North Africa and Middle East: Drivers of the energy transition?

Drenched in sunshine and surrounded by windy coasts, the Middle East and North Africa – also known as the MENA region – boast excellent conditions for generating electricity from renewables. To date, however, insufficient funds combined with a lack of ambition have meant that large swathes of the region remain untapped.

Now, the German Aerospace Centre (DLR), the Wuppertal Institute and the Institute for Future Energy and Material Flow Systems (IZES) have conducted an in-depth study into the role these countries could play in securing Germany and Europe’s future energy supply.

The report went into particular detail on the production of green hydrogen and synfuels, i.e. petroleum-free synthetic fuels. These two fuels could make an important contribution to decarbonising emissions-intensive manufacturing processes and accelerating the mobility transition. According to experts, the MENA region is well-positioned to be a key exporter of both.

Over 400,000 terawatt hours possible

First, the study divided 17 MENA countries into smaller sites and analysed high-resolution satellite imagery to determine their energy production potential from wind, photovoltaics and solar thermals. The study found that, in theory, the region could generate around 413,000 terawatt hours of electricity from renewables every year, mainly by harnessing solar and solar thermal energy.

Subsequently, the research team looked closely at a number of factors: the entire synfuel production chain spanning energy and hydrogen storage, additional technological and economic considerations as well as the individual country-specific risks – such as political instability. Based on their findings, the researchers modelled three development scenarios – negative, conservative and positive.

The results are promising. According to the report, the parts of the MENA region that were examined harbour enormous long-term technical potential for cost-effectively producing emission-free green electricity. This is closely connected with the ability to profitably produce hydrogen and its downstream products as well as synthetic fuels.

Investment from abroad needed

The study highlights that foreign investments are crucial in order to fully tap this potential. Since most of the MENA countries in the study have not yet set ambitious renewable energy targets, unlike e.g. the EU, any expansion drive is clearly lacking momentum. There is an urgent need for investments in solar farms, wind turbines and solar thermal power stations. The experts believe domestic supply is the first port of call. This is due to the lack of acceptance of previous expansion strategies that were exclusively focussed on exports.

According to the experts, the only way to create markets for green hydrogen and synthetic downstream products is to provide long-term and stable political framework conditions that deliver the planning certainty investors are looking for. If this were to be implemented, the region could produce enough electricity from renewables to more than cover its own demand even if renewables accounted for 100 percent of its energy mix.

Surpluses could then be used to cheaply produce hydrogen and synfuels – ideally clean e-fuels – which could then be exported. This, of course, would also call for investments in hydrogen and synfuel production facilities. If all were to go to plan, domestic supply and export would complement and enhance one another. That being said, the study did not consider how the necessary infrastructure should be developed and how much water would ultimately be needed for hydrogen production.

Synfuels for less than two euros a litre

Depending on which of the report’s development scenarios one considers, it could be possible to export enough synfuels to exceed German demand 60-fold (negative) or even as much as 1,200-fold (positive) at comparatively low production costs to boot. Under optimal conditions, synfuel would cost between 1.92 and 2.65 euros per litre to produce in 2030, but forecasts suggest that this cost could come down to 1.22 to 1.65 euros by 2050.

Overall, between 28,000 TWh of synfuels (negative scenario) and 50,000 TWh of synfuels (positive scenario) could be produced in 2050 at a cost of less than two euros a litre. Prices in this ballpark would be of great interest to importers such as Germany.