Companies vying to supply Saudi Arabia and other Middle East nations with solar, wind and nuclear power face potential hurdles including negotiating access to Bedouin tribe lands, law firm Eversheds LLP said.
Saudi Arabia, the biggest oil exporter, is seeking about $109 billion of investment for a solar industry that will generate a third of its electricity by 2032, or about 41 gigawatts, according to the International Renewable Energy Agency in Abu Dhabi. That’s more than the 32 gigawatts of renewable energy generation the European Union installed last year, Bloomberg New Energy Finance data show.
Outside developers in Saudi Arabia, which is using its oil wealth to invest in renewables, may struggle to determine land ownership and win local zoning approvals for projects, according to Eversheds. Contractors may need to get access from traditional owners, who may include Bedouin tribes.
“The hope is the legal system will catch up,” Indraj Mangat, the London-based head of clean energy project finance at the law firm, said by phone July 19.
In Dubai, foreigners can only own real estate in designated areas, according to a report in May by Eversheds, Ernst & Young and the Emirates Solar Industry Association.
Bedouin are mostly migrating animal herders, according to Encyclopaedia Britannica. Although they make up a small part of the region’s population, they use a large area of land.
Infrastructure banks and Japanese trading houses are among groups seeking to supply renewable energy in the Middle East as investments in Europe are scaled back, said Michelle Davies, global head of clean energy for Eversheds.
“The real driver behind the Saudi policy is the increase in population year on year and the corresponding increase in energy demand,” she said. “As long as the cost of renewable energy is sufficiently lower than the export price of oil, renewable energy makes sense and will be developed.”
The Saudi population rose 2.7 percent in 2011 to 28.1 million, according to UN data. Its solar program is part of a wider program to generate 54 gigawatts from renewable energy sources.
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