Investment costs of energy storage projects in the Middle East

Why are energy storage systems being integrated in MENA?

The pace of integration of energy storage systems in MENA is driven by three main factors: 1) the technical need associated with the accelerated deployment of renewables, 2) the technological advancements driving ESS cost competitiveness, and 3) the policy support and power markets evolution that incentivizes investments.

How much money will the MENA energy sector invest in 2023?

Overall investment in the MENA energy sector could reach $1 trillion by 2023, with the power sector accounting for the largest share of the spending at 36%. As the unit rate for solar energy investment is reducing year-on-year, a decrease in capital does not represent a slowdown in the industry (Figure 2).

Which energy storage technology has the most installed capacity in MENA?

Pumped hydro storage (PHS) has the largest share of installed capacity in MENA at 55%, as compared to a global share of 90%. Pumped hydro storage is one of the oldest energy storage technologies, which explains its dominance in the global ESS market.

Will energy storage expand in MENA?

The current utility business model limits the prospects of energy storage expansion opportunities, unless driven by direct governmental support. Auctions in MENA have been a major driver for renewable energy deployment, most notably for solar and wind, but only a few have included energy storage.

Are Mena electricity utilities a good investment?

MENA electricity utilities are predominantly state-owned and characterized by the single buyer model (SBM) which limits the prospects of energy storage investments. This is because the SBM restricts the revenue stacking business model that makes any Energy Storage System (ESS) project economically viable and attractive to investors.

Which MENA energy sector receives the most investment in 2021-25?

The power sector is the largest recipient of investments in MENA energy sectors, accounting for nearly one-third of the $805 billion allocated to projects between 2021 and 2025. Most of these investments focus on the generation value chain, while only 8-12% are designated for T&D networks.