Dubai: The potential for renewable energy in the Gulf is large, but faces several obstacles, according to a recent study by management consultancy Strategy& Middle East.

The report concludes that to unlock this potential, the Gulf Cooperation Council (GCC) governments must develop a carefully planned framework and make sensible decisions. The transition to a modern, renewables-based energy system is “fraught with risk if governments take an ad hoc approach. Instead, they must act quickly and deliberately,” the study states.

Renewable energy continues to attract an increasing share of global investment, with annual investments expected to grow by $130 billion (Dh477 billion), compared to 2016 figures, to reach around $370 billion in 2020.

And while the cumulative total of global investment is estimated to hit $1.5 trillion between 2016 and 2020, GCC countries thus far have made little investment in renewables technology — less than $1 billion in 2016, the Strategy& study says — and are at risk of falling further behind other countries if they do not create a “supportive, coherent policy framework to facilitate renewables investment.”

While several factors in the GCC make rapid deployment of renewables attractive, there are major structural and institutional factors behind current underinvestment in renewable energy. These include generous fuel subsidies, a mindset that prefers building very large conventional plants to meet rapidly growing demand rather than many smaller renewables projects, and, most significantly, unclear regulatory and policy frameworks that discourage the development of renewables.

Raed Kombargi, partner with Strategy& Middle East, said in a statement: “The case for rapid deployment of renewable energy in the GCC is compelling. The GCC has ample solar and wind resources, a regional gas shortage along with growing domestic demand for hydrocarbons as fuel and feedstock, and an affordable means of financing renewable energy. With the right policies and decisions an increasing number of utilities in the GCC could add renewables to their energy supply mix.”