The obstacles that impede the spread of renewable energy projects in Yemen in a nutshell are financial constraints, a legislative and institutional lack of information or data, a lack of qualified personnel, and a lack of awareness about renewable energy.
The measures that must be taken to overcome these obstacles include: adoption of policies to ensure the elimination of these barriers; adoption of a renewable energy policy; and a response to the key issues facing the electricity sector, such as the rapid growth in demand for power, deficits of energy and the high costs of power generation. Yemen’s strategy is for the share of renewable energy in electricity generation in the country to rise to 15 per cent by 2020.
Yemen has been experiencing a chronic power supply shortage. An estimate for the electric power deficit in 2006 was 220 MW, a figure that is expected to increase to 250 MW in 2007. This shows the extent of the need to cover the growing demand for new energy projects, and the private sector can play an important role here. The capacity deficit between 2010 and 2018 is predicted to be huge, and renewables could potentially fill this gap. Electricity is available over only about 42 per cent of Yemen, and decentralized renewable energy systems can play an important role in meeting the government’s goal of providing electricity to remote and rural areas.
The aim of government policy on renewable energy is to optimize the use of energy from domestic sources; increase the share of renewable energy in electricity generation to 1520 per cent by 2025; and promote sustainable development of the electricity sector. Other objectives of the policy include: reducing the deficit in electricity supply; reducing Yemen’s dependence on fossil fuel in electricity generation; allowing electricity services to reach rural communities; attracting foreign investment and the private sector; and reducing greenhouse gas emissions.
Potential for renewables in Yemen
Yemen is rich in renewable resources, such as wind, solar and geothermal. This means that large power generation projects can be developed in the country, as well as decentralized systems to meet the needs of energy in rural and remote communities.
Yemen is one of the regions in the world that has high levels of solar radiation, with an average of 6.85.2 kW/m2 per day. According to a study completed in the 1980s, the Dhamar region alone could produce 125-250 MW of geothermal energy. The potential for wind is also very high. It is technically and economically feasible for Yemen to produce 34 GW of electricity.
Wind is considered to be the second most developed and mature renewable energy resource after hydropower. Wind capacity has grown very quickly across the world. New capacity was added worldwide in 2006 bringing the total installed figure in that year to 74 GW. Figure 1 shows that the growth rate in 2006 was 25 per cent, compared with 24 per cent in 2005, and investments amounted to $23 billon. Installed wind capacity today is more than one per cent of the world’s electrical energy consumption. The World Wind Energy Association (WWEA) expects installed capacity to be 160 GW in 2010.
Fig. 1: Total global installed wind energy capacity and prediction 1997- 2010
Wind capacity has only reached this level thanks to countries adopting policies and laws to promote renewable energy and creating financial incentives. However, actions have to be taken to kick start investments in renewables so that they provide a high share of overall capacity.
First, there must be a comprehensive assessment of renewable energy resources. This means monitoring stations must be installed to determine what the real possibilities of these resources are. This will allow the setting of work priorities, targets and operational plans to achieve objectives.
Second, land sites must be allocated for future wind farms. This is an important step to take to create an appropriate environment for investment to make conditions easier for the investors of tomorrow.
Egyptian experts recently visited Yemen to conduct an assessment of the wind potential north-west of the road to Almkhai in an area that covers about 300 km2 (Figure 2). They found that from this region alone Yemen could produced 1.8 GW of power. Analysis of data from monitoring stations in Almkhai shows that the average annual wind speed is 7.4 m/s. This area also has other advantages that make it eligible for wind farms. It is an open area without obstacles and there are transport links close by.
Fig. 2: High average wind speeds could provide 1.8 GW
Many regions have ambitious goals to increase the share of renewable energy in their energy mix. For example, to meet their growing energy demands as fuel prices escalate and to meet their obligations to the Kyoto Protocol, the European Union (EU) wants the figure to be 20 per cent by 2020 and China 10 per cent by 2010. The EU and China have enacted innovative policies and laws to expedite the construction of renewable energy projects to meet these commitments.
To encourage investment in renewable energy in Yemen, several policies that have proven highly successful in other countries, for example feed-in laws, a quota system and tenders, should be implemented.
Incentives for investment
Feed-in laws allow producers of renewable energy to sell electric power at a preferential price. These have been implemented in countries such as Germany, Spain and Denmark. Tariffs are determined depending on the type of technology in use, the site of the project, the breadth and size of the project, the costs of energy production, and the season. Also, the tariff is not fixed over a project’s life. It decreases as production costs decline, for example every ten years.
What distinguishes this option is that it gives renewables a high rate of penetration in the market in a short period of time. It creates local industries and provides a strong incentive for private investment to become involved. This option is generally simpler in the design, management and execution of contracts, and has resulted in huge renewable installed capacity. Also, investors prefer this mechanism because of the price stability it gives.
The quota system forces electricity companies to produce a certain percentage of their total production from renewables. It is implemented in countries such as the United States, Japan and the UK. Companies receive fines if they fail to achieve this goal without a convincing reason. It focuses on new and emerging renewable technologies. What distinguishes the quota system is that it introduces the possibility of achieving realistic targets for renewable energy. It can also be more sustainable economically and politically because it works according to market mechanisms. Quota systems can create new markets, for green certificate trading and for energy.
However, in general the quota system is more complex in the design and management of the price differential, so this option may not be practical for Yemen.
However, in general, the quota system is more complex in the design and management of the price differential, so this option may not be practical for Yemen.
In the tender system competitive bids are made for government-sponsored renewable energy projects. Tendering policies involve a government-sponsored competitive bidding process for renewable energy.
In the case of tendering, the lowest priced projects are awarded contracts; contract guarantees to take all the power generated at a specified price over a fixed time period; the government pays the incremental cost of renewable energy; and they are usually combined with other policies.
Tendering, however, favours the least-cost solution though it is relatively easy to have separate bidding categories or separate solicitations for different technology groups. If a solid resource planning process exists with competitive bidding used to acquire the resources identified in the planning process, this is probably the most sustainable market approach.
Tendering is good at minimizing cost, but ensuring that signed contracts are secured is a key challenge.Finally, the bidding system requires a more complex administrative system, which also increases the cost.
What now for Yemen?
Knowing the advantages and disadvantages of each of the three policy options depends on a variety of factors,including the choice of tariff specific goals and objectives that must be pursued, the social and economic context, and the structure of the particular energy sector. There is no solution that fits all, i.e. the policy made today can be reviewed tomorrow, which demonstrates the importance of monitoring and evaluation.
In addition to these policy tools, there must be a set of specific financial incentives to improve the competitiveness of renewable energy costs, such as investment subsidies, low-interest loans, or an increased demand for green electricity and tax benefits, and accelerated depreciation of capital subsidies and loans negotiable.
The potential of renewable energy in Yemen is clear to see and one hopes that the right decisions are taken, so that its power shortfall can be halted and ultimately ameliorated.