New energy firms up efforts in Arab world

Chinese companies are ramping up their engagement in the burgeoning new energy sector in Arab nations, responding to the urgent energy transition needs in the region, said experts.

This strategic move entails a substantial push into renewable energy domains like solar and wind power, hydrogen energy and cutting-edge power storage solutions. Anticipated future cooperation is poised to drive innovation and foster deeper cooperation throughout the entire energy value chain, said Loletta Chow, global leader of China overseas investment network at accounting firm EY.

Chow highlighted the proactive stance of several League of Arab States (LAS) member economies in promoting economic diversification strategies to lessen reliance on traditional energy sources. Notable initiatives include Saudi Arabia's "Vision 2030" targeting 50 percent of power to be generated from renewable energy sources by 2030, the United Arab Emirates' goal for a 50 percent clean energy share by 2050, and Egypt's ambition for 40 percent renewable energy generation by 2040.

"This shift has opened up avenues for Chinese renewable energy enterprises," Chow said.

A recent EY report underscored a significant surge in Chinese company involvement in the clean energy sector across LAS countries in recent years. Particularly prominent are investments in sectors such as solar, wind power and battery storage. There's also great potential for investment in green hydrogen, and carbon capture, utilization and storage.

In the field of photovoltaics, leading Chinese firms including Trina Solar, GCL Technology and Jinko Solar have either established or planned capacities in LAS member economies, primarily in the UAE and Saudi Arabia. These ventures span the entire photovoltaic industry chain, encompassing silicon materials, wafers, cells, modules and mounting structures.

According to EY data, Chinese investments in solar and wind energy within LAS countries surpassed $13 billion between 2018 and 2023, constituting 24 percent of China's total energy investment in the region.

China's increasing investment in Arab nations came amid growing geopolitical conflicts, where major markets such as the United States and the European Union have raised trade barriers for imported Chinese new energy products.

Yan Yishu, a China utilities analyst at UBS Securities, emphasized the critical need for Chinese firms to diversify their supply chains over the next five to 10 years, given the backdrop of escalating geopolitical tensions and trade conflicts.

Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University, highlighted the challenges faced by Chinese renewable energy exporters amid trade protectionist measures from markets like the US and the EU. To navigate these barriers, Lin advocated for a multifaceted strategy that involves market diversification beyond traditional regions.

"It is important to tap into emerging markets like some of those in Southeast Asia, Africa and Latin America, where robust energy demand and a receptive environment for renewable energy products present significant opportunities," Lin said.

He also emphasized the need for businesses to continuously invest in research and development, focus on enhancing product efficiency, overcome technological barriers, and foster the development of core technologies to increase companies' international competitiveness and navigate evolving trade landscapes.