Introduction

The GCC countries hold significant fossil energy resources, which are mostly exploitable at low to moderate cost. Therefore, power generation relies almost exclusively on conventional technologies. Yet, a high potential for renewable electricity generation also exists, which has not been exploited so far because of the significantly higher cost compared to conventional energy generators.

In technological terms, renewable energy generation in the electricity sector is more mature than in other sectors, especially the transport sector. Thus, integrating renewable power plants in the GCC region and therefore replacing existing gas power plants may avoid global CO2 emission even more efficiently, in technical and economical terms1, than applying state-of-the-art renewable technologies in the transport sector within the EU. Subsequently, the displaced gas of the GCC region can be exported to global energy markets and used, amongst others, in the transport sector.

Apart from the substantial environmental benefit of greater reliance on renewable sources, security of power supply becomes increasingly important. The Middle East has faced a power demand increase of 56 percent during the last decade caused by strong demographic growth and representing four times the global rate of growth (The Economist, 2012). Taking into account the fact that a very large share of Saudi Arabia's and all of Qatar's power generation is based on natural gas fired plants, the rapidly increasing power demand requires a disproportionate share of their domestic natural gas resources in the future. Moreover, only 40 percent of, in particular, Saudi Arabian gas resources are constituted by non-associated2 gas (Abi- Aad, 2012). Because domestic gas production is not sufficient to satisfy all potential demand, Saudi Arabia also relies on crude oil and oil products for power generation, the opportunity cost of which is even higher. Extrapolating current trends, Saudi Arabia might become an importer of natural gas or cease exporting oil within the next 20 years in order to meet domestic power demand. Renewable electricity opens the opportunity to supply electrical energy without depending on energy imports from neighboring countries even in times of increasing domestic power demand.