There's no question the Middle East is a world energy leader today, with more than half of the world's oil reserves and some 36 percent of the world's natural-gas reserves.

Now it looks like the region also could become a leader in renewable energy.

The Middle East has displayed a growing interest in investing in renewable-energy projects. And new policies could make the sun-baked region an attractive greentech market, according to Piper Jaffray analysts, who are visiting the Middle East this week as part of a trade mission with the U.S. Departments of Energy and Commerce.

In a research note Tuesday, Piper Jaffray analyst Jesse Pichel wrote that he believes the region's demand for energy "far exceeds" what it can generate from natural-gas plants, based on meetings with government officials and companies in Egypt. The country ratified the Kyoto Protocol and has a set goal of generating 20 percent of its electrical power from renewable sources by 2020.

"We believe renewable energy sources, especially wind andsolar will be needed to satisfy this growing demand," Pichel wrote.

After two days of meetings in Egypt, the trade mission plans to visit Abu Dhabi and Dubai the rest of this week.

Granted, solar and wind installations in the Middle East are minimal today compared with those in Europe, the United States and Japan. But government and private spending on renewable energy in the region is growing.

Last week, Egyptian cable company El-Sewedy Cables said it had created a new wind-energy subsidiary, the Sewedy Wind Energy Group, and had spent €40 million ($51.06 million) to buy a 30 percent stake in M. Torres Olvega, a wind-energy equipment maker in Spain, Reuters reported. El-Sewedy CEO Ahmed El-Sewedy said in a written statement that the new wind-energy business will make various wind equipment.

A Pakistan government official recently told the Voice of Germany that the country intends to produce 1 gigawatt of wind power in the next few years.

And in the United Arab Emirates, Solar Technologies FZE is developing a thin-film solar factory in Dubai. The factory is expected to have the capacity to make up to 130 megawatts of amorphous-silicon thin-film panels using equipment from California-based Applied Materials (NDSQ: AMAT), according to the company's Website. The plant is scheduled to begin operating by the end of 2010.

Meanwhile, Masdar, a major cleantech initiative launched in 2006 by Abu Dhabi, in the United Arab Emirates, has invested significant sums in both cleantech companies and renewable-energy projects. The initiative received a significant boost in January when the government said it would invest $15 billion in the program to benefit solar, wind, carbon-emissions-reduction and hydrogen technologies, among others.

In August, Masdar broke ground on its first thin-film solar panel factory, a $230 million project making amorphous-silicon panels in Germany (see Masdar Breaks Ground on $230M Solar Factory). The initiative also plans to develop a 6-square-kilometer, car-free community called Masdar City within Abu Dhabi to showcase clean technology. The community will be home to a 140-megawatt, amorphous-silicon panel factory.

A Chinese amorphous-silicon thin-film company reportedly has also been tapped for a 10-megawatt solar project in the United Arab Emirates, Pichel wrote.

The emergence of a natural-gas cartel will likely spur more renewable-energy developments in the Middle East as the region's governments seek new ways to reduce their dependence on natural gas, he added.

Iran proposed the cartel last year and has since been joined by Russia and Qatar to establish an organization similar to the Organization of Petroleum Exporting Countries (OPEC). These countries control about 60 percent of the natural-gas reserves worldwide, according to the Piper Jaffray note.

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