Publications

This paper argues that renewable energy – most importantly solar power, with its particular regional climatic advantage – could play a significant role as a cost-competitive alternative to conventional fossil fuels, if the full opportunity cost of domestically consumed oil and natural gas resources is fully priced into the regional energy system. The absence of cost-reflective energy and electricity tariffs in the MENA region today currently conceals this potential cost advantage; and leaves renewable energy deployment subject to further, economically distorting, policies such as renewables targets and fiscal incentives. Systematically opening up the economic opportunities offered by renewable energy to the MENA region will hence require structural reform of regional energy market and pricing mechanisms, thereby rationalizing the use of different energy sources in each domestic market.