The potential for cooperation is enormous! Developing photovoltaics, China Middle East cooperation continues to heat up

The Middle East has become the "next stop" for China's photovoltaic industry to go global. With the establishment of trade barriers between Europe and the United States on the import of Chinese solar products, the Middle East region, which is transitioning towards clean energy, has become an important destination for China's solar energy capacity exports. According to Bloomberg on the 16th, major Chinese solar equipment manufacturers are planning to collaborate with Saudi Arabia to build a $3 billion factory locally, highlighting their efforts to achieve global production base.

Photovoltaic industry finds' oasis' in the Middle East

Saudi Arabia's Al Arabia TV reported on the 17th that several Chinese photovoltaic companies are entering the markets of Saudi Arabia and other Gulf countries. After Sunac Power announced the signing of a contract with Saudi Arabia's ALGIHAZ to jointly build the world's largest energy storage project, Jinko Solar and TCL Zhonghuan have successively announced heavyweight investment plans. The former plans to build a 10 gigawatt (1 gigawatt equals 1 million kilowatts) high-efficiency battery and module project in Saudi Arabia, while the latter plans to build a 20 gigawatt photovoltaic crystal chip project with an annual output in Saudi Arabia. Previously, Sunac had won two energy storage projects in succession in the Saudi Red Sea project.

This is not the first time that Chinese photovoltaic companies have entered the Middle East layout. It is reported that in Saudi Arabia, JinkoSolar's market share exceeded 70% last year. According to Li Xiande, Chairman of JinkoSolar, JinkoSolar's market share in the Middle East is 45%, covering almost all countries in the region.

Currently, Gulf countries that rely on traditional energy as their economic pillar are actively seeking a transition to clean energy. Saudi Arabia's "Middle East News" reported that Saudi Arabia launched its national renewable energy plan in 2017 as an important component of its "2030 Vision". The goal includes achieving a photovoltaic installed capacity of 40 gigawatts by 2030, while the country's photovoltaic installed capacity in 2023 is currently only 7 gigawatts. The 1.3 gigawatt hour global off grid energy storage project completed by Huawei Digital Energy in June is one of the key engineering projects in Saudi Arabia's "2030 Vision" plan.

Apart from Saudi Arabia, other Middle Eastern and North African countries have also been focusing on the development of the photovoltaic industry. The United Arab Emirates has launched multiple photovoltaic projects in recent years, and it is expected that the country's installed photovoltaic capacity will reach 8.5 gigawatts by 2025. Oman, also located in the Gulf, launched the SAHIM rooftop photovoltaic project plan in 2017.

The Middle East has gradually become an important highland for domestic photovoltaic enterprises to expand globally. On the 17th, Taiwan's Electronic Times reported that in recent years, leading photovoltaic companies such as GCL Technology, Junda Corporation, Zhongxin Bo, and Tianhe Solar have announced investment plans in the Middle East, involving crystalline silicon, battery components, auxiliary materials, etc. Some commentators say that a complete photovoltaic industry chain located in the Middle East is about to emerge, with production capacity covering the upstream and downstream of polycrystalline silicon and important auxiliary materials.

Why the Middle East?

According to reports from photovoltaic professional media such as Solar Quarter, the Middle East has extremely abundant photovoltaic resources, with almost all regions having very high levels of solar radiation energy. The annual total solar irradiance in Israel is 8640 megajoules per square meter, while in the United Arab Emirates it is 7920 megajoules per square meter. In contrast, regions such as the Qinghai Tibet Plateau and northern Gansu in China have an annual solar irradiance ranging from 5040-6300 megajoules per square meter.

Therefore, photovoltaic technology is undoubtedly the most suitable renewable energy source for the Middle East region. According to the Middle East Solar Industry Association, the current photovoltaic market value in the Middle East and North Africa region is approximately $20 billion. By 2030, the value of the photovoltaic market in the Middle East and North Africa region will reach trillions of dollars.

According to the data of Infolink Consulting, the demand for solar energy in the Middle East is expected to increase from 20.5-23.6 GW in 2023 to 29-35 GW in 2027, of which the demand of Türkiye, the United Arab Emirates and Saudi Arabia will increase significantly. Since the beginning of this year, Saudi Arabia has tendered 6.7 gigawatts of solar and wind renewable energy projects, and plans to increase tenders by the end of the year to achieve the annual target of 20 gigawatts.

Zhang Sen, Secretary General of Solar Photovoltaic Products Branch of China Chamber of Commerce for Import and Export of Mechanical and Electrical Products, told the Global Times that except Türkiye, there are few photovoltaic manufacturing industries in the Middle East, and key products such as photovoltaic inverters and modules rely on imports. This means that with the continuous growth of photovoltaic installed capacity in the Middle East, Chinese photovoltaic products will usher in a larger market space. Yao Yao, an analyst at Guojin Securities, also stated that with the continuous launch of large-scale projects by governments in the Middle East and the economic benefits brought about by the decline in component prices, the demand for photovoltaics in the Middle East is expected to grow rapidly in 2024.

Challenges and Future

However, industry insiders have analyzed that the manufacturing foundation in the Middle East is weak, and the photovoltaic industry started relatively late. There are significant gaps in local power infrastructure, communication facilities, talent support, logistics transportation, and supply chain support compared to China, which also brings many difficulties to overseas enterprises. In addition, a more common issue is that differences in policies and regulations, as well as cultural and business environments among countries, will pose challenges for localized operations of enterprises.

Regarding these concerns, Zhang Sen stated that China's photovoltaic industry has the advantage of a full industry chain, complete industrial supporting facilities, and can solve the problem of weak local industrial foundation and industrial chain foundation. In addition, China's leading photovoltaic enterprises that have gone global have outstanding financial strength, and can smoothly promote the landing of photovoltaic production under the premise of ensuring basic conditions such as land, water and electricity, and good policies in the local area. However, Zhang Sen suggests that Chinese companies should pay attention to and respect local cultural and religious beliefs, laws and regulations when expanding their market in the Middle East, in order to seek sustainable and healthy development in the Middle East market.

Egyptian energy expert Hadib also stated in an interview with Global Times on the 18th that Chinese photovoltaic companies should delve into the local market in the Middle East and establish cooperative relationships with local enterprises and governments. By recruiting and cultivating local talents, we provide more local technical support and project services. Strengthen brand building and enhance international market awareness and reputation.

The unique natural conditions of Middle Eastern countries and the industrial chain advantages of China's photovoltaic industry have a natural complementarity, and the potential for cooperation between the two sides will be enormous, "Zhang Sen added.