<span>Islamic finance can play a significant role in financing solar and other alternative energy projects in the Middle East as countries put an emphasis on green energy to meet increasing demand, according to a report by consultancy Deloitte.</span> <span>“The adoption of green sukuk as one of the alternatives to several traditional financing techniques will rise due to factors such as an increasing number of<br/> solar projects, lower capital costs, favourable green energy policies, along with a preference towards Sharia-compliant instruments,” the report said.</span> <span>A number of countries in the Middle East, especially the UAE, Saudi Arabia and Oman, are investing heavily in the development of renewables projects as demand rises and solar energy production costs fall.</span> <span>Saudi Arabia aims to tender about 9.5 gigawatts of solar and wind capacities by 2023. Riyadh will tender at least 12 projects across the renewable value chain in 2019 alone. The government also plans to attract between $30 billion (Dh110bn) and $50bn in new investment into renewables by 2030.</span> <span>Abu Dhabi, which accounts for 4.2 per cent of the world’s oil production, plans to generate 7 per cent of its energy capacity through renewables by 2020.</span> <span>“There is a healthy pipeline of solar and other alternative energy projects being developed in the Middle East region and Islamic finance can play a significant role in the financing of these projects” said Vishal Rander, director of project and infrastructure finance at Deloitte Middle East.</span> <span>In Dubai’s Mohammed bin Rashid Al Maktoum Solar Park, the 950 megawatt<br/> solar PV (photo volataic) phase III and the 700MW CSP (concentrated solar power) phase IV projects received investments of $940 million and $3.8 billion, respectively, according to the report. The park is expected to generate 5,000MW of electricity by 2030.</span> <span>In Abu Dhabi, about $870 million was invested in the 1,177MW Noor Abu Dhabi solar PV plant in Sweihan, which began commercial operation last month.</span> <span>“The [UAE’s] clean energy targets rank among the world’s most ambitious, aiming to achieve 24 per cent clean-energy generation by 2021, with solar power as the second-largest source of clean energy power after nuclear,” the Deloitte report said.</span> <span>“The main hurdle is lack of liquidity among Islamic banks. However, the UAE government’s support for Sharia-compliant project finance will increase its investment appeal among investors.”</span> <span>Standard & Poor’s also said green finance is likely to continue its growth momentum in the GCC thanks to an increasing pipeline of renewable projects in the region in a report earlier this year.</span> <span>Global green bond issuance rose 3 per cent to $167.3bn last year from $155bn in 2017, according to S&P.</span> <span>The ratings agency said the global green bond market is set to grow 8 per cent this year, with the GCC likely to experience more activity owing to efforts towards low-carbon transition.</span>
