It is assessed that Middle East and North Africa (“MENA”) area has large potential for development of a renewable energy industry due to its blessed natural condition suitable for various types of renewable energy generation, such as photovoltaic power generation and wind power generation. However, investment for development of a renewable energy industry and degree of development of such industry has been rather marginal in MENA area as compared to its high potential.
However, as countries in MENA area have started to be concerned with depletion of fossil fuels, including petroleum and natural gas, and how to respond to global climate change, the countries have realized necessity of developing new energy sources and have increased amount of investment for a renewable energy industry. Furthermore, there has been sharp increase of demand for energy in MENA area due to population increase and development of various industries and major countries in MENA area, such as Saudi Arabia and UAE, have expressed that they will take more proactive approach for development of a renewable energy industry. Consequently, it is expected that there will be rapid increase in investment in a renewable energy industry sector. As a matter of fact, many countries in MENA area, including Israel, Morocco, Jordan, and Algeria, have institutionally supported such interest for development of a renewable energy industry by devising new national plans, enacting new legislations and amending relevant laws and regulations for development of a renewable energy industry.
Consequently, Korean companies’ interest toward investment on a renewable energy industry in MENA area is also in an increasing trend and their large-scale investment plans are frequently announced in these days. However, Korean companies have to take multi-dimensional consideration including social, economic and political aspects into account in their investment plans for MENA area to ensure stable development of a renewable energy industry and stable investment result in MENA area. The countries in MENA area contain a high political risk due to proliferation of a civil revolution which was initially provoked in Tunisia, conflicts among different tribes within nations and confrontation with Western countries. Not only that, a risk of general investment in this area is relatively high due to inadequate number of infrastructure for resource development and incomplete nature of regulations and policies on foreign investment. Therefore, Korean companies should take sufficient consideration for these risks in their investment decision and should come up with appropriate countermeasures which the companies can take even before they execute investment plans.
Moreover, since there is also a general risk that the countries in MENA may delay their investment on a renewable energy industry, Korean companies need to devise more systematic and long-term investment plans. In the meantime, the Korean government’s leading role in foreign trade is also critical in order for Korean companies’ successful investment in MENA area. Above all, those Korean companies which are planning to invest in a renewable energy industry in MENA area must find out areas where they have technologic superiorities and specialties. After finding such areas, they must endeavor to proactively promote those superiorities and specialties and to search for plans of strategic cooperation in association with governments in MENA area, government enterprises and companies in this industry.