The recent key forums, Africa Energy Forum, invest in Africa Energy Forum, World Energy Forum and Green Hydrogen Mena and the UAE-Africa Debate, greatly highlighted amongst other key topics; the fact that transitioning to renewable energy is a complex process that comes with several significant challenges. This sits against the backdrop of the need to balance the continuing requirement of the development of fossil fuel reserves in a cleaner way against investment into renewable energy projects.
Thus, as exciting as it is to consider the range of renewable energy sources, we have available; from solar to wind to biomass solutions there are key hurdles that we see in our Energy practice at BSA Law, that developing countries and the private sector face in seeking to progress their renewable energy aims and capacity.
These challenges range from technological limitations, infrastructure support, investment difficulties in sourcing for the right type of funding; policy and regulatory barriers, economic factors, geopolitical issues, environmental and land use concerns coupled with public acceptance and awareness.
How then does a government support or enable the progress required for the private sector in the development of renewable energy projects? What are the right initiatives to foster business growth and success? Does one have to forego investing into cleaner fossil fuel exploration for developing renewable energy capacity or can both co-exist where the overall focus is development and expansion of access to facilities and electricity and utilities for a country's population. For the purpose of this article, we will focus on the renewable energy position and how development of that can greatly facilitate advancement in multiple ways.
In answering this question, of great significance in any analysis are the efforts of the UAE as an excellent example of progressive, and supportive efforts and initiatives that bolster the private sector and the government's positions. The UAE sits at the forefront of the energy transition in the Middle East, with very ambitious goals to achieve 50% clean energy by 2050. With three of the planet's largest solar sites, the UAE is the sixth highest per capita consumer of solar energy in the world, behind only Australia, The Netherlands, Japan, Israel, and Chile.
Under the Renewable Energy Prospectus 2023, the demand for electricity as well as for water is ever increasing due to the growing population expanding economy and climatic considerations. To meet this rising demand in a sustainable manner, the UAE is focusing on renewable energy sources, which will minimize the environmental impacts relative to traditional sources.
The UAE launched the Green Economy Initiative in 2012, under the slogan 'A Green Economy for Sustainable Development.' This initiative aimed to make the UAE one of the global pioneers in the green economy with the various products and technologies associated with it coupled with its core focus on creating a long-term sustainable environment for achieving its visions. The updated Energy Strategy 2050 (2023) further aims to triple the capacity of renewables.
The country now aims to reach 44% of energy consumption with Renewables by 2050. This is a huge percentage certainly achievable by the strategies in place. (Energy Strategy 2050). The identified target of 32% of clean sources in the power mix in 2030 is for renewables and nuclear.
Thus, in view of the above, the renewable energy sector in the UAE in line with the above stated aims, offers significant opportunities for small and medium-sized enterprises (SMEs). The key aspects of which include, firstly the right governmental support. The UAE government has launched several initiatives to support the growth of renewable energy, including the UAE Energy Strategy 2050, which aims to increase the share of clean energy in the total energy mix to 50% by 2050. This creates a conducive environment for SMEs to enter the market and we are seeing its impact for new clients entering the market in this supportive environment. To date the number of small & medium enterprises in the UAE is 557,000 with SME's contributing as much as 63.5 per cent to the non-oil GDP. It is further forecasted that there will be 1 million SMEs in the UAE by the year 2030.
Secondly the existence of various funding opportunities available for SMEs in the renewable energy sector helps. Masdar, for example as a leading renewable energy company in the UAE, focuses on small and medium-sized applications and provides support in challenging conditions and geographies.
In our practice we also see Innovation and R&D playing a very pivotal role as the UAE immensely encourages innovation and research in renewable energy technologies. The recent Green Hydrogen Forum and WETEX in Dubai on the 16th to the 18th of October greatly highlighted the existing technology in country and global in the private sector and we were privileged to engage with multiple companies driving innovating and technological progress in this sector.
In our practice, we also continue to see great market demand that drives the growth in renewable energy sector as the growing demand for renewable energy solutions in the UAE provides a robust market for SMEs to trade in the country's commitment to sustainability and reducing carbon emissions drives the need for innovative renewable energy solutions underpinning all the above is the existing regulatory framework as the country has developed and established a supportive regulatory framework that facilitates the development and deployment of renewable energy projects. This includes streamlined processes for project approvals and incentives for renewable energy investments.
Lastly networking and collaboration provide the right platform for SMEs to benefit from partnerships and collaborations with larger companies, foreign companies and government entities. Key forums such as the World Future Energy Summit; held recently in Abu Dhabi provide excellent opportunities for SMEs to showcase their innovations and connect with potential partners and investors in the promotion of the right collaborative environment.
These proactive initiatives ensure that the UAE's renewable energy sector stands out as a promising business landscape for SMEs, with ample opportunities for growth and innovation and community impact in the short and long term.
The planned build of the world's largest Concentrated Solar Power (CPS) project on a single site in Dubai with a capacity of 1,000 MW promises to be a landmark development in the sector globally.
Looking outward, in its commitment to renewable energy the UAE without a doubt, positioned itself incredibly well and stands as one of the leading countries in its commitment and support of not just its own citizens but developing countries; investing more than USD$ 1 billion in energy projects around the world, including wind, solar and electric power and pledging $4.5 billion to finance and support African nations accelerate clean-energy projects. In this pledge Abu Dhabi's clean-energy producer Masdar, Abu Dhabi Fund for Development, Etihad Credit Insurance, the nation's export credit agency, and AMEA Power the Dubai-based renewable-energy company, will provide the funds working with Africa50 in the development of specific projects.
Thus, from a legal perspective and with the portfolio of cross-border matters we advise on, we are already seeing the impact this is having particularly on the African continent in the opening up of government-led initiatives and PPP projects. In addition, there is a burgeoning private sector that is bolstered by access to the right sustainable investment/project financing structures and legal frameworks that build on the learnings and success of the UAE in the Renewable Energy Sector. We look forward to great strides ahead where the right project structuring needs are met in each region and country and supporting more cross-border project initiatives across the board.
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