Renewable energy in Yemen: Welfare or necessity? [Archives:2008/1153/Business & Economy]

May 8 2008

By: Amel Al-Ariqi
[email protected]

“Natural gas now, renewable energy now and then, and nuclear energy aybe,” Minister of Energy and Electricity Mustafa Bahran said recently in a meeting with a German delegation visiting Yemen to discuss the country's energy resources.

The statement revealed the ministry's plan to reduce dependence on oil to generate electricity and replace it with other sources, which, according to Bahran, can solve electricity shortages. However, achieving this goal of efficient and clean fuel energy use may prove difficult.

According to the ministry's statistics, approximately 58 percent of Yemen's population does without electricity. A paltry 22 percent of rural households, which comprise 75 percent of Yemen's population, have access to electricity from the national power grid, while the majority of 95 percent of the urban population has this access.

However, even for those connected to the grid, electricity is intermittent and interspersed with regular blackouts. The ministry estimates that the Yemeni population has access to power from other sources such as diesel generators, which operate for only a few hours in the evening.

The World Bank completed and published a 2004 survey of household energy use in Yemen, which provided insight into the characteristics of the rural energy market. The results indicated that in order to cope with energy supply constraints, all households, regardless of income, combine different energy sources such as wood, liquefied petroleum gas (LPG) and kerosene for cooking and lighting. Extremely poor households rely on wood for cooking and kerosene dipped wicks in a tin can for lighting.

In rural areas, car batteries are the most common energy source for institutions such as schools, health centers and mosques, as well as being used for fans, lighting, microphones and other needs. As a result, schools and hospitals are limited in the services they offer and operate under restricted hours.

“Electricity shortages are seen as limiting Yemen's economic growth because electricity is the heart of development,” Bahran pointed out.

Yemeni government policy on renewable energy is to optimize the use of energy from domestic sources, increase renewable energy in electricity generation to 15 to 20 percent by 2025 and promote sustainable development within the electricity sector.

Another high priority is reducing Yemen's dependence on fossil fuels for electricity generation. According to a recent World Bank report, Yemen's oil reserves will be nearly depleted by 2010.

Other policy objectives include increasing electricity supply, extending electrical power to rural communities, increasing foreign investment in the private sector and reducing greenhouse gas emissions.

So far, the Yemeni government has agreed with various organizations and donors to expand electricity generation based on natural gas, although this too is a limited resource.

“In return, we'll face the problem of providing electricity to the Yemeni population, which is expected to triple,” Bahran noted, adding that even if the Yemeni government can provide electricity to half of the population (now 20 million) using current resources, after 10 years with such population growth, the ministry still won't be able to meet the increased demand.

He continued, “Our goal is to use environmentally-friendly sustainable sources to generate electricity and cover increased demand,” pointing out that Yemen is rich in renewable resources, such as wind, solar and geothermal energy.

Bahran added that using renewable energy could increase Yemen's developing power-generating projects, as well as help decentralize systems in order to meet the energy needs of rural and remote communities.

In his article, “Clearing the Hurdles: Renewable Energy in Yemen,” published on the Middle East Energy web site, General Electricity Director Abdulmati Al-Junaid confirmed that Yemen has one of the world's highest levels of solar radiation. Thus, “It is both technically and economically feasible for Yemen to produce 34 gigawatts of electricity,” he writes.

Regarding geothermal energy, Al-Junaid mentions that the Dhamar region alone could produce 125 to 250 megawatts of geothermal power, adding that wind potential also is very high.

A 2004 Electricity Ministry report entitled, “Yemen's rural electrification and renewable energy development,” noted that the nation's current approaches to developing renewable energy have had limited success due to barriers related to current institutional, policy, financial, technological barriers, as well as lack of private sector engagement.

According to the UNDP, because Yemen is considered one of the poorest countries in the Middle East region, with approximately 45 percent of its population living on less than $2 per day, the high up-front costs of renewable energy technologies may prevent the nation's poor from receiving electrical services.

“The Yemeni banking system isn't well situated to provide small loans and micro financing institutions aren't widespread in rural areas,” the study noted, further pointing out that Yemen's private sector, including non-governmental organizations and community-based organizations, has limited knowledge about the technical and financial aspects of renewable energy.

“Implementing the Renewable Energy Project would create a favorable policy and regulatory environment for private sector participation,” the study noted, “However, overcoming this barrier is possible only through large investments, which are expected to follow.”

The study also revealed that there is lack of coordination among concerned stakeholders, such as government agencies interested in renewable energy, donors, NGOs, the private sector and the financial sector. The Energy Ministry also lacks staff to implement suggested strategies.

Despite such difficulties, the ministry has conducted numerous roundtable discussions and studies with international donors such as Germany, Iceland and the World Bank to implement certain projects for generating electricity using wind and geothermal energy.

In this regard, Yemen signed an agreement with Iceland's Reykjavik Energy Invest – this past April to generate geothermal electricity. Under the agreement, the company will conduct a study for geothermal sources at Al-Lisi Mountain in Dhamar governorate and then initiate drilling in the location.

The company will invest in setting up the first geothermal station on the mountain with a capacity of 100 megawatts after finalizing the study by the end of this August, according to the agreement.

However, such agreements often are signed in the absence of a supportive legal and/or policy framework, including a regulatory mechanism to encourage small entrepreneurs and power producing entities to invest in renewable energy, which causes Yemenis to wonder whether their government, represented by the electricity ministry, will be able to fulfill its promises and meet public demand.