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Alternative energy investments gain momentum in the MENA region.

Although many alternative energy options are still in the experimental stages, there are others, such as solar, hydroelectric and wind energy, which are advanced enough to provide commercially viable alternatives to traditional forms of energy.

The rapid expansion of alternative energy has thrown up a wealth of investment opportunities, which according to a report published by Wells Fargo are spread across three tiers: large established companies in established growth markets such as hydro-electric and wind energy; small publicly listed companies developing energy technologies such as biomass, solar and fuel cells and private, non-listed companies developing experimental technologies such as nanotechnology based solar panels.

According to the International Solar Energy Society (ISES) the Gulf region holds enormous potential for investment, particularly in terms of wind and solar energy, which the region has an abundance of.

Dr. Waheeb Essa Alnaser, Chairman, Arab Section, ISES said, "Despite controlling 40 percent of the world's known oil reserves and 23 percent of proven natural gas reserves, the GCC must conserve hydrocarbon resources not only because they are finite sources, but because conservation makes financial sense. In contrast, water is an extremely scarce resource in the GCC, which is one of the world's most arid regions. Therefore, these countries should use the solar and wind energy which is abundance there; each m 2 receives 5kWh per day while for wind it is nearly 2 kWh- where both are economically efficient. If the GCC countries devoted an area 10 km by 10 km then they could fulfill all their electricity and desalinated water needs using solar thermal technology."

GCC countries are expanding their electricity-generating capacity and are expected to invest $200-250 billion in up to 20 energy projects by 2020. Kuwait plans to spend $15 billion to double its power capacity to 20 GW by 2020, while Saudi Arabia could see power consumption rise 57 per cent to 65 GW by 2018. Bahrain will need nearly 10 GW of electricity by 2020. In the UAE, the Dubai Electricity and Water Authority will invest nearly $8 billion in the next five years to triple power and water output. By 2020 the GCC population is forecasted to reach 53.5 million, a 30 per cent increase over 2000. According to the Economist Intelligence Unit (EIU), over the same period, the region's real GDP is expected to grow by 56 per cent.

Furthermore as the world recovers from the economic crisis which forced many developed nations to pull out of or reassess their renewable energy investments, countries across the region are rapidly becoming an attractive alternative. At a recent panel discussion in Saudi Arabia, Arab News reported that 'many major projects in the developed world were in trouble due to the global credit crunch, effectively opening the way for the GCC'. CEO of Gulf One Investment Bank, Saudi Arabia, Nahed Taher concluded: "Vast opportunities exist for investors and businessmen as some of those projects are likely to be relocated or replicated in this part of the world."

2009 CPI Financial. All rights reserved.

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Publication:CPI Financial
Date:Apr 14, 2010
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