The Middle East and North Africa (Mena) region has seen a proliferation of renewable energy projects—both to decarbonise domestic energy use and for dedicated green hydrogen production— but the deployment of storage solutions remains on the back burner. Battery technology, in particular, is struggling to take off in Mena compared with Europe, according to law firm Bracewell.

“The Middle East is at the vanguard of renewable energy development, with the largest solar projects in the world and a number of jurisdictions looking seriously at onshore wind capacity. Deployment of battery storage systems is still really low,” says Tom Swarbrick, a partner at Bracewell’s Dubai office.

A particular challenge is the region’s heat and humidity. “Performance of batteries is reduced significantly in these extremes of weather,” he says. This requires additional investment in cooling systems to prevent overheating, which “makes utility-scale deployment uneconomical”.

He cites an example of a developer in the UAE that considered but ultimately refused to include a battery storage element to a solar project due to “ultra-low” tariffs, as “even a marginal increase would have made those bids uncompetitive”.

Smoothing out hydrogen

A lack of battery storage capacity could present a potential hurdle for future green hydrogen production, particularly if Mena projects aim to produce 100pc renewables-derived hydrogen for export to Europe.

“Performance of batteries is reduced significantly in these extremes of weather” Swarbrick, Bracewell

While the off-grid nature of such projects means even the strictest definitions of ‘green’ hydrogen can be met, it also limits options for managing intermittent renewable electricity, particularly depending on electrolyser type. Alkaline electrolysers—the type ordered for Saudi Arabia’s flagship Neom project—have been designed to run on a constant source of electricity. Technical performance optimisation is therefore expected to be a key focus for Mena projects.

“As an asset class, [hydrogen] is adjacent to oil and gas and so there is considerable regional expertise. However, it is still a relatively nascent technology, and the first projects will require significant investment—both R&D and expenditure on the physical asset—and may not turn a profit,” says Swarbrick. He notes that “there is also a lot of variation in the technology, so there is no guarantee that solutions now will endure”.

“For now, that means developers are faced with a choice of investing now and hoping to secure first-mover advantage—which is risky—or waiting until the technology settles and the path to profit becomes clearer,” he adds. While inflation “may be a concern around the edges”, it has not been raised by developers Bracewell is in conversation with when considering participation in the sector.

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Author: Polly Martin