is estimated at 25 million dollars. This number is expected to increase to 100 million dollars by 2015 with improved interest of international companies and the partial takeover by some local glass producers. As for the electronic equipment, the high tech components are usually provided by international suppliers, with only the smaller components being supplied by the local market. The estimated market size is 2 million dollars. By 2015 this is estimated to grow to 5 to 10 million dollars (Earnest and Young, ISE and ISI 99).

In light of this gradual development, it is important to consider the strengths and difficulties facing this sector. Perhaps the most important factor is that the stretch of desert in the Arab world makes it a region with one of the highest solar irradiance potentials. A second important factor is the low cost of labor of low-skilled workers who would maintain the plants. Both factors are important to the reduction of energy production costs. Other areas of potential that can serve this purpose are the region’s ability to manufacture mirrors for solar panels and the existing float glass sector in Egypt and Algeria (an important requirement for the sector).

The manufacturing of mirrors would still pose a high demand for foreign expertise which would increase the costs of skilled laborers (Earnest & Young, ISE and ISI 106). Moreover, the production of float remains energy intensive, a barrier that prevents countries like Jordan and Morocco from becoming producers. Perhaps the most important barrier is the very low interest in solar energy across the region. The sector has received low government support and is only thriving on the initiative of some individuals (Earnest & Young, ISE and ISI 87).

Though at the moment it is still less costly to produce power through the use of oil or natural gas, if the industry is launched with appropriate planning, the price of production can be significantly reduced. Large scale projects such as Desertec and Masdar are worth of attention, for they provide a serious attempt to expand the horizons of the solar sector. The potential boom of the market would imply positive economic outcomes to countries that import oil where the cost of doing so could be significantly relieved. And perhaps the most attractive aspect to consider about solar energy is its renewable nature making it a reliable long-term alternative. Being so, public policy should aim at providing incentives for new residential and development projects to make this alternative attractive to its citizens.

References:

- Earnest , And Young, ISE, and ISI. “Middle East and North Africa Region Assessment of the Local Manufacturing Potential for Concentrated Solar Power (CSP) Projects.” Fraunhofer ISI. The World Bank, January 2011. Web. 9 May 2012.

- Mills, Robin. “Sunrise in the Dessert.” PricewaterhouseCoopers International Limited (PwCIL). Emirates Solar Industry Association and PWC, January 2012. Web. 9 May 2012. <http://www.pwc.com/en_M1/m1/publications/sunrise-in-the-desert-in-collaboration-with-emirates-solar-industry-association.pdf>.